The upcoming CBA could change the value of rookie contracts

Back in July, I wrote an article aimed at giving a bit of a ‘heads up’ about the upcoming expiration of the current Collective Bargaining Agreement (CBA) between the NFL and the player’s association (NFLPA). I thought it might provide a kind of reference point for later articles about the CBA, which took effect in 2011, but only has a 10-year life, meaning that there are only two seasons remaining before the league and the fans may have to face up to new work stoppages, changes to contract rules, and another re-grading of the terrain that affects draft, free agency, salary cap, roster construction and control, and myriad associated issues.

As a result of the current CBA, we have seen teams incentivized to optimize roster construction by loading about half the roster with players on ‘rookie contracts’, with salaries that are relatively low in comparison to the salary cap, and then filling the top-10 or 12 salary cap spots with high-dollar free agents who are expected to be franchise cornerstones.

Here’s part of what I wrote in the July article:

Will the new CBA continue the current approach toward ‘slotted’ rookie contracts based on draft position? The current system was created, in part, to protect teams from themselves — to prevent the situation that happened with the Rams and Sam Bradford and the Lions and Matt Stafford. Bradford was drafted #1 overall in 2009, the final year of the last CBA. He signed a 6-year, $78m contract with $50m guaranteed. Matt Stafford, the previous year’s top pick, had signed a 6-year, $72m deal with $41.7m guaranteed. The feeling was that teams were being forced to pay far too much to unproven rookies. Something had to be done.

But the move to limit rookie salaries was not just for the purpose of protecting teams against themselves. Since the salary cap is a pie with a specific number of slices, giving less to rookie players meant giving more to veteran players. In other words, the rookie salary structure is largely about reserving more cash for veterans.

Of course, the NFLPA may feel that the pendulum has swung too far the other way. The current structure of 4-year contracts ‘slotted’ by draft position, with a 5th year option for first-round picks, may be seen as being too disadvantageous for drafted rookies, who need to wait 4 to 5 years to cash in if they play well. That’s long time in a league with the average career span of the NFL. If the new CBA, due in 2021, increases the amount paid under the rookie wage scale; if it shortens the contract length to 2 or 3 years; if it eliminates the 5th year option — any of those changes could adversely affect teams’ salary cap mangement. Veteran contracts signed now may need to provide flexibility in 2021 and beyond that may be necessitated by changes to the rookie salary structure.

It seems obvious that the current system is limiting the opportunities of star players to maximize their career earning potential by giving the teams a 4-year contract window where those players are on team-friendly contract values. This issue probably affects running backs, as a group, the most dramatically. Teams have drafted players locked up for 4 years, but for many running backs, that’s an entire career.

It seems to me that the NFLPA should be seeking a number of changes in the CBA; I mentioned three possibilities in the quoted material above — higher rookie wages, shorter rookie contracts, and elimination of the 5th year option.

I don’t expect the NFLPA to fight for the first of those; after all, giving more money to rookies means taking money away from veterans, and the NFLPA membership comprises current NFL players (that is, veteran players) who aren’t likely to push for changes that take money out of their pockets.

The second item on that list — shorter rookie contracts — is one of the key places that I think the NFLPA should ‘plant its flag’ in the upcoming CBA negotiations. After all, by the time a player gets to the end of his rookie contract, he’s now a veteran, and the union should be all about creating more opportunities for veterans.

If the length of rookie contracts is shortened to 2 or 3 years, then the current “5th year option” becomes much less of an issue, as it would now become a 3rd or 4th year option.

The ideal scenario in the (hopefully) 2021 CBA would be to keep the ‘slotted’ rookie wage scale (with a couple of tweaks), but shorten the length of rookie contracts to just 2 years on the slotted system, supplemented by expensive 3rd year and 4th year options that allow the team to keep control of the player for 4 years... if they are willing to pay the expensive option price.

While this is a relatively small change in the structure of the CBA, it would likely have a huge impact on the way teams manage roster construction and manage the salary cap.

The last CBA was a reaction to the inability of teams to sign 1st round draft picks to moderate contracts, so the ‘slotting’ system was created.

In effect, teams get a player on ‘slave wages’ for 4 years, and because it was collectively bargained, the players can’t really do much about it.

I don’t think owners want to undo the slotting system unless they can replace it with something that largely accomplishes the same thing, but I think the NFLPA is going to have to step up and represent their future members by trying to get drafted players through their rookie contracts more quickly, giving them a shot to hit the free agency market sooner in their careers. This would also mean that more players would get a second (or even third) crack at free agency before hitting 30 years old.

This might make it seem as if I’m offering up a harebrained scheme that is unrealistic, but I don’t think so. To prove that I’m not alone in my thinking, I’ll let Jason Fitzgerald and Vijay Natarajan, who recently authored a series of articles related to the upcoming CBA negotiation, make the arguments for me.

NFL rosters peak between the ages of 23 and 25 and slowly decline from there. This age graph is the reality of today’s NFL and the players have to understand that the key is using this to their advantage.

