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Econ 101: Adjusting to the New Era of Quarterback Contracts

Colin Kaepernick reportedly wants to make anywhere from $18 to $20 million in salary on his next contract. Hell, so do I, but here’s a few reasons why it’s not all that crazy that Kaepernick will ask for that — and why it’d be crazier for San Francisco to not pay him.

PERHAPS no single contract announcement in recent history was met with as much universal derision as Joe Flacco’s six-year, $120.6 million deal with Baltimore.

It was almost a year ago to this day, and the consensus was clear — the Ravens had bent over backwards to accommodate their Super Bowl MVP in fear of losing him to unrestricted free agency, creating an albatross of a contract in the process that would demolish their championship roster like the rifting of Pangaea. The subsequent departures of key contributors such as Anquan Boldin, Paul Kruger, Bernard Pollard, and Ed Reed were all in some way blamed on Flacco’s pay raise in the ensuing weeks.

The slew of big-time extensions that followed in the spring and summer of 2013 — $108 million for Tony Romo later that March, $110 million for Aaron Rodgers in April, and deals in June of $76.5 million and $103.75 for Matthew Stafford and Matt Ryan, respectively — were all covered as fallout of the Flacco-bomb that had exploded the market, and Jay Cutler’s eye-popping seven-year, $126.7 contract with the Bears once again evoked last year’s narrative. Nevermind that Drew Brees’ five-year, $100 million extension in the summer of 2012 was probably the real baseline for all future deals; no one raised much of a gripe with a four-time All-Pro getting his dues, and it only narrowly edged out Peyton Manning’s five-year, $96 million contract that he got from Denver three months prior.

There’s a pattern here, as you’ll notice.

The latest quarterback to be seeing dollar signs on the horizon is the 49ers’ Colin Kaepernick, a former second-round pick that is about to be on the last legs of a four-year, $5.12 million contract he signed in 2011. He’ll make just shy of $974,000 this season before entering unrestricted free agency in the spring of 2015, and it’s rumored that Kaepernick desires to be paid… well, quite a bit more than that. Ben Volin of the Boston Globe reported last week that the Nevada alum wants a contract that is in the neighborhood of Cutler’s, centering on an average annual value (AAV) of $18 million, while CBS’ Jason La Canfora said on Friday that Kaepernick wants even more — a contract that would make him the NFL’s fifth twenty-million-dollar man.

As expected, the sports world’s narrative was relentless in its painting of San Francisco’s signal-caller as a money-hungry malcontent. Kaepernick is already polarizing enough as an entertainer between his tattooed torso and (literally) trademarked touchdown celebration, and it doesn’t take a lot for media members to throw all logic to the wind when discussing him. The oft-critical Mike Florio immediately released a list of ten reasons why the 49ers should play the wait-and-see game with Kaepernick instead of engaging in any extension talks this summer, while hacks like this took the news as an opportunity to essentially assassinate a young man’s character. The actual contents of the column aren’t worth parsing over, but click it if you want a laugh (or a tutorial on how not to cover the most recognizable face of your paper’s local pro football team).

Before we examine Kaepernick’s specific case and the leverage he possesses to make such a demand, let’s look at some contributing factors to the recent phenomenon of skyrocketing quarterback salaries — and why people are so paranoid about it.

The Salary Cap is Rising

An obvious enough reason, but I feel that the average sports fan will underestimate just how much this matters in both the short and long-term. The new figure of $133 raises the cap past the pre-lockout record of $129 million, and Adam Schefter reported that the league plans for it to swell to $150 million by 2016.

That’s a shit ton of dough for GMs to play around with, and a lot of players are now considerably more wealthy because of it. Another $13 million lining league pockets in 2014 can mean squeezing a Jarius Byrd onto your roster or signing two TJ Wards, and those teams who coughed up $20 million for their franchise quarterback may no longer lack wiggle room. What once commanded a sixth of your cap from the new CBA era of 2011-2013 will barely cover 13-percent of your costs in three years’ time.

Contracts are Not Apportioned Evenly

Look, I’m not a big Flacco fan — he’s been a slightly above average player for a half-decade now and rode a four-game sample to a twelve-figure deal — but a harrowing amount of disinformation was spread with regard to his contract, and virtually all of it stuck. While it is true that his deal checks in at roughly $20 million AAV, at no point in the near future will he be making that figure in salary.

Thanks to Spotrac, the handiest sports-centric business site you will find on the web, the complete details of the contract are available for perusal.


