by National Football Post
May 22, 02014
By: Joel Corry and Ari Nissim
Former NFL agent Joel Corry and former New York Jets Director of Football Administration Ari Nissim are going to give the NFP readers an in-depth perspective of how an actual contract negotiation between an Agent (Joel) and the Club (Ari) takes place in the NFL. Although condensed, Joel and Ari are attempting to take readers through a player contract negotiation from beginning to possible conclusion in weekly segments. Whether they can reach an agreement on the hypothetical contract extension is not known by anyone at this point. The player Joel and Ari will be negotiating over is Houston Texans pass rusher J.J. Watt, the 11th overall draft selection from the 2011 NFL Draft.
Let the negotiations continue…
CLICK HERE to read Part I
CLICK HERE to read Part II
CLICK HERE to read Part III
CLICK HERE to read Part IV
AGENT (Joel): I’ve discussed your latest proposal with J.J. We have no choice but to question the organization’s seriousness about getting a deal done based on the offers you’ve made.
The new money average of your latest offer (almost $14.225 million per year) is below the $14,372,038 average yearly salary of the 10 highest paid non-quarterbacks. Just to alleviate any confusion, I took the sum of the total new money in the top 10 deals (by average per year) and divided it by the total number of new contract years (52 years) to arrive at this figure.
The 10 players used are as follows: Calvin Johnson ($16,207,143-average/7-year extension), Larry Fitzgerald ($16,142,857-average/7-year extension), Mario Williams ($16 million/6 years), Adrian Peterson ($14,213,333/6-year extension), Richard Sherman ($14 million/4-year extension), Joe Haden $13.5 million/5-year extension), Greg Hardy ($13.116 million/1-year), Clay Matthews ($13 million/5-year extension), Charles Johnson ($12,666,667/6-years) and Haloti Ngata ($12.2 million/5-years ).
Watt's side is willing to exclude Ndamukong Suh's rookie deal from the equation.
The calculations are favorable to you because I excluded Ndamukong Suh’s rookie contract and Darrelle Revis’ two-year, $32 million deal with the New England Patriots. I’m considering Revis’ contract as only for one year at $12 million since it’s unlikely he’ll play 2015 under his scheduled $20 million salary. I also didn’t include Percy Harvin’s $12,843,500 new money average because I recognize that some teams value new deals which are a part of a trade differently. Instead of focusing on the new money, the total amount that will be paid to the player over the length of a deal by the acquiring team can be more of a priority. Because of this, Harvin is valued at $11,166,667 per year for these purposes. By the way, the average yearly salary of the top 10 would be $14,720,073 with the excluded players.
Since there aren’t 10 non-quarterbacks better than J.J., these figures are just more evidence of how inappropriate the deals you have been proposing are for a player of J.J.’s caliber. For your information, the average yearly salary of the top five non-quarterbacks using the parameters is $15,457,667. As you may not know, J.J. heads Pro Football Focus’ list of the NFL’s top 101 players for the second straight year. J.J.’s ranking is further confirmation that he doesn’t have any peers. The average of the top five non-quarterbacks also isn’t an appropriate gauge for J.J.
I strongly disagree with your contention that Mario Williams’ deal has a “Free Agent premium for playing in one of the less attractive free agency destinations.” His contract is more of a function of having free agent visits with other teams lined up after Buffalo than your suggestion. Williams was going to get his money wherever he signed.
I don’t find your state income tax argument compelling. I’ve never entertained such discussions in a negotiation. J.J’s contract won’t be the first. By the way, you neglected to account for the salary cap being $120.6 million when Williams signed his contract with your adjustments to his deal. An equivalent deal with the current $133 million salary cap would average slightly more that $17.645 million.
Bringing up Nnamdi Asomugha’s 2009 contract with the Oakland Raiders doesn’t change that salaries are going to continue escalating for the NFL’s best players. Otherwise, Haden wouldn’t have signed a five-year, $67.5 million contract extension last week with $45,078,193 in guarantees. The only real exception will be at running back. Instead of only two $10 million per year cornerbacks in the NFL (Revis and Brandon Carr), that number has doubled in the last couple of weeks with Sherman and Haden’s deals.
