Interesting Thought from Mike Mayock

HawkGA

New member
Joined
May 1, 2009
Messages
107,412
Reaction score
1
Heard him on Mike and Mike this morning. He mentioned the importance some teams place on getting a QB in the first round because it gives them that 5th year option which can be so important in developing and evaluating a QB. In other words, even if a team is confident they could get the QB they want in the second round, it could be worth trading up into the first just for the contract structure.

All the more good news for the Hawks in this case.
 

City Of Reign

Member
Joined
Sep 14, 2010
Messages
469
Reaction score
7
That's exactly what happened when the Vikings traded up to get Teddy Bridgewater.
 

sutz

Well-known member
Joined
Mar 1, 2007
Messages
29,164
Reaction score
5,185
Location
Kent, WA
Yeah, that 5th year option is just another reason for teams to do the wrong thing and reach in the draft. ;)
 

gowazzu02

New member
Joined
Feb 7, 2014
Messages
1,911
Reaction score
0
Great point. Ive been on record predicting a trade down for a while now. (big limb im out on right lol). Cleveland is the one that screams trade up partner.
 

Attyla the Hawk

Well-known member
Joined
Mar 11, 2013
Messages
2,559
Reaction score
47
I think that's coming from the school of common sense. But in the end I think smart GMs will see that it is not a great deal.

I'm going to use the Lane Johnson situation relative to his peers to illustrate. I will also preface this with a Seahawks bent.

The idea is that our #25 pick would be valuable for a team picking in the early/mid thirties. So from a rookie deal let's do the math:

#25 overall.

4 years
9.44 million total
5.06 guaranteed

#35 overall

4 years
6.3 million
2.825 guaranteed

So we have to assume for this exercise, that a player is drafted that turns out well. So the full value is expected to pay out.

The idea is that having the 5th year option makes this deal 'pan out'.

For 2016, we're using the 2013 class (teams have to declare by May 2nd).

The 5th year option for OTs is 11.9 million.

So a team that took an OT, and wanted a R1 pick so that they could exercise the 'cheap' 5th year option has a total payout of (assuming #25 overall pick)

9.44m + 11.9m = 21.3m

Lane Johnson was extended this offseason. The eagles opted to not use the option. This is the situation that any non 1st round pick would face.

So if we were to assume a guy taken at #35 (simulate the scenario where a team could have taken the same guy at 35 as 25 -- but DIDN'T care about the 5th year option).

Lane's Extention:

4th year: 8.1m cap
5th year: 10.0m cap
6th year: 12.25m cap (first year where cut produces savings)
7th year: 12.8m
8th year: 10.8m
9th year: 8.3m cap

Total for 5 years:

6.3m - 2.0m (original 4th year) + 8.1 + 10.0 (extended 4th and 5th years) = 22.4m.

The outlay is basically the same. Except in the case of the #35 pick -- he's still under contract for 4 more additional years. At a pretty modest price (using the Lane Johnson numbers).

Where it blows up in the #25 overall scenario is what do you do after year 5? You've 'saved' 1.1 million over the course of 5 years. You now have two options only. Franchise tag. Or outbid on the open market.

So

year 6 for #25 would require 21,3m + 13.7m (today's tag rate) = 35m
year 6 for #35 would require 22.4 + 12.25m = 34.65

By year 6, it's getting cheaper. And that gap grows significantly throughout the remainder of that extended player's contract.


Basically, it doesn't make fiscal sense to trade up from the early second round to the end or R1 just for the sake of the 5th year option. Unless you really only want them for 5 and only 5 years. Not only is it financially largely a wash -- but the financial risk is significantly lower in the case of injury of the player not working out.

In reality, the only instance where the 5th year makes sense, is if the player is a good player and they happen to incur a career crippling injury in that 5th year option. Or if you need that 5th year to decide if a player is worth an extention. Those are about the only scenarios where the payout and commitment works in a teams' favor.

Regardless of the 5th year option, it makes more sense to simply extend in that 4th year. Which you can do with any player in any round.
 

AgentDib

Well-known member
Joined
Oct 1, 2010
Messages
5,468
Reaction score
1,240
Location
Bothell
The important distinction here is that the 5th year option is derived from the average of the 4th-25th highest paid players at their position. On the other hand, initial salaries are based on draft slot and not the player's position. This means that the calculation above is going to be very different based on position and ultimately whether it's beneficial will depend on how the player develops relative to the 4th-25th players at their position.

Successful QB careers are long enough that the total value of the first two contracts is not an accurate way of looking at this compared to cash flows. Bridgewater's 5th year option in the Bridgewater (#32) vs. Carr (#36) example will be around $17m. The first four years of Carr's contract are $1.5m cheaper in total due to being drafted four slots later. If you escalate 2016 QB salaries by 3% over the next two years then Bridgewater would need to be the 15th best(paid) QB at the time of his second contract to make this a break-even proposition for the Vikings. And while an extension (figuring 5% savings) would likely be preferable at that point it too is likely eclipsed at the #11 mark and far exceeded should the QB in question turn out to be a top QB.

The final thing to consider is that the 5th year option is not mutually exclusive with an extension but is instead a benefit to the team. There's a huge difference in time value of money between {$40m, $X, $X}, {$2m, $40m, $X}, and {$2m, $17m, $40m}. It's essentially a much cheaper one-off franchise tag.
 

kearly

New member
Joined
Mar 6, 2007
Messages
15,975
Reaction score
0
AgentDib":vcxifn6i said:
The important distinction here is that the 5th year option is derived from the average of the 4th-25th highest paid players at their position. On the other hand, initial salaries are based on draft slot and not the player's position. This means that the calculation above is going to be very different based on position and ultimately whether it's beneficial will depend on how the player develops relative to the 4th-25th players at their position.

