It’s 5 o’clock somewhere…
The 5 o’clock club is published from time to time during the season, and aims to provide a forum for reader-driven discussion at a time of day when there isn’t much NFL news being published. Feel free to introduce topics that interest you in the comments below.
CLICK HERE to see the full 5 o’clock club archive
I read an interesting article about Trevor Lawrence’s recent contract extension this week, and it got me thinking about what long-term plans Washington’s brains trust should be making with respect to their freshly minted rookie quarterback from a salary cap perspective.
I went to an Over the Cap article that I had read a couple of months ago that discussed growth in contract value at the top end of the quarterback market. I thought this chart was startlingly linear and clear:
It felt like you could almost lay a ruler from the Andrew Luck point in 2016 to the Joe Burrow point in 2023, and draw a line between the two that would cut through each top QB from year to year.
When I tried it, I found that the inscribed line touched 4 points — Luck & Burrows at the two ends, and both Aaron Rogers contracts (2018 & 2022).
I went ahead and inscribed three more lines, which seemed to define the ranges for the top 3 or 4 QB contracts signed annually with amazing linearity.
I wondered how much of an increase I was looking at on an annual basis, so I calculated the annual compounded increase to go from Andrew Luck’s 2016 contract value of $24.59m to Joe Burrows’ 2023 contract value of $55m.
The magic number turned out to be a shade over 12.18% per year (compounded).
I produced this table, which shows the linear projection based on this number, and the actual value of the top QB contract signed in each season from 2016 to 2023. You’ll see that the linear projection is highly predictive of the actual growth in contract value.
I used that growth rate of 12.18% to extrapolate that trend forward for another decade. My purpose was to try to identify what we could expect the Commanders to have to pay Jayden Daniels when it’s time to sign him to an extension, and then to discuss some of the basic ramifications of that extension.
It goes almost without saying that if Daniels is a bust, none of this will matter. This discussion is based on the idea that Daniels develops into a good starting quarterback over the next three seasons, and that the Commanders gladly exercise his 5th year option.
The soonest that Daniels will be eligible for an extension will be after the 2026 season.
The top quarterback contract signed in the 2027 offseason currently has an expected average annual value of just over $87m.
Learning from the Trevor Lawrence and Joe Burrow contracts
To understand how that might be applied in terms of an actual contract, let’s look at the Trevor Lawrence deal that was inked this week. The Jags gave Lawