The CBA mandates that rookie contracts be four years long (among other requirements) with a notable exception for first-round draft picks. Teams have the option to extend the rookie contracts of their first-round picks by one year subject to a pre-determined salary requirement.
For picks 1 through 10, the fifth-year option salary must be equal to the average of the salaries of the 10 highest-paid players at the same position. Picks 11 through 32 must be paid the average of the salaries of the 4th through 25th highest-paid players at the same position.
Fifth-year options are guaranteed contracts with no incentives. On the downside for teams, that means players are owed the full salary even if injured, playing poorly, or benched. On the upside, that means they won't have to shell out additional money for spectacular performances.
At pick 16, Kerrigan would be owed in the ballpark of $3 to $4 million in 2015 should the Redskins choose to exercise his fifth-year option. The raise would roughly double his current salary of $1.56 million. The alternative would be to let Kerrigan become a free agent and test his value on the open market.
Here's the catch: Franchises have until May 3, 2014, to decide whether to exercise the fifth-year option for 2015. This introduces an element of uncertainty because they must make the call without knowing how a player will perform during the 2014 season.
In the best-case scenario, the fifth-year option allows teams to lock up talent and save money on a player that would fetch a higher salary as a free agent. In the worst-case scenario, teams would be stuck paying a top-end salary to a player that's injured, performing poorly, or otherwise not contributing.
Because health is unpredictable even for guys without a history of injury, these decisions come down to a team's estimated valuation of a player. If Kerrigan became a free agent today, would he fetch more or less than the $3 to $4 million salary mandated by the CBA?
More? Exercise the fifth-year option and pray he doesn't get hurt. Less? Let him hit the free market and hope you can bring him back for cheaper.
If you were Bruce Allen, what would you do?
Oh, and one more thing: RGIII, the number 2 pick, is only one year behind Kerrigan.