NFL Draft Turns Players’ Dreams Into Clear Financial Realities
By Adam Grossman and Ross Chumsky
For virtually every player not named Myles Garrett, tomorrow’s NFL Draft will be filled with uncertainty. It is not clear what number draft pick he will be or which team will select him. There is one thing, however, that these future NFL players do have virtual certainty about – they will know exactly how much they will be getting paid once they are drafted.
The document that governs relations between the NFL, teams, and players, as well as sets the basic ground rules for NFL business and conduct, the NFL Collective Bargaining Agreement (CBA). The 2011 CBA radically altered the way rookie contracts are both structured and negotiated. The new rookie salary cap effectively created a set wage structure for all rookies entering the league, each draft position with a specific slotted salary based on a league-wide rookie compensation pool that is largely non-negotiable. Another significant change was rookie contract length, which with the institution of the 2011 CBA was capped at four years, with a fifth-year team option for first round picks, versus contacts that could span as long as six seasons under previous iterations of the CBA.
Since each draft position has a predetermined salary value, salary cap considerations in draft trades are diminished since there is no risk of inflated and unreasonable contract demands from top picks. With fewer monetary limitations, teams are able to more freely move around within the draft order to position themselves to be able to select the player they want without fear that they will be taking on a likely high salary or using significant cap space with a player who has yet to play a single down at the NFL-level.
A prime example of the impact of the rookie salary cap on rookie compensation can be observed by comparing two contracts: Sam Bradford’s 2010 contract and Cam Newton’s 2011 contract. Drafted just one year apart, Bradford and Newton were both number one overall picks, however both their first-year and overall compensation differed greatly. According to Jason Fitzgerald and Vijay Natarajan, authors of Crunching the Numbers: An Inside Look At The Salary Cap And Negotiating Player Contracts, Sam Bradford originally signed a 6-year, $78 million contract, with $51 million in guarantees and the potential for the deal to escalate to $86 million with the inclusion of Likely to Be Earned Incentives (LTBE) in the deal, while just one year later Cam Newton signed a 4-year, $22,025,498 fully guaranteed deal (i.e. guaranteed for skill, injury, and cap), with the opportunity to earn a fifth-year team option with a salary substantially larger than in the first four seasons of the contract. The difference between the overall compensation and general contract structure between Bradford and Newton’s deals clearly illustrates the change in rookie compensation that the 2011 CBA implemented.
Paying millions to first-year players meant that teams had to set aside huge amounts of salary cap space to accommodate these deals. This effectively limited the amount of money and salary cap space available for teams to sign veteran free agents. Creating more predictability for teams of the salaries of their newly drafted players resulted in cap space becoming available for free agent veteran players.
With simplified rookie contract negotiations, teams are better able to avoid lengthy holdouts that stretch into the summer and possibly even training camp. Rookies signing their deals soon after the draft means rookies arrive at team facilities earlier in the offseason and they can begin learning their teams’ playbooks sooner. More offseason practice time for rookies is one major reason why more and more rookies are making immediate impacts for their new NFL franchises at a lower cost than before the new CBA was put into place.
These factors make early round picks an extremely valuable asset that are difficult to acquire. The more early picks a team has, the more likely a team will be able to draft a young player that can have an immediate impact on its roster. Through a series of trades and personnel decisions over multiple seasons, the Cleveland Browns have amassed an additional pick in the second round in 2016, extra first and second round picks in 2017, and two additional second round picks in 2018. That means for the three-year period between 2016 and 2018, the Browns have amassed fifteen picks that fall within the top 100 selections. This has put the Browns in a position to maximize their probability of adding impactful talent to its roster over the next few seasons.
The Chicago Bears have been and will continue to build through the draft as well. Young players such as Kyle Long, Leonard Floyd, and Jordan Howard have become integral parts of the team’s future plans for success. In addition, the injuries to 2015 first round pick Kevin White have been less detrimental to the team than in past years because of his relatively low salary cap number.
By no means is the current version of the NFL’s CBA perfect. For example, players may feel they are being undercompensated as compared to the previous CBA, in which teams still were required to make significant investments in players that had yet to play a snap of professional football. However, for the players drafted on Thursday and throughout the entire weekend, they will have little doubt about how much they can expect to be paid when their names are called to be drafted.
Adam Grossman is the CEO and Founder of the sports sponsorship technology and analytics firm Block Six Analytics (B6A). In addition, he is a lecturer for Northwestern University’s Masters of Sports Administration where he teaches classes focused on develop and communicate strategic insights through data.
Ross Chumsky is a Senior Partnership Analyst at B6A.