"Clayton claims he's "baffled" by Wilson contract talks"

[Polaris]

I think you are forgetting about signing bonuses that can be prorated but are available immediately. Also by going the franchise tag route, Russell is actually putting off his third contract and THERE is where he can make up the money.

Sorry, still going with Clayton's basic analysis.

Edit: Also take one year off that and calculate through 2018 and calculate from new money. No one is seriously suggesting that Seattle will franchise three times (the most I've reasonably heard is two). In such a case Clayton's analysis is basically accurate. Frankly I think this is what happens when a baseball agent forgets that the NFL is not the MLB.

 

[DavidSeven]

I think you are forgetting about signing bonuses that can be prorated but are available immediately. Also by going the franchise tag route, Russell is actually putting off his third contract and THERE is where he can make up the money.

Sorry, still going with Clayton's basic analysis.

The signing bonus is an advance, not new money. He still makes $87M overall on the extension. Some of it just gets paid earlier, which makes no difference except for cap management.

Your last point doesn't make sense. Either way, he is eligible to sign another deal in 2019, even if he gets franchised for 3 years. And he would make more money during the franchise period anyway.

Clayton is wrong.

 

[Polaris]

I agree it's not extra money, but it is IMMEDIATE money and that makes a huge difference. I also dispute your franchise numbers (and I dispute Popeye's as well).

 

[DavidSeven]

I agree it's not extra money, but it is IMMEDIATE money and that makes a huge difference. I also dispute your franchise numbers (and I dispute Popeye's as well).

The franchise numbers are from Clayton.

 

[Polaris]

I agree it's not extra money, but it is IMMEDIATE money and that makes a huge difference. I also dispute your franchise numbers (and I dispute Popeye's as well).

The franchise numbers are from Clayton.

Not the third one.

 

[bigwrm]

The only way what you're saying makes any sense is if in an artificially restricted market the Seahawks are willing to pay Russell Wilson more than 31 other teams are willing to pay him in an open market in which they're competing.

Letting Wilson negotiate with other teams under a non-exclusive franchise tag is not the same as letting him hit free agency. Any team that tries to sign him away would have to give up two first round picks, which would limit what they would be willing to offer him compared to a free agent contract. But I still would not feel comfortable risking this scenario.

Also the non-exclusive tag is IIRC the top TEN not the top FIVE and that makes a big difference.

There seems to be a lot of misinformation on this board regarding the franchise tag. Top ten applies to the transition tag, not the franchise tag. The exclusive-rights franchise tag is the average of the top 5 cap hits (not base salaries) at the position, or about $25 million for 2016. The non-exclusive franchise tag is what is commonly reported in the media and used by teams because of the draft pick penalties associated with it. It's based on the proportion of the salary cap taken up by the top 5 cap hits over the past five years. It's a little complicated to figure out but is estimated to be around $20 million for quarterbacks in 2016.

A second franchise tag adds an additional 20%, and a third is an additional 44% of the second tag. So here are the estimated values for each tag for 2016-2018 (can change if contracts are adjusted, but should be pretty close):

Exclusive: 2016 - $25 million, 2017 - $30 million, 2018 - $43 million
Non-Exclusive: 2016 - $20 million, 2017 - $24 million, 2018 - $35 million

 

[Polaris]

Thanks for the clarification bigwrm. My point is (esp if the 'hawks bank what they would have given Wilson this year with an extension) is that there is no reason to assume (like Rogers apparently is) that the Seahawks will use the exclusive franchise tag. If they use the non-exclusive one, using your numbers that amounts to a total of 79million over the next three years in new money or 80.5 million total in the unlikely event that no deal is struck (one way or another) over the next four years (and that seems unlikely since Seattle probably would at least match one of those franchised years).

What's more, Wilson will get NONE of that money up front, and up front money is vastly more valuable and preferable than backend money.

By contrast if Wilson signs what's on the table per Clayton, that would be 87million over four years in new money or 88.5 total of which about 20-30% will be UP FRONT money of one sort or another.

It sure seems to me like Wilson's agent is doing him a disservice and it sure seems like his agent seems to be doing this on a skewed idea of what Free Agency is like in the NFL and an assumption (that I think is dead wrong) that the Seahawks will be compelled to use the exclusive tag.

 

[rideaducati]

Salk, and to a lesser extent Clayton, have had rose colored glasses on the past few months and now seem confused by the reality that Wilson's agent is good at his job and not having Wilson settle for less than he needs to.

Salk is in outright denial right now, thinking that Wilson is losing the negotiations and will crawl back with his tail between his legs at any moment, when the reality of what's going on is the exact opposite.

