Fletcher Cox’s 6-year/102m deal by the Philadelphia Eagles has only fanned the storyline of Kawann Short’s desire for a contract extension from Carolina. The story was hot anyway as Short was entering the final year of his rookie contract after an 11 sack season. When Carolina abruptly parted ways with Josh Norman, it seemed as if the added cap space was going to be used to sign Short to a long-term deal. The Cox deal from the Eagles, however, blew off the market doors, which before a 13 or 14 million per deal for Short seemed possible. What was a no brainer has now become a deciding moment for the Panthers organization moving forward.
The story has only gotten hotter as Short’s agent reportedly sees the Fletcher Cox contract as the starting point for negotiations. His desire for the big payday is understandable. Defensive tackles, like Cox and Malik Jackson, are collecting dividends in a bull market, and Kawann is getting short-changed to the tune of 1 million bucks.
Short, whose stock can’t get much higher than it is currently, hopes to cash in on a market that has been soaring since Suh signed that unfathomable 6-yr/114m with 60 million guaranteed last season. For a moment, it looked as if Suh’s contract was a sort of market anomaly inflated by a buyer who felt compelled to make a drastic move for their stockholders.
The Malik Jackson and Fletcher Cox Contract Effect
At first glance, Malik Jackson’s 6-year/85m overall contract figure seemed like another bloated deal. Although it made him the 2nd highest paid defensive tackle at the time, a careful look at the contract details reveals a more balanced deal and what could be viewed as a market correction. Jackson’s guaranteed money was significantly lower at 31 million, and the average per year money (14.2 m) dropped substantially in comparison to Suh’s mega deal. Still, 14.2 million per year is a figure that at the very least establishes a market floor for Short.
Fletcher Cox’s deal showed, however, that Jackson's contract wasn't a correction, just a momentary pullback. The big bounce-back shows that the sector is still bullish and fast becoming the blue-chip stocks of the league. Defensive tackles are getting paid in all contractual measurables: yearly average salary, guaranteed money, the overall value of the contract, and length of contracts, and Short wants to capitalize on this boom.
Short Contract Negotiations
Panthers GM Dave Gettleman, who has made some bold moves regarding players seeking big money, appeared to be ready to invest in this hog-molly franchise when he rescinded Josh Norman’s franchise tag. “You have to understand,” Gettleman reasoned, “you can't keep everybody. It's impossible.” Gettleman was all business, stating, “that’s what this is folks” when he explained the decision.
Most assumed this cap space was opened to sign Short to the big contract he sought and the hog mollies Gettleman loves. Ian Rapport next reported that the Panthers had begun negotiations with Short.
Then word broke that negotiations had stalled at best or hadn't existed at worst.
When more reports emerged that Short was displeased to the point where he wouldn't attend optional OTAs, it was clear his point was that his contract status was an important focus prior to beginning the 2016 season. It also showed that the two parties weren't close on the contract numbers.
Short smartly took the high road and attended mandatory OTAs the following week. Gettleman, however, responded to the situation with a harder line than Short’s agent had hoped and any of us really expected. In an interview with BBR, he stated, “I can never fault a guy when he's getting what we call the first kick of the can. I would never get upset, it's business, just like I hope they don't get upset with me when I don't give them what they want." Gettleman didn’t stop either, stating, “I'd like to think agents have figured out they can't scare me; they can't squeeze me. I'm not going to panic. I'm not going to give money away. It's a waste of time. But if that's the attack they want to take, that's their business. I'm too old. I've been around too long to be scared.”
Gettleman wasn’t this brash after rescinding Norman’s franchise tender. He was direct but not self-assertive, stating, “As we got deeper into conversations, we realized it was a significant difference between our thoughts and theirs. The intervening weeks gave us additional time to evaluate where we're going as a franchise."
So what is it that Kawann Short should want and, most importantly, what will Gettleman give? Is it a deal where the APY surpasses Cox? Is it the guaranteed money like Suh? Carolina’s seasoned GM isn’t likely to measure the value in these metrics that are so often reported.
OvertheCap.com recently published a series of articles on contract evaluation and how APY is a limited look at the actual money of a contract. It’s nothing shocking to those who know even just little about contracts. Even a novice would quickly point out that the overall contract number or APY tells very little the contract, and that it is all about the guaranteed money. They’re right, the guaranteed the most determinative figure, but OTC’s Bryce Johnston, reminds that it’s not only about this figure, it’s the actual expected earnings that is the most revealing measure of a contract's value.
It's hard reporting contracts. The NFL doesn't publicize the information and we are off putting together these snippets released by media insiders. They are often limited to, or choose at least, to report the big easy figures to understand, total contract value, yearly average earnings, and guaranteed money. The devil is in the details in all of this, however. It’s where the real money is made by agents and saved by GMs.
