Could guaranteed NFL contracts become the norm? Why it’s difficult, how Deshaun Watson’s $230 million deal adds momentum, what’s next

Could guaranteed NFL contracts become the norm? Why it’s difficult, how Deshaun Watson’s $230 million deal adds momentum, what’s next post thumbnail image

The problem with the Hail Mary pass is that it’s a low-percentage play. Born of desperation, it’s something NFL teams try only when they have no other choice. It’s breathtaking to watch and thrilling to attempt, but they do it with the full knowledge that it has little chance to succeed.

When Cleveland Browns owner Jimmy Haslam decided in March to throw a Hail Mary with his checkbook, however, he had a pretty good chance of connecting. That’s because Haslam’s heave was a five-year, $230 million contract offer to quarterback Deshaun Watson that was — unlike nearly every other NFL contract — fully guaranteed.

“I wish they hadn’t guaranteed the whole contract,” Baltimore Ravens team owner Steve Bisciotti said a few weeks later at the annual NFL spring meetings. “I don’t know that [Watson] should’ve been the first guy to get a fully guaranteed contract. To me, that’s something that is groundbreaking, and it’ll make negotiations harder with others.”

There are many reasons Bisciotti would think Watson shouldn’t be the one to have broken this ground. Watson hasn’t accomplished what superstar quarterbacks Aaron Rodgers, Tom Brady and Patrick Mahomes have at the NFL level. He also didn’t play last year, when he demanded a trade from Houston and sat out rather than play for the Texans again. And there are all of the legitimate questions that come with the 22 civil lawsuits still pending against him from women alleging sexual misconduct, for which he could still face league discipline in the form of a suspension.

Bisciotti is wrong about Watson being the first, though. When quarterback Kirk Cousins reached free agency following the 2017 season, he signed with the Minnesota Vikings for three years and a fully guaranteed $84 million. Cousins wasn’t the best quarterback in the league, but there were market factors that led to his ability to do what others had not. A starting quarterback reaching free agency in his prime is a rare thing. At the time, the Cousins deal was hailed as a historic signing, and many wondered if others would follow. They did not.

In the four years between Cousins’ deal and Watson’s new extension, Rodgers, Brady and Mahomes were among the quarterbacks who negotiated new contracts or contract extensions that came with eye-popping numbers, and none was fully guaranteed.

Fast-forward to March 2022, when the Browns worked out a trade with the Texans to acquire Watson and convinced Watson (who had a no-trade clause) to approve the deal by fully guaranteeing all five years. They did this after he had informed the Browns and Panthers that they were out of the running for his services and turned his attention to the Saints and the Falcons as potential trade destinations. Haslam didn’t want to take “no” for an answer, so he made an offer he knew most (if not all) of his fellow owners wouldn’t be willing to make.

NFL executives were stunned by the fully guaranteed structure of the contract and what it could mean when their own superstars come up for extensions. How likely is it that the next set of extension-eligible quarterbacks — including Lamar Jackson, Russell Wilson and Joe Burrow — move the market toward a world in which NFL players get guaranteed contracts just like their baseball and basketball counterparts? What’s stopping that from happening, and how likely are things to change anytime soon?

A push from the NFL players’ union

The question of whether Watson’s deal could start a trend was a hot topic at the spring meetings, and it resonated with the NFL Players Association (NFLPA) as well. Union president and former Browns center JC Tretter published a letter on the NFLPA’s website last month that urged players and agents to take advantage of Watson’s “groundbreaking” deal and push for more guarantees in contracts moving forward.

“I think it starts with guys who have a significant amount of leverage,” Tretter told ESPN in an interview the day after the letter was published. “And that means quarterbacks or game-changing star players, but most of them happen to be quarterbacks. I think we have quarterbacks and star players now who understand the decisions they make can turn the tide and change the outlook of the NFL for generations.

“Hopefully we have guys who look at it and say, ‘That could be me,’ and then generations of players can look back on them and say they’re the ones who changed it for them.”

One place where the players are making headway? The draft. Twenty-six of the 32 first-round picks for the 2022 class have signed their contracts, and all 26 of them are fully guaranteed four-year deals. That includes picks Nos. 30, 31 and 32, which is significant for a number of reasons.

Last year, only the first 28 picks got their fourth years fully guaranteed. The year before, only the first 26 did. The fact that Minnesota’s Lewis Cine, the No. 32 pick last month, got a full four-year guarantee means this will be the first year in which the whole first round got full guarantees.