There isn’t going to be some sort of general market correction similar to what happened specifically with the top of the cornerback market in 2011 as the salary cap increases. Asomugha went from $14.296 million per year on his Oakland deal to $12 million per year after signing with the Philadelphia Eagles for five years. As you know, the third year of Asomugha’s Raiders deal voided to make it a two-year deal with a franchise tag prohibition because certain Not Likely To Be Earned incentives weren’t met.
If J.J. is the type of player a team can build around as you say, then you shouldn’t have any problem paying J.J. like the other players that teams are built around, which are usually quarterbacks. Please spare me from any more talk about how it would be so hard to stay competitive with the highest paid defensive player because it has been done. The Indianapolis Colts had five winning seasons and one Super Bowl appearance while Dwight Freeney played under a deal that made him the NFL’s highest paid defensive player in 2007. He remained as one of the highest paid defensive players for the duration of the deal.
After looking at the roster, I don’t see how J.J. would be taking up too many resources by paying him like a centerpiece player considering some of the highest priced talent on the team could be leaving in the next couple of years. Andre Johnson will be 34-years-old when his contract expires after the 2016 season. Given that he’s disgruntled, it’s wouldn’t be a surprise if he was playing elsewhere in 2015. His 2015 cap number is slightly over $16 million while his dead money is a little more than $7.3 million. Arian Foster may not see the last two years of his contract if he doesn’t return to form from his back injury. Johnathan Joseph’s contract is also up after the 2015 season. Kareem Jackson, whose contract expires after the upcoming season, seems to be the only possible Texans free agent in the next couple of years that could command a significant deal. As I’ve said before, a high-priced quarterback won’t be an issue for awhile.
Since you’ve acknowledged that J.J. would receive roughly $25 million over three years with a franchise tag, it might be more constructive if you shifted your focus to (1) how much money above this $25 million should be necessary for J.J. to give up four unrestricted years (2017-2020) now and (2) what is a fair value today of unrestricted years in the future for the game’s best non-quarterback. An extra $13 million over the next three years and valuing J.J.’s unrestricted years at $13.75 million per year with a team friendly structure isn’t enough for J.J. to sign away years in his prime where he would be a 31-year-old free agent if he completed his contract.
I’ve revised my offer to the following:
I don’t have any flexibility with the guarantees. In light of Haden receiving slight over $45 million in guarantees, I considered raising the amount of guarantees in the proposal. Guarantees for cornerbacks have increased dramatically with the Sherman and Haden deals. I’ve already made substantial concessions structurally, but insist on skill and cap guarantees similar to the most lucrative St. Louis Rams veteran deals (Chris Long and James Laurinaitis). Robert Quinn’s next contract will likely be structured in this manner.
You can call my numbers “astronomically high” as much as you want. Less than $17 million per year for the unrestricted years of the NFL’s best non-quarterback will seem extremely reasonable in a couple of years.
I also have an idea where we may be able to find common ground on a deal much closer to what you’ve been proposing. J.J. is willing to sign such a below market deal if you are willing to add a provision that gives him the right to void the remaining years of his contract if his new money average ever falls below the defensive end franchise tag number. For example, if the 2016 non-exclusive defensive end franchise tag is greater than J.J.’s new money average, he would have the discretionary right to void the remaining years of his contract (2017-2020) no later than two days before the start of the 2017 league year. Since no one will really know how much the salary cap will increase in the future until the numbers are actually set, the voidable provision wouldn’t be a factor until the latter years of the deal if this year’s cap increase is an anomaly.
Please also consider the offer below.
I’m not sure I agree that it will be in everyone’s best interest to table discussions if you have serious objections to either of my proposals. After J.J. successfully incurs the risk of injury and poor performance while playing another year on his rookie contract, I can assure you that the offers you are rejecting will seem like a bargain compared to the type of money we will be seeking once the season is over. As I said before, J.J. is cognizant of the different negotiating dynamics with players who got new contracts after their third NFL season when they had two years left on their rookie deals (Patrick Willis and Chris Johnson).