Baltimore was obligated to pay Flacco a guaranteed $29 million (his signing bonus), but his cap hit this last season was a mere $6.8 million in 2013 thanks to the back-loaded nature of the deal. That’s nothing for a quarterback. The 2014 and 2015 figures will be some of the most costly among his position, but it’s a far cry from the $20 million AAV that a six-year, $120 million contract appears to be on the surface.

Now here’s the fun part — Flacco will never see the money you’re looking at from 2016-2018. Never. At least not in its current state. Ravens GM Ozzie Newsome will be restructuring the deal with Flacco’s agent far before the 2016 offseason is underway, just like Tony Romo did a few days ago when Dallas knocked $10 million off a would-be $21.8 million cap hit in 2014. It’s all about manipulating the payroll; teams avoid crippling cap hits in the form of up-front signing bonuses that are converted to guaranteed money for the player. Both benefit. Among the other three players in the NFL that boast salaries of $20 million AAV — Brees, Rodgers, and Ryan — none sport a cap hit of $20 million until the fourth year of their contracts. Sound familiar?

Signing bonuses are a GM’s best friend. You can bet all three of those guys will be “volunteering” to restructure their deals at some point in the next few seasons to “help the team”, and they’ll get some nice PR for it. Just ask Tom Brady.

But yeah, the point is that Joe Flacco never has been and never will be taking up a sixth of Baltimore’s salary cap. C’mon. Remember that six-year, $100 million mega-contract Philly handed Vick a few years back? He then signed a three-year deal worth only $10 million guaranteed with the club by February 2013, not-so-coincidentally occurring in the offseason before his cap hit was set to balloon to $15.5 million.

Front office execs in MLB and the NBA would do some awful, awful things to be able to work around their biggest blunders like that.

Quarterbacks are More Important Than Ever

This one doesn’t warrant much explanation. A passer’s gain has been a running back’s loss*, and the economic landscape has necessarily shifted to accommodate the most important position in organized sports.

Good Quarterbacks are Really Hard to Come By

“Joe Flacco is much closer to an average quarterback than a great one.” — True.

“Joe Flacco is completely replaceable.” — Really, really fucking false.

I wish Flacco were replaceable. I wish his 22 interceptions and 4.50 ANY/A in 2013 were worthy of immediate substitution, but for the sum of his parts, Flacco is one of the fifteen-best quarterbacks in the NFL… AKA one of the fifteen-best humans on the planet at doing the most difficult job in an elite physical activity. I think that is a fair assumption. Flacco’s superhuman playoff run in 2012 was a fluke in the sense that he is not as good as his ridiculous numbers suggested, but it did prove that he is capable of being built around to win a championship.

In layman’s terms, there are essentially three types of passers in this league — ones you win titles because of, ones you can a title with, and ones you cannot win a title with. The first two are franchise quarterbacks and the latter will eventually reveal themselves over time to be replaceable. Young guns like Andrew Luck, Cam Newton, and Russell Wilson have already firmly established themselves in most minds as belonging in one of the first two categories — guys you could realistically see hoisting a Lombardi Trophy in their primes (or in Wilson’s case, last month) — while the jury is still out on Andy Dalton and Ryan Tannehill as to whether they are the second or third. The likelihood of them becoming great quarterbacks is already bleak.

The first tier, comprised of players like Tom Brady, Drew Brees, Peyton Manning, and Aaron Rodgers, are no-brainer keepers when it comes to handling their contract demands, but the NFL in the twenty-first century dictates that you also hold onto a quarterback if you believe he is already a player that can be built around. In Baltimore’s situation, with their Super Bowl MVP asking for elite-level money and presented with the risk of losing him to the open market, it was never much of a question for Newsome and team ownership. Paying Flacco above market value was far more palatable than starting from scratch at the quarterback position; letting him walk only to swing and miss on a rookie or a veteran acquired through trade would probably result in a lot of people in that front office losing their jobs during the inevitable fallout.

This brings us back to Kaepernick and the 49ers. Jim Harbaugh’s mind is almost certainly settled on the matter, as Kaepernick was his handpicked successor to Alex Smith, but GM Trent Baalke and CEO Jed York need to be on the same page when deciding whether or not to make him a $20 million AAV player. Is he a quarterback that they can win a Super Bowl with? Has he shown enough in his 23 starts to be worth that kind of investment?

In both cases, I believe the answer is yes — and unequivocally so.