That’s a milepost for which the NFLPA has been striving for a while now, and the union is working to keep those chains moving into the second round and beyond. For example: Houston’s Jalen Pitre, the fifth pick of this year’s second round, got the third year of his four-year rookie deal fully guaranteed. Last year, the latest pick to get his third year fully guaranteed was the Jets’ Elijah Moore, who was the second pick of the second round.

Tretter is hopeful the players can make similar gains on veteran contracts. The purpose of his letter, he said, was to reiterate for his own constituents that the fully guaranteed contracts NBA and MLB players sign are not mandated by those sports’ collective bargaining agreements but became the norm because, once upon a time, players and their agents insisted. Catfish Hunter in baseball. Larry Bird in basketball. Irreplaceable stars who told their teams they wouldn’t sign unless the deal was guaranteed and got what they wanted. Others followed, and guaranteed deals in MLB and the NBA became the norm.

This has not happened in football. No one followed Cousins’ lead in 2018. Even Watson wasn’t out there determined to get full guarantees; it just happened because Cleveland needed to throw that Hail Mary. Less than a month later, Las Vegas Raiders quarterback Derek Carr signed an extension that isn’t even close to fully guaranteed. Carr’s deal is effectively a favor to the Raiders that creates salary cap room and helps the team manage its budget over the next few seasons. More or less the opposite of Cousins in terms of priorities.

“When the process started with Kirk, I told him we had a couple of options,” Cousins’ agent, Mike McCartney, said in an interview last month. “We could go for the full guarantee with a little less money and hopefully change how contracts are done for years to come. We could go the traditional longer route, or we could do something with ‘rolling guarantees.’ I told him that I personally would like to do a game-changing contract.”

Clearly, Cousins agreed. He and McCartney got offers from other teams, and some would have paid him more than the $28 million-a-year deal he signed. But when the Vikings came in with the fully guaranteed offer, Cousins had what he wanted. This ended up benefiting him significantly down the road as well, because Minnesota later needed to extend his deal prior to the 2020 season and again this offseason, each time putting more money in his pocket as a result of the leverage he had with the final year of his deal guaranteed.

Vikings ownership said after the initial Cousins deal they didn’t get a lot of pushback from fellow owners about what they’d done. But in conversations with team owners and high-ranking team executives, it’s clear the league isn’t eager to start a trend of guaranteed deals that mimic what we see in the NBA and in baseball. The officials who spoke to us for this story, who didn’t want to attach their names to their opinions, basically asked why they would want to guarantee contracts if they don’t have to.

Surely, one owner pointed out, NBA and MLB teams would love to not have to guarantee contracts, so if you’re in a league in which that isn’t yet the norm, why wouldn’t you resist as long as you could?

“There are factors that make us different,” one executive said. “Higher injury risk, shorter average career length, things like that. Guaranteeing deals is risky in a sport where the injury numbers are this high. I think that’s one big reason why it hasn’t [moved that way].”

The main reason NFL players aren’t getting fully guaranteed deals like their counterparts in other sports? Because they don’t really ask for them. Or at least the guys who could potentially get them don’t ask for them. Think about it: The Kansas City Chiefs went to Mahomes two offseasons ago and said they wanted to do an extension. If he had dug in and said he wasn’t signing anything unless it was fully guaranteed, what would the team have done?

“This isn’t something that changes overnight,” Tretter said. “We know it takes the next guy that’s in a similar spot to do it, and then the next guy and then the next guy and eventually it becomes the norm. Kirk had leverage because he was coming off the franchise tag and was able to use that to get his deal. Deshaun had unique leverage. The Browns needed to empty the clip or they weren’t going to get him. Now we have another opportunity to take advantage of it, so we’ll see if there’s another player who wants to take that stand.”


A step back … for two steps forward?

There are a number of reasons it’s tough to get quarterbacks to seek fully guaranteed deals. One is that the money is so good that they feel silly turning it down. Another is that starters rarely get cut, so long-term veteran quarterback deals are effectively guaranteed anyway.

Then there’s what longtime agent Tom Condon once described to me as the “hero principle.” Basically, the quarterback buys into the idea that he needs to accept a team-favorable structure so that the team can spend enough money elsewhere to put good pieces around him. This worked on Carr last month.

“I went through a heartbreak the last time I signed my contract,” Carr said after his new deal was announced. “My best friend [Khalil Mack] left. And I didn’t want that to ever happen again.”

Now look, if the Raiders really tricked Carr into believing the extension he signed in 2017 was the reason Jon Gruden decided to trade Mack to the Bears in 2018, that’s good negotiating by them. Fundamentally, Carr could have pushed for full guarantees (or at least greater guarantees than he got). He just didn’t want to. He wanted to stay a Raider. He wanted to be a team player and help make it easier for the Raiders to manage their salary cap. That’s not a player’s job, but if that was Carr’s priority, then so be it.

play

1:52

Stephen A. Smith shares his thoughts on Derek Carr’s 3-year, $121.5 million contract extension with the Raiders.