CLUB (Ari): Of course you don’t agree it’s in everyone’s best interest to table discussions because you want your cake and you want to eat it, too. First off, your offer of voiding the deal if the franchise tag number is higher than the average of this deal is simply a non-starter. Why would a club give any player $30 million dollars in years that he is already under contract for roughly $8.9 million just so the deal may void before the club gets any benefit of doing the new deal? You cannot possibly have a valid and justifiable explanation for this, and I’m actually concerned if you have led your client down this type of thought process. It actually offends us that you would make a comment such as us not taking this matter seriously when we have made multiple offers and have moved significantly in our proposals despite the fact that J.J. has two years remaining on his contract, a fact you continually discount. Furthermore, you may not find the tax argument persuasive. However, I guarantee that J.J’s financial advisor and his bank account find it persuasive when he gets to keep more of his earnings.
Although I could rebut the arguments you have made about the top 10 non-quarterbacks, the simple fact is only three of those players have higher averages per year than our last offer to J.J. and two of those players were in the last year of their contracts and the other was a free agent when they received those extensions. However, there is no point in continuing to go back and forth with you when you are asking for significantly more money than the averages you use to back your own arguments.
If $50 million guaranteed is something that is that important to you and J.J., it is something that we would consider, as long as the structure is as we have proposed with the guarantee initially being for injury only and then guaranteeing fully in that league year, a concept you have said you don’t believe is an issue, thus we are not sure why you continually argue about the structure except for you to beat your chest when recruiting. However, please note we will only consider a $50 million guarantee if your new money average per year comes down to an average closer to the top 10 average you mentioned above. If this is something you think you can work with, we look forward to seeing you present another offer within these parameters. If not, we appreciate your effort and will revisit the matter after the upcoming season.
AGENT (Joel): That’s the pot calling the kettle black. I understand that any deal J.J. signed wouldn’t stand up for its duration, but it’s ridiculous to expect a player who has the most run stuffs and sacks in the NFL over the last two seasons to agree to a deal that will quickly become obsolete. Good luck naming another current player capable of accomplishing this feat. At least you finally made an offer that exceeds the average in the deal a 30-year-old Julius Peppers signed a little over four years ago (barely and with less in guarantees).
A deal close to your number with the team-friendly structure that you want is an impossibility. Right now, it has to be deal closer to your number with a player-friendly structure or a deal closer to my number where I’m making structural concessions. For the record, we don’t consider something near the average of the top five non-quarterbacks close enough to my number. However, we could probably live with third day of the waiver period for the guarantees under the right circumstance. $50 million in guarantees is justifiable considering there weren’t any cornerbacks with $30 million in guarantees two weeks ago.
My second option was an attempt at being creative by coming up with an alternative to a straight deal, which is a lot more than can be said of your attempts at signing J.J. for a relative bargain. My general concept is still valid. J.J. might have thought twice about rejecting your offers with the inclusion of salary escalators or Not Likely To Be Earned Incentives, or higher salaries with some sort of salary de-escalators.
I’m not going to counter my own offer because it’s an unreasonable request. If you want to table discussions for now, that’s your prerogative.
J.J. is paying close attention to Patrick Peterson’s negotiations since he is a Pro Bowl-caliber player taken in the first round of his draft class. It will speak volumes to J.J. if the Arizona Cardinals give Peterson a deal comparable to or better than your last offer during this off-season.
Next Week—Negotiation Post Mortem
Follow Joel on Twitter: @corryjoel
Follow Ari on Twitter: @AriNissim
Joel Corry is a former sports agent who helped found Premier Sports & Entertainment, a sports management firm that represents professional athletes and coaches. Prior to his tenure at Premier, Joel worked for Management Plus Enterprises, which represented Shaquille O'Neal, Hakeem Olajuwon and Ronnie Lott. You can email Joel at firstname.lastname@example.org.
Ari Nissim worked with the New York Jets from 2006 through 2013, serving six years as Director of Football Administration. In addition, Nissim interned at the NFL League office and worked at Athletic Resource Management Sports Agency, and currently teaches in the NYU Sports Management Program.