I don't see where you get that Wilson's agent is good at his job. He has NEVER negotiated an NFL contract. He also has his client buying an insurance policy that will probably cost more than his NFL salary for the season instead of signing a contract that would make his client the third highest paid QB in the NFL. Claiming that he likes the idea of having his client receive the franchise tag is rather baffling because instead of being guaranteed to be the third highest paid QB and having millions in the bank, he is steering his client towards being paid the average of the top 5 at his position for only one year while being exposed to injury for two seasons without a long term deal in place. I bet he won't like it when the Seahawks put the nonexclusive franchise tag on Russell and no other team in the NFL will cater to their demands either. Russell might lose millions of dollars because his agent is a clown.

Russell's agent is gambling his client's future on his own ability to change the way the NFL structures contracts for players.

I wouldn't consider it being Russell crawling back with his tail between his legs if he signed his contract offer before the season started, I'd consider it a smart move.

Seems like a lot of huffing and puffing from Wilson's camp while the Seahawks sit in their brick house. I think Russell will sign before training camp is over for $22 million/season. That is close to what the Seahawks have already offered and would make Russell the same amount as Aaron Rodgers in a per year average.

great but all assumptions as you really do not know what is going on.

I am going on what has been reported by reputable sources. At least MY assumptions make sense.

 

[AgentDib]

Time value of money is a critical component of this discussion, and is fortunately very easy to include if you have any spreadsheet program.



Using Excel, put your expected cash flows in a single column (F here) and then use the NPV formula at the bottom. The first term "rate" stands for the Discount Rate and is the amount by which future values are discounted against the present. 10% is a pretty good estimate for most people as the long-term rate of return on the stock market is 9.6%. The value you will end up with is the Net Present Value of your cash flows and can be compared apples to apples against any other set of cash flows in that period (with the same Discount Rate).

 

[DavidSeven]

Time value would be relevant to the early bonus that Russell would forgo by rejecting the extension offer. In terms of what he'd earn on that money by investing it a year earlier, I think we're really only talking about a couple million dollars (lol "only"). So, yeah, it's definitely relevant, but would only sway Russell's agent if he thinks he'd be stuck with the exact same offer next year and not one that's significantly better.

 

[Polaris]

Time value would be relevant to the early bonus that Russell would forgo by rejecting the extension offer. In terms of what he'd earn on that money by investing it a year earlier, I think we're really only talking about a couple million dollars (lol "only"). So, yeah, it's definitely relevant, but would only sway Russell's agent if he thinks he'd be stuck with the exact same offer next year and not one that's significantly better.

Also include the time value of the cost of the insurance that Wilson is taking out (which would be completely unnecessary if he took an extension now).

 

[DavidSeven]

Time value would be relevant to the early bonus that Russell would forgo by rejecting the extension offer. In terms of what he'd earn on that money by investing it a year earlier, I think we're really only talking about a couple million dollars (lol "only"). So, yeah, it's definitely relevant, but would only sway Russell's agent if he thinks he'd be stuck with the exact same offer next year and not one that's significantly better.

Also include the time value of the cost of the insurance that Wilson is taking out (which would be completely unnecessary if he took an extension now).

That's a fair point.

 

[AgentDib]

Discounting isn't just about investment, but also about risk aversion and debt servicing. To put it another way, imagine a customer owed you $100k. How much would they have to offer in order for you to agree to postpone collection for an entire year? 10% is a fairly conservative number for most purposes but it's obviously different for everybody.

Either way, it does impact the result and should not be ignored or be assumed to be minor because it seems complicated.

Also include the time value of the cost of the insurance that Wilson is taking out (which would be completely unnecessary if he took an extension now).

Some (most?) of the cost of insurance is offset by the benefit it provides as a negotiation ploy.

 

[DavidSeven]

Discounting isn't just about investment, but also about risk aversion and debt servicing. To put it another way, imagine a customer owed you $100k. How much would they have to offer in order for you to agree to postpone collection for an entire year? 10% is a fairly conservative number for most purposes but it's obviously different for everybody.

Either way, it does impact the result and should not be ignored or be assumed to be minor because it seems complicated.

True, but this is still relevant to mostly the signing bonus, which is the portion he'd receive upfront and thus wouldn't be discounted by time value. We might be able to estimate the signing bonus at around $20-25M. Whether he's servicing debt or investing it, by conservative estimate, that money is worth a couple million more now than it would be a year from now. Some of that benefit is offset by the fact that he'd probably earn more money upfront next year under a franchise tag or a new deal than he would under the 2016 year of his extension (since that amount will be reduced by some portion of the bonus that was already paid).

 

[Anthony!]

You're assuming Popeye (as I think Wilson's agent is) that the Seahawks will have to use the exclusive franchise tag. If you look at the projected cap spaces of QB-needy teams, you'll find that the Seahawks can almost certainly match any offer any of these other clubs would make....and Wilson would be forced to play for Seattle anyhow. Also the non-exclusive tag is IIRC the top TEN not the top FIVE and that makes a big difference.

No, I think that Wilson is being poorly served by his agent on this. The NFL simply doesn't work like baseball, and it's often *not* to the advantage of the client to make it to free-agency, and this is such a case. Clayton has outlined the numbers on this exceptionally well.

I disagree his agent is serving him right, if they use the non exclusive tag some team will offer him what he wants and then the Hawks will match and yes he stays here but the FO looks bad because they could have avoided all of this from the beginning, then the risk the offer he gets Is more than the FO wants to pay and there for will not match. Clayton outlined the numbers based on what he thinks will happen and was offered but he does not really know.

 

[Polaris]

You're assuming Popeye (as I think Wilson's agent is) that the Seahawks will have to use the exclusive franchise tag. If you look at the projected cap spaces of QB-needy teams, you'll find that the Seahawks can almost certainly match any offer any of these other clubs would make....and Wilson would be forced to play for Seattle anyhow. Also the non-exclusive tag is IIRC the top TEN not the top FIVE and that makes a big difference.

No, I think that Wilson is being poorly served by his agent on this. The NFL simply doesn't work like baseball, and it's often *not* to the advantage of the client to make it to free-agency, and this is such a case. Clayton has outlined the numbers on this exceptionally well.

I disagree his agent is serving him right, if they use the non exclusive tag some team will offer him what he wants and then the Hawks will match and yes he stays here but the FO looks bad because they could have avoided all of this from the beginning, then the risk the offer he gets Is more than the FO wants to pay and there for will not match. Clayton outlined the numbers based on what he thinks will happen and was offered but he does not really know.

You sure about that? I am not being quip. Remember that making Wilson an offer under these conditions would cost TWO first round draft picks. That's a king's ransom. Now for some teams that really need a QB, it might be worth it, but that's going to cut down on the potential suiters right there drastically. Then you have to consider how much cap space the Seahawks are likely to have (as opposed to what other teams are likely to have). What GM likes to negotiate a deal for another team? [Not too many I think.] That being so, the fact Seattle can match will restrict the pool even further (those with tight caps need not apply). Finally in light of all this, how many GMs would rather go through all this rather than going for a drafted QB.

Basically even in this worst case scenario (which I still doubt will really happen), I can't imagine too many teams willing to even talk to Russel let alone give him an offer that they know the 'hawks will simply match. It's just not worth it (from their PoV). Now if we were talking transition tag, that'd be different, but nobody is fool enough to use *that* tag (and Seattle least of all I think).

 

[Lords of Scythia]

The FO might not consider Russell to be an elite qb, while the agent is trying to bring in possibly the biggest contract in the NFL. If this is what the impasse is, it could lead to him being a FA in a few seasons.

 

[Lords of Scythia]

The insurance policy sort of makes the whole "risk of injury" argument a nonstarter. Shaun Alexander had a $20M policy during his franchise year. I imagine Russell's would be more. So, what is he losing if he gets hurt? It would not be some astronomical sum in relative terms. Even if he signed a deal now, he would lose a big chunk of it if his career ended next year in injury. What he loses is what the premium costs, which is anyone's guess.

Also, I guess I'm a little baffled by Clayton's thought that Russell could never make up the money he lost if he played out his rookie deal? Is that really true here? I'm not even going to entertain the notion of three consecutive franchise tags -- that's not going to happen. This is all about new money. If Russell signs an extension now, it gets tacked onto his current deal and he gets some of it advanced as a bonus, which really just helps Seattle manage the cap and doesn't impact the overall sum that Russell is making. So, it's $87M/4 going through 2019 in new money. If he waits till next year, nothing would stop him from demanding a "fresh" deal for $87M/4. Same money, same end date. Seattle is the only party hurt because they lost the chance to spread the bonus over five years instead of four.

Even assuming he got franchised, looking at his earnings through a 3 year window is a little narrow. I am convinced Mark Rogers is looking at the long game, not what Russell will win or lose over 3 years, but what he will make over 10-15 years. And yes, if he ever becomes a true free agent in that period, I think he would make up for any losses endured for a short 3 year period.

Do you consider $40 million astronomical?

 

[Popeyejones]

With all due respect Popeye, I think I trust Clayton's analysis a lot more than yours.