Successful QB careers are long enough that the total value of the first two contracts is not an accurate way of looking at this compared to cash flows. Bridgewater's 5th year option in the Bridgewater (#32) vs. Carr (#36) example will be around $17m. The first four years of Carr's contract are $1.5m cheaper in total due to being drafted four slots later. If you escalate 2016 QB salaries by 3% over the next two years then Bridgewater would need to be the 15th best(paid) QB at the time of his second contract to make this a break-even proposition for the Vikings. And while an extension (figuring 5% savings) would likely be preferable at that point it too is likely eclipsed at the #11 mark and far exceeded should the QB in question turn out to be a top QB.

The final thing to consider is that the 5th year option is not mutually exclusive with an extension but is instead a benefit to the team. There's a huge difference in time value of money between {$40m, $X, $X}, {$2m, $40m, $X}, and {$2m, $17m, $40m}. It's essentially a much cheaper one-off franchise tag.

This analysis is totally fair and I wanted to piggyback off this with a few extra details.

QB is a bit unique in that teams are not afraid to overpay at the position, even for a mediocre QB. Two recent examples of this are Sam Bradford and Brock Osweiler. Neither of those QBs are top 15 guys, and yet they got more years and more money (APY) than the 1 year, $17.696m they'd have gotten on a 5th year option had it been available to use.

Bradford and Osweiler are clearly overpaid, but the way the NFL works, most QBs in the league are overpaid these days because there aren't enough starting QBs. Therefore, I'd expect most teams to pick up the 5th year option, even if its value on paper is sub-par. In other words, NFL QBs very often have value that is outside the domain of moneyball principles. In what other sport would the very best player at the most important position make almost the same money as an average starter at his position? This strange dichotomy leads to average and mediocre QBs getting much bigger deals than they should. Which means that a QB would have to be pretty bad for a 5th year option to not look like a solid move.

Of course, if the QB ends up being really good, then the option would save the team a couple million dollars over the franchise tag in year five, and would free up the tag for another player if needed. Using the 5th year option instead of the franchise tag would also save money in year six (and possibly beyond) since it would result in a smaller franchise tag number (when compared to the cost of back-to-back franchising).

All that said, the majority of non-QB players who are eligible for 5th year options are declined by teams. It's just too expensive to be worth using unless the player is a bonafide star.

So in conclusion, the 5th year option has significant allure if the player is a QB (since the QB position is an exception to the usual moneyball rules of the NFL). But for all other positions, the option's value is a lot lower since moneyball principles play a bigger role. This is why Seattle hasn't cared at all about trading out of the first round, because they know that since they aren't drafting a QB in round one, the player they would have drafted with their first round pick probably wasn't going to justify the 5th round option cost.
 

Attyla the Hawk

Well-known member
Joined
Mar 11, 2013
Messages
2,559
Reaction score
47
kearly":3mhcrcuy said:
All that said, the majority of non-QB players who are eligible for 5th year options are declined by teams. It's just too expensive to be worth using unless the player is a bonafide star.

So in conclusion, the 5th year option has significant allure if the player is a QB (since the QB position is an exception to the usual moneyball rules of the NFL). But for all other positions, the option's value is a lot lower since moneyball principles play a bigger role. This is why Seattle hasn't cared at all about trading out of the first round, because they know that since they aren't drafting a QB in round one, the player they would have drafted with their first round pick probably wasn't going to justify the 5th round option cost.

I kind of thought that too. But looking at the 2 classes who have had the option available (2011/12), this hasn't been the case.

5th year options

The 2011 class had 19 options exercised/13 declined
The 2012 class had 20 options exercised/12 declined

4 QBs extended (Luck, Griffin, Newton, Tannehill). 3 not (Weeden, Locker, Ponder)

It's interesting that for the OL, there is no distinction between positions. OC/OG are rated the same as LTs. Same with LBs. Same with DT/DE.
 

Jimjones0384

New member
Joined
Feb 7, 2016
Messages
819
Reaction score
0
That fifth year option is ok, but if you havent figured out if your qb is starting caliber after four years, don't know what to say. The fifth year option, in my opinion, is a piss poor reason to reach for a qb. Like this year, the rams and eagles just morgaged the farm in a giant reach. They say that the talent isn't there at qb for next few years. But that is what they said last year. And I am not saying both qbs won't work out. But man, all of those picks. This could be the first time in a long time that the Browns may have made the right move in the first round. And if I was bradford, I would be mad too. They may have been in the mix for elliot at eight. If not, a blue chip tackle. A lot of talent they are passing up. Giant reach.
 
OP
OP
H

HawkGA

New member
Joined
May 1, 2009
Messages
107,412
Reaction score
1
Jimjones0384":evkpmggm said:
That fifth year option is ok, but if you havent figured out if your qb is starting caliber after four years, don't know what to say. The fifth year option, in my opinion, is a piss poor reason to reach for a qb. Like this year, the rams and eagles just morgaged the farm in a giant reach. They say that the talent isn't there at qb for next few years. But that is what they said last year. And I am not saying both qbs won't work out. But man, all of those picks. This could be the first time in a long time that the Browns may have made the right move in the first round. And if I was bradford, I would be mad too. They may have been in the mix for elliot at eight. If not, a blue chip tackle. A lot of talent they are passing up. Giant reach.

I don't know if that is true. I think we've seen several QBs who sat for a couple of years and then their four years is up before you really get to see them in game action. Saw it just this year with the Denver backup and the Washington backup. Now, granted, presumably if you're drafting a QB in the first round the plan wouldn't be to have them sit for a few years, but if it's late in the first round? I could see it. Again, in the scenario it's largely talking about moving up from say, 32, to 26 or something like that.
 

Latest posts

Top