It’s another offseason and, like virtually every offseason, at least one or two NFL teams appear prepared to engage in what most fans would consider the “wild overpayment” of a quarterback whose past performance doesn’t merit the sum he is about to be paid.
Update: The #Giants have offered QB Daniel Jones a contract worth between $35 to $39 million per year, a source tells @AlbertBreer— Dov Kleiman (@NFL_DovKleiman) March 4, 2023
Daniel Jones is reportedly seeking more than $45 million per season. pic.twitter.com/J1rvSnYp6V
Most fans - to the extent they consider it at all - stew on it briefly and then move onto more important things. A subset of fans and commentators, though, often take it a bit further.
They see the spiraling salaries of QBs as a problem in need of a solution. Surely, they think, if QB salaries keep climbing, teams - already working within a salary cap framework - are going to be crippled in their ability to construct strong units if most of their money is going to a single position.
The impulse is understandable, but in this case, it turns out that - for a variety of reasons - the cures are worse than the disease. I’ll explain why below.
Origin of the salary cap
To a certain extent, this conversation begins and ends with the NFL’s salary cap, which was introduced in 1994 as part of a grand bargain that coincided with the advent of true free agency in the league.
In early 1993, the current system of free agency was introduced in the NFL, allowing the movement of players in a way that had been unprecedented beforehand. Reggie White sued the NFL and achieved a settlement, changing the game forever, allowing veterans with at least 5 years experience to become unrestricted free agents. That action set in motion the next, perhaps even more cataclysmic, one.
The owners, fearing that free agency would cut heavily into the profitability of their lucrative businesses, put in place a salary cap in 1994 as part of the White settlement. This flattened the salary exposure of the owners and heavily impaired the ability of teams to spend their way to a championship. It also critically tilted the tables in the favor of the draft, and young players on cheaper contracts. Some expensive vets could be carried, but a full team of them was now a thing of the past.
The salary cap exists to limit the financial exposure of the owners to the cost of paying players. Period. The cap generally increases each year, and is tied to overall league revenues, but it is known well in advance of the timeframe when those costs are going to hit, and has averaged about 5 to 7% increases year over year (with the exception of the COVID downturn). It also likely plays an important role in the NFL’s consistent parity, which many observers point to as a key reason football is the most popular pro sport in the land, by a wide margin.
Any tweaks to quarterback compensation would certainly have to happen within the bounds of the salary cap framework or risk overwhelming veto by the owners, ruling out....
An Exemption from the Cap for QBs
One “solution” that has been proposed to wildly increasing QB salaries is to have QB contracts exist outside the salary cap framework, and then just have the cap apply to the other position players on the roster.
Quarterbacks and, presumably, the NFL Players’ Association (NFLPA), would love such an arrangement, as it provides QBs a path to virtually limitless earnings and divides the biggest slice of the pie among non-quarterbacks. And, that’s exactly why the owners would never allow it. It would be both the camel’s nose under the tent of dispensing with the cap altogether, and, inevitably, confer massive advantage to wealthier owners who could absorb the even more quickly increasing QB costs and still keep their businesses afloat.
But let’s throw the owners’ objection out for the time being. Situating QBs outside the cap is perhaps the fastest avenue to ensure their salaries grow even more quickly. Without the need to balance competing, positional salary interests, and guided by a general belief that you need a top QB to win, teams - at least those that take winning seriously and have the money to do so - would inevitably end up participating in a continuously accelerating bidding wars. Imagine, for instance, if Patrick Mahomes were the subject of an uncapped auction: $45M per year would seem like child’s play.
Rookie wage scale
Some have argued that the “rookie wage scale,” which is - in effect - a salary cap within the salary cap for rookie salaries is an analog that could work for quarterbacks. A brief background on why the rookie wage scale came about, and why it would almost certainly never work or get approval for quarterbacks follows. The rookie wage scale was put in place as part of the 2011 collective bargaining agreement (CBA) between the NFLPA and the owners. Given their divergent sets of interests, what on earth could have caused these two parties to come together so decisively?
Well, in the second decade of free agency, first round draft picks and their agents began to get savvy. They recognized that top talent, particularly potential, future, franchise QBs, could demand - and command - top salaries out of the gate.
As first round draft pick salaries began to climb, they started to cut uncomfortably into the share of the salary cap pie held by NFL veterans. Predictably, the veterans (i.e., the NFLPA) were not happy about that, with rookies often out-earning them in many cases. My guess is, the owners didn’t particularly care - after all, the overall pie remained the same size before and after the rookie wage scale - but viewed it as an opportunity to grant a perceived “concession” to the NFLPA that could be used as a bargaining chip elsewhere in the CBA.
The above was a relatively easy negotiation, as no party to the agreement existed (or exists) to protect the bargaining rights of rookies. The NFLPA protects vets - with lip service to serving rookies - and the owners want to limit their own financial exposure.
A “quarterback salary cap” would be an entirely different animal. QBs are both members of the NFLPA and, arguably, the most powerful constituency among the group. A positional salary cap for the most important position in the game would probably be inoffensive to the owners - at least from a financial standpoint - but it would force a civil war within the NFLPA.
In fact, if the owners ever wanted to fracture the union, it might be a highly effective strategy to pursue. But, for the time being both the owners and players recognize that a detente is the most fiscally responsible path for all involved.
So What Can Be Done?
In the case of rising quarterback salaries, I’m a huge advocate of doing nothing. Yes, the NFL’s economic model is highly manipulated, and in certain respects anti-competitive - I’ve written about that a number of times - but within the revenue sharing, salary capped framework, there are still market mechanisms at work.
Ultimately, with limited resources (ensured by the cap), those teams that make poor value decisions as they pertain to overpaying for quarterback performance are going to suffer competitiveness consequences. The NFL’s broad economic model ensures that it won’t be lethal to any individual team, but that does not prevent the teams that overinvest in their quarterback at the expense of other positions from sinking to the bottom of the league’s ranks. That’s not an outcome many NFL owners want to define their franchise.
Once that signal becomes undeniably apparent - and I think the cases of DeShaun Watson, Russell Wilson, and, perhaps, Lamar Jackson and Daniel Jones will bring it to light sooner, rather than later - general managers (and owners) will adapt their strategies, invest more in surrounding sub-elite QBs with well-compensated talent, and the mid-range quarterback market will correct itself. Let’s let it play out.
Do you see rapidly increasing QB salaries as a problem?
Yes, but it will correct itself.
Yes, and need outside correction.