Which hey, is fine, but it doesn't change the simple (and too commonly made) statistical flaw in his argument (which is assuming an independence of events in making it to FA and talent/worth).

Let's take what Clayton is saying and actually apply it to the real world: he is suggesting that Suh would have been financially better off if he signed an extension last year than if he hit FA this year.

That's an argument worth laughing at. Players like to get to free agency for a reason. Teams like to extend their players before they hit free agency for a reason.

It's not about trusting me or Clayton, it's about either suggesting that Clayton is right and me and every NFL team is wrong or that Clayton is wrong and me and every NFL team is right.

That's especially true when you consider that Wilson will NOT hit unrestricted free agency and the only way your argument really applies is with unrestricted free agency. Remember that the needier teams would have to lose TWO first round draft picks to get Wilson and that's assuming that the Seahawks wouldn't match (which they would).

Good point, you absolutely have to factor in the value of the two first round picks. Remember though, to enter the RFA tournament every team that enters is doing so with the express purpose of offering more than the Seahawks can or will match. If they're not doing that, there's no point in entering.

As for those two picks though, remember, as you said we must add it to the cost of signing Wilson to a deal the Hawks won't match, but on the other side of the equation we have to also add those two picks to the opportunity cost of matching the deal for the Hawks. This is why I said you'd only want to go down that road if you secretly were after the picks rather than resigning Wilson. If not, there's absolutely only one single scenario in which it is to the Seahawks' benefit to let a competitive market negotiate Wilson's contract for him.

That is, as I said before, a scenario in which the Hawks have ALREADY offered Wilson more than any of the 31 other teams have offered him. That's unlikely for two reasons: 1) the Seahawks would have to be very dumb to offer him more than he'd get in a competitive market given that they're not currently working in a competitive market, and 2) Wilson and his agent would also have to be very dumb to not take the offer. Rather than assuming that both the Hawks and Wilson are stupid, I choose the parsimonious explanation: neither of them are stupid.

I am not saying that this is the ideal way to negotiate (it's not), but top QBs haven't tried to get more money this way for a reason.

Ummmmmm, this is EXACTLY how Drew Brees got more money in 2011-2012.

From what I am hearing, Rodgers is essentially asking for the moon because he's thinking like a baseball agent, and the NFL simply doesn't work that way and the Seahawks can't be pressured in the same way a MLB club can. In any event the expected costs and cap hits for the 'hawks are well known for the next three years, and if Wilson's agent is demanding more than that, then he needs to get a reality check.

I think there's some misinformation about Rodgers. He didn't make his reputation in baseball for thinking like a traditional baseball agent, he made his reputation in baseball for NOT thinking like a traditional baseball agent and instead bargaining much more aggressively for his clients' rights. He's basically the Andrew Wylie (a literary agent whose nickname is "The Jackal") of MLB.

What Rodgers has done in MLB (and what he's now doing in the NFL) is realizing that there is a market flaw caused by the natural human propensity to overvalue short term utilities and undervalue long term utilities. This is even more problematic in a venue like professional sports when there are artificial market limitations that can be waited out.

In a weird way Rodgers' existence (and success) is kind of an unanticipated effect of the analytics movement; he's not thinking like a baseball guy or a football guy, he's thinking like an economist. There's always inherent risk in either accepting or rejecting ANY contract, but like it or not Rodgers is playing chess right now, and you can't wish that away by calling it checkers.

 

[DavidSeven]

The insurance policy sort of makes the whole "risk of injury" argument a nonstarter. Shaun Alexander had a $20M policy during his franchise year. I imagine Russell's would be more. So, what is he losing if he gets hurt? It would not be some astronomical sum in relative terms. Even if he signed a deal now, he would lose a big chunk of it if his career ended next year in injury. What he loses is what the premium costs, which is anyone's guess.

Do you consider $40 million astronomical?

How did you arrive at that number? Wilson's policy will be for a huge sum and may not cost as much as people think. Tony Romo bought a $30M policy back in 2007 for $150K. This covered both permanent disability and loss of value, so he didn't even need to end his career to collect. That was back in 2007 when injury guarantees were much lower. Wilson could easily double that on his current policy. Source: http://www.nfl.com/news/story/09000d5d8 ... l-get-paid.

I think what people should understand is that the "Injury Guaranty" is paid for by insurance regardless of whether or not its due under a contract. If Russell signs an extension, the Seahawks pay for the premium. In the event he gets hurt, the Seahawks make the claim and will in no event have to pay him $60M out-of-pocket. If Russell doesn't sign the extension, he just pays for the premium himself.