Delhomme contract has Panthers on the hook
On Thursday, it was announced that Carolina Panthers quarterback Jake Delhomme would be sidelined this week, replaced by Matt Moore as the starter Sunday against the Buccaneers. Ostensibly, the reason for the change is a broken finger on Delhomme’s throwing hand, although there are many who believe the injury is an opportunity to make a change in a disappointing season for the Panthers (currently 4-7). With eight touchdowns and 18 interceptions, things were not going as planned for Delhomme.
The decision to extend
On April 23, the Panthers extended Delhomme’s contract – set to expire at the end of this season -- through 2012, with additional options for 2013 and 2014. Despite last season’s lingering disappointment of five interceptions in the playoff game against the Cardinals, the team saw fit to extend the contract of its 34-year old quarterback for five more years. With the extension – completed a few days before the 2009 NFL Draft – the Panthers picked up approximately $3 million of cap room, enough to pay their draft class. They were bumping up against the cap – and had done a few other cap restructures -- after placing a $16.7-million franchise tag on Julius Peppers.
With the possibility that Delhomme might lose his job depending on Moore’s performance against the Bucs, let’s look at the commitment made to him last spring. Although the total amount of the deal is $42M, the chances of Delhomme earning all of that are about the same as you or me making that $42M. Here are the real numbers.
The current season remains essentially unchanged, paying Delhomme a guaranteed $3.2M salary along with a $3.125M signing bonus, giving him the same $6.325M – although now fully guaranteed – that was due prior to the extension and cutting his cap charge because half the money in a prorated signing bonus.
Next year is where it gets a bit complicated.
The two options
The first option – exercisable between March 1 and May 15, 2010 – calls for $12.7M to extend the contract through 2013.
What happens, you ask, if the Panthers don’t exercise the option during that time frame? Well, there is a “non-exercise fee” payment of $10.14M to Delhomme, or 80 percent of the option amount.
The second option – exercisable between March 1 and Sept. 1, 2011 – is for $3.4M to extend the contract through 2014.
What happens, you ask, if the Panthers don’t exercise the option during that time frame? Well, there is a “non-exercise fee” payment of approximately $2.535M, or 75 percent of the second option amount.
These options of a collective $16M combined with the $6.325M guaranteed this season for a total guarantee of $22.38M.
If the Panthers do not exercise the options, the combined amount of the non-exercise fees is $12.7M, which combined with the $6.325M guaranteed this season equal a total guarantee of $19M.
The Panthers also have the right to “supersede” the contract during a three-week time frame between late April and early May 2010. This would require paying Delhomme a signing bonus of $10.14M, the same figure as the non-exercise fee of the first option above. In superseding the contract, the options would become null and void and the contract would expire in 2012.
In the event the Panthers elect to do the superseding contract, the future salaries would become non-guaranteed for 2011 and 2012, although $2.535M of the 2010 salary – the exact amount of the second option non-exercise fee – would be guaranteed, bringing the total guarantee through the supersede to that same $12.7M figure above.
Release prior to options or supersede
What happens, you ask, if the Panthers simply release Delhomme prior to March, never reaching the time frame to exercise the option, pay the non-exercise fee or supersede the contract? Good question. The short answer is that they’re not off the hook.
The contract provides for guaranteed salaries in 2010, 2011 and 2012. The guaranteed salary ensures payment to Delhomme even if he’s terminated (his contract, not him).
The guarantees are for skill (not being good enough), injury (having an injury carrying into the next year) or cap (having too high a cap number). The amounts of the guarantees are:
Predictably, the total guaranteed future salary amount of approximately $12.7M is the exact same amount as the first option. Upon exercise of that option, the future guaranteed salaries become null and void, replaced by far lower salaries that are not guaranteed.
These guarantees serve to protect Delhomme from being released prior to next season, an eventuality that looked nearly impossible to the team a few months ago yet would seem certainly within the realm of possibility now.
Of course, the guaranteed future salaries are necessary for Delhomme to have entered into this extension rather than playing out his contract. No player or agent would agree to an extension that allows a team to simply release the player without consequence. There is no reason for a player to sign an extension without putting him in a greater financial position than not having one. Delhomme’s agents protected almost $13M for him no matter what the circumstances after 2009.
Four ways to $13M guaranteed
Thus, the Panthers can release Delhomme prior to next season and subject themselves to almost $13M of future guaranteed salary. Or they can supersede the contract and pay the same almost $13M guaranteed through signing bonus and guaranteed salary in 2010. Or they can exercise the future option payments and subject themselves to the same almost $13M guaranteed (or over $16M guaranteed with the exercise of the second option). Or they can opt not to exercise the options and subject themselves to the same almost $13M guaranteed through the non-exercise fees.
The above is a detailed way of saying the Panthers are on the hook for almost $13M guaranteed to Delhomme, a player who will be 35 in January and whose contract they could have let expire at the end of this season with no future obligation.
Let me be clear: I think the world of Jake Delhomme as a person. When I was with the Packers, we brought him in as a restricted free agent, and he commanded the room with his charismatic and extroverted personality. He is a shining example of someone who waited his turn behind other quarterbacks and took advantage of the opportunity when it was put in front of him.
However, things went south for Delhomme in his last performance of last year. It did not appear to be the environment for an extension of a contract expiring with $6M due this season.
The Panthers, though, did extend the deal, whether through extreme loyalty to Delhomme, fear of Delhomme becoming a free agent in an uncapped year, cap problems or some combination of these reasons. They will now deal with that decision.
The Delhomme contract proves the mantra that all NFL front offices realize at different times: Some of the best deals made are the ones that are not made.
Follow me on Twitter: adbrandt