Why do teams fully guarantee rookie contracts for highly drafted picks? Because they believe that they can give the team four to five years of value that outweighs the cost of the contract. 93% of draft picks are no older than 23 so when we see the big numbers at 24, 25, and 26 what should that mean? It should mean that the NFL team sees value in the players at these ages.

Teams have argued for far too long that it takes years to evaluate rookies. It doesn’t. If it did the Patriots would never have extended tight end Rob Gronkowski after two years. The Steelers never would have with wide receiver Antonio Brown. The Cowboys would not have extended offensive lineman La’el Collins nor would the Bengals have done the same for linebacker Vontaze Burfict and those two players are nowhere near the level of the other two players mentioned. Look at the stats of the players. Did the Falcons need four years to know that Julio Jones deserved a monster raise from his rookie deal? Of course not! Even in the current system teams can decide that an undrafted player is worth a tender worth more than $3 million for the season after three seasons in the NFL.

The players would solve so many problems if they can shorten rookie contracts. The franchise tag is a major problem because after two tags a player is likely going to be 28 or older. With shorter contracts we would likely cap off the first chance at free agency, even after two tags, at no older than 27. That’s doable for a top line player since they will still be considered in the prime of their career. Teams were already willing to guarantee huge numbers to rookies and we can guarantee you that the percentage of contract guarantees should go up much higher when signing deals at 24 or 25 in free agency [rather] than [at] 27 and 28.

If the new CBA shortens rookie contracts from the current four years to, say, two years, that will dramatically shift the value proposition of rookie contracts, making them less beneficial to teams. In my mind, it would be analogous to removing a government subsidy to an industry like dairy or petroleum, and allowing the open market to set prices. Rookies would be on fixed salaries for only half as long, and then they would be free agents.

If this were to happen, then roster building strategies would be affected.

Getting to free agency at this age gets the player into free agency at the peak of his career. Players who may be good but not great are going to get raises and you will likely see the rise of the middle class due to that even if those players will likely be done by the time they are 27. At least in this case they get the raise they deserve off a rookie contract rather than having to play out the rookie deal and finding out there is little more than a minimum deal waiting for them by the time they hit free agency at 27.

For elite players this is going to not only give them one good chance at earning a contract but likely two major deals. Under this type of system you should get a chance to cash in at 25 and then again at 29 or 30 if you are still really effective. That first deal likely would carry a massive guarantee if extended or signed as a free agent.

A sudden switch from 4 years to 2 years might be more shock to the system than the NFL could bear. We’ve seen from the league that they often like to tread lightly with changes, going in steps or half-measures. I wouldn’t be at all surprised to see a compromise set with a change to 3-year contracts, which is what I have long thought would be the outcome.

Might things have to go to three years before two? Probably so, but this should be the ultimate objective for players to better secure the financial futures of the next generation of players. Moving the rookie deals significantly down puts the sides on equal footing with both sides knowing that they will be lucky to make it past 27 years old but at least now they will be fairly compensated for their time in the NFL rather than the team side gaining almost all the benefit in the rookie contract.

There will be changes to the Collective Bargaining Agreement when the next iteration replaces the current one, set to expire at the end of the 2020 season. Right now, we can only speculate what changes might be coming, but I think one of the most likely will involve shortening the length of rookie contracts under the CBA without dramatically altering the ‘slotting’ system.

If that happens, then the current salary cap advantages that come with drafted rookies would be greatly diminished. Draft resources would become relatively less important than they are today, and the ability to value the worth of veteran free agents would become more critical. The net effect would likely be to spread the available salary cap dollars a bit more evenly (and in my view, more equitably), and to give star players the opportunity for another ‘bite at the apple’ of free agency, meaning a greater chance to maximize career earnings.

Remember - this change wouldn’t cost teams any more money; it would simply move around the money that is spent on players’ salaries. Also, given the structure of the draft, the salary cap, roster limits and so on, no single team gains an advantage over the others in the ability to keep talented players on the roster. This change would give players the chance to get their ‘piece of the pie’ a bit earlier; otherwise, we’re talking about the same number of jobs, the same sized salary cap ‘pie’, and an even playing field. It simply creates a different dynamic for roster construction.

Under a 2-year rookie deal, Ezekiel Elliott would have been a free agent this off-season, able to command a hefty salary in the open market of free agency, rather than being tied to a miserable franchise like the Cowboys for two more years of wear and tear on his body.

Of course, Jonathan Allen and Chase Roullier would have been able to test the free agency waters this offseason as well. Every team in the NFL would be forced to pay their young stars by Year 3 or risk losing them to another team that opens the purse strings.

We could see a complete re-shaping of the NFL landscape in 2021. Shorter rookie contracts — a single change with a lot of benefits for players — would dramatically change how teams value rookie contracts and how free agents are used to complete NFL rosters from year to year.

This is only one small potential change. The end result of multiple changes to the CBA could have Seismic results, and the front offices that are able to best anticipate the changes and adapt most quickly will have an advantage over others.