Tretter and the NFLPA are now waiting for the next quarterback who wants to do what Cousins tried to do four years ago, and change the contract landscape for future generations of players.

Could that be Jackson, who’s heading into his fifth year and doesn’t seem to be in a big hurry to sign an extension with the Baltimore Ravens? Jackson’s case is unique, in that he doesn’t employ an agent and has his mother negotiate his deals instead. He could play this season on his fifth-year option, accept franchise tags in 2023 and 2024 and hit free agency the way Cousins did after two franchise-tag years in Washington.

Could it be Wilson, who has two years left on his deal but was just acquired by the Denver Broncos for a massive haul of picks and players and will be looking for an extension this time next year? His situation is unique because the Broncos are up for sale. Would a new owner want his or her first big move to be a fully guaranteed quarterback deal that would rankle at least 29 of his business partners right away?

Jackson and Wilson will have the leverage to insist on full guarantees if they want; the question is whether they push for it.

There’s one other structural factor that keeps teams from fully guaranteeing contracts, and it’s an antiquated portion of the collective bargaining agreement (CBA) known colloquially as the “funding rule.”


The ‘funding rule,’ and what could be next

This rule stipulates that a team has to set aside in advance any guaranteed money. At the end of each January, the league requires teams to add up all of the guaranteed money remaining on all of their contracts (players, coaches, all of them) and put that amount in an escrow account at the league office. The rule dates back to the 1960s, when the NFL was not as flush with TV revenue as it is now and there was legitimate concern about teams defaulting and not being able to make their payrolls.

With the league generating more than $15 billion worth of revenue annually, this is no longer a concern.

“We know it’s a barrier to guaranteed contracts,” Tretter said. “It’s an excuse for the other side not to give more guarantees.”

Teams use it, and they protect it. The union pushed hard during the 2020 CBA negotiations to abolish the fully funded rule, but the owners consistently refused. All the players could get was a carve-out — $15 million worth of a team’s guaranteed money doesn’t have to go into escrow. That number increases to $17 million in 2029. In the previous CBA, it was $2 million.

To put it simply, it means that next January, Haslam will need to write a check for $169 million of Watson’s contract ($230 million minus the $46 million Watson will have earned in 2022, minus the $15 million CBA-specified deductible) and have the league hold that money in escrow until Watson earns it.

Haslam, who has an estimated net worth of roughly $4 billion and made his fortune as a truck stop magnate before he ever owned an NFL team, can write that kind of check. Not every team owner could do so as comfortably.

“For less liquid owners, it’s hard for them to put that money in escrow,” Tretter said. “It’s like there are haves and have-nots. And it’s funny to say that about billionaires, but there are some haves and have-nots among ownership. So hopefully, as players fight for longer guarantees, they might need to consider thinking about that in the future, because it might make some teams unable to compete in terms of their ability to sign players.”

As of now, NFL team owners don’t seem worried about Tretter’s scenario coming true. But there are owners, such as Haslam and Stan Kroenke (Los Angeles Rams) and David Tepper (Carolina Panthers) and the family of the late Paul Allen (Seattle Seahawks), who have massive fortunes from non-NFL businesses. And then there are team owners, like the Spanos family (Los Angeles Chargers), Mike Brown (Cincinnati Bengals), the Rooneys (Pittsburgh Steelers) and the Maras (New York Giants), whose main business is their football team. Those in the latter group likely represent the “less liquid” owners to whom Tretter was referring. (He was insistent on not naming names.)

At least two of the teams in that latter group could confront this situation soon. Star quarterbacks Joe Burrow (Bengals) and Justin Herbert (Chargers) will be extension-eligible for the first time next offseason. There’s no reason to assume either or both of them would insist on fully guaranteed extensions, but if they did, could their teams even make it happen?

That’s something to watch in 2023. The NFL prides itself on competitive balance — the idea that a publicly owned team in Green Bay, Wisconsin, has the same chance to compete as a Kroenke-owned team in Los Angeles. And if Tretter’s theory is correct, and we get to a point at which the wealthiest owners are guaranteeing contracts and the less wealthy ones can’t, then sure, we have to think the league would take that seriously and potentially abolish the funding rule.

But with only two veteran quarterback contracts over the past four years coming in fully guaranteed, it’s clear we’re a long way from something like that ever happening. If you’re wondering whether the Watson deal is the start of an era of fully guaranteed contracts in the NFL, there are quite a few reasons to believe it’s not.



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