As more information is slowly released, we start to pull back the layers of these contracts to see where and how the money is truly allocated. It’s not as simple as saying that the guaranteed money is the only money you should count on either. Contract reports differentiate between real guarantees and injury guarantees, but even when they do, the guaranteed money is only one important layer. Generally, the first three years of salary are guaranteed simply because cutting a guy, even if there is a decline in production, would cost two ways--paying the guy to leave and paying his replacement.
OTC’s Bryce Johnston elaborated these inadequacies in a paper submitted to the MIT Sloan Analytics Conference:
“Guaranteed Money is under-inclusive because it assigns a $0 value to all contract amounts not fully guaranteed at the moment of signing, implying a 0% probability of the player earning such amounts. Three-Year Payout is under-inclusive because it likewise implies a 0% probability of the player earning amounts scheduled for the fourth season of the contract and beyond, but it is also over-inclusive because it assumes a 100% probability of the player earning all amounts scheduled for the first three seasons of the contract.”
A more thorough analysis accounts for the real likelihood that a player will actually earn this money reported. Simply asked, will the contract’s backend look good enough in 4 or 5 years to please the player and the organization? Generally, the longer the contract is, even if the overall figures are staggering. The allocation of the money in guaranteed salary, prorated signing bonuses, and roster and workout bonuses are arranged in a manner that the team has a lot of flexibility on the backend of a player's contract.
None of this is earth-shattering. The agents don’t mind these deals because they associate their agency with a player who just became the highest paid player until the next highest paid player gets his deal and the players get to see the big numbers they have dreamed in a Tweet at the least. The team, most often, also happy about deals with long-term structures. It’s no secret that the organization can often cut ties with a player without suffering major financial penalties in the later years of the contract. It’s not, however, the team's’ ability to get out of a contract that is most exciting--it’s their ability to stay with it.
It’s at this point that you find the Terrell Owens, Kam Chancellors, and Rob Gronkowskis of the world. They got their big deals with all the years and guarantees, but all those years have passed, the salary cap continues to expand, and the market resets higher and higher than the year before. Four or five years down the line, the player looks up and he’s still one of the top players in the league at his position, but his salary is middle of the pack.
How can Short and the organization win?
It sounds counterintuitive at first--sign a shorter deal for less money. What? No player wants to hear that! No reporter wants to tweet that! It’s a contract-style that Darrelle Revis has perfected, and what may be becoming a more and more attractive option for players. It’s the way to make the most money if a player can sustain elite performance for more than four years. “many contracts are longer than would be optimal from the player’s perspective,” contract analyst Bryce Johnston wrote. “Rather than sign short contracts that allow the player to return to free agency following the portion of the contract that is predominantly guaranteed,” he continued, many contracts include additional contract seasons that subject the player to team control for contract seasons in which the contract amounts are rather unlikely to be earned.” Accepting a shorter deal with a lower overall value, players can earn higher average annual pay and leverage their signing bonus against a team in the instance of declined performance. Most importantly, the player can benefit more from natural market inflation by getting perhaps a second or third kick of the can.
If Short were to adopt this strategy, he’d sign a 3-4 year agreement where the guaranteed money was still relatively per year but was a little lower overall. It would also be high enough to ensure that the team would probably have to pay out the full life of the contract. What would be most appealing for Short, however, is that he would still likely have an enough gas left in the tank in four years to get another good kick of the can.
Sure, there are some risks involved with this. The possibility of a career ending injury or a significant decline in performance could undermine the value of a future second contract. A contract, however, shouldn’t be negotiated with only this in mind, nor should it be negotiated with the sole aim of being the highest paid player at your position at the time. Contracts should be negotiated on the real expected earnings, and those seem to be better with a shorter contract.
With a shorter deal, teams aren’t handcuffed to a player for an exorbitant amount of time. They get some years with a player in his prime, but if organizational needs change in a few years, they have the flexibility to part with a player on mutually beneficial terms. The team can move a different direction and the player can hit free agency again before he’s a dinosaur. There will also be added money on the table if the player can hit the market because of natural market inflation. Just think, the fourth or fifth highest paid defensive tackle today makes more than the highest paid defensive tackle from five years ago.
This is why both Carolina and Kawann should play the Short game. It may not break the Twitter reporting record books, but Short’s actual earnings would be higher if he stays healthy (he’s been durable so far), plays productively on a productive defense for three or four years, and gets another kick of the can in 2020.
If Short looks to go the more traditional route by landing the next biggest contract, he could find himself likely earning less in the long-run. The Panthers GM has commented recently that “he isn’t scared to use the franchise tag.” He tagged Greg Hardy and tagged and untagged Josh Norman. If an extension doesn’t get worked out before 2017, you may as well just add Short to this list. He would be 29 going on 30 by then, and the chances of him getting that long deal then will have declined substantially by that point.
It’s best for everyone if this deal gets done the right way. If Short does opt for this different styled short-contract, he should probably look to negotiate a no franchise tag clause to make sure he can get his third kick of the can sooner than later.
By the Professor, aka Tony Dunn
Follow him on Twitter @Cat_Chronicles