In his two NFL seasons — seven starts in 2012 and a full 16-game slate last year — Kaepernick finished above the league average in TD%, INT%, Y/A, AY/A, Y/C, passer rating, NY/A, and ANY/A.** Aside from a high sack rate in 2013, this is virtually everything you can ask for out of a young quarterback that was considered to be a long-term project when drafted out of a mid-major program. His volume is far less than most of his peers, averaging just 26 passes a game (nine less than the league average), but Kaepernick compensates this by possessing arguably the best set of wheels the NFL has seen on a quarterback since Michael Vick was sentenced to prison. Newton is an elite short-yardage runner, but Kaepernick has already logged playoff games of 181, 98 and 130 yards rushing. He holds an absurd 9.94 yards-per-carry in five total postseason contests.

As impressive as his statistics are, Kaepernick’s playoff resume is one of the best in league history for a two-season starter; he is simply unlucky enough to be playing in the same division at the same time as Wilson. The impressive performances are already there statistically — 7.96 AY/A and an 87.3 passer rating (0.02 shy of Tom Brady’s career mark) — and he fell a few questionable offensive play-calls short of a legendary Super Bowl comeback.*** Kaepernick was somehow tagged with the “choker” label for throwing an end zone interception on one of the all-time great defensive plays by Richard Sherman, but few have acknowledged that his 49ers put up more points against the Seahawks’ defense than either of the other two quarterbacks Seattle faced in the playoffs… a pair of future first-ballot Hall-of-Famers in Brees and Manning.

I’m unsure of what would prevent San Francisco from giving their quarterback the contract he desires. Kaepernick’s most common criticisms are his cocky attitude, which hasn’t seemed to negatively affect his on-field impact, and his relative lack of experience, which should be ameliorated by the fact that he’s started as many playoff games as Luck, Newton, Tannehill, and Robert Griffin III combined. When considering that a 30-year-old Cutler was gladly handed a seven-year deal at $18.1 million AAV by Chicago despite making just one playoff trip in five seasons there, Kaepernick and his agent would have to be fools to ask for anything less than that as a starting point.

And why wouldn’t he? He’s younger, his stats are better, and he has far more playoff success than Cutler. Shouldn’t the anger be directed towards Baltimore, Chicago, Detroit, and any other team that has given gobs of money to a quarterback worse than Kaepernick? They set the market.

Despite owning a young core, San Francisco is as much of a win-now team as any in the NFL. They have been built to compete ever since Harbaugh’s arrival and have no reason to think that a quarterback who was one goal-line stand away from a title and almost toppled the eventual Super Bowl champions on their own turf is incapable of winning his own Lombardi. As a fan, I can appreciate a player wanting a raise after performing at a level that far exceeded his salary for the past two seasons; conversely, can we not place it on San Francisco’s management to accommodate their own and reward their most important soldier for good service?

Some may immediately take issue with that last insinuation, but Colin Kaepernick is the 49ers’ key piece to the championship puzzle going forward. Not Patrick Willis, not Navarro Bowman, not Aldon Smith, not anyone on that stellar San Francisco defense that gets so much praise. Quarterbacks are kings in this era; the rest merely keep the castle standing.

Since winning a ring is apparently the only precursor a passer must satisfy before asking to be compensated in accordance to his peers, then the complaints should keep pouring forth when reports inevitably leak about Newton and Luck wanting top dollar. If fans want to bitch about every stud youngster that try to take advantage of the contracts that their position enables them to earn, then all I ask is for them to be consistent.

* And a pass-rusher’s gain, too, along with pass-stoppers. Quarterbacks aren’t the only ones getting rich off the rule changes; the contracts of star defensive ends, sack-specialist linebackers, and shutdown corners have been rapidly increasing as well, culminating in $100 million deals for stalwarts like Albert Haynesworth and Mario Williams. Who knows what JJ Watt will get.

** For any and all unfamiliar acronyms, check the formulas in my first piece.

*** I’ll never understand all those designed fades to Michael Crabtree. Greg Roman, you’re a smart dude, but one day you’re gonna have to answer to your maker for that one.

Brandon Magner (@BrandonMagner) is a recent graduate of the University of Kentucky and will begin attending the Gatton College of Business and Economics in June.

About Brandon Magner (27 Articles)
(@BrandonMagner) is a recent graduate of the one-year MBA program at the Gatton College of Business and Economics. He is now enrolled in the University of Kentucky College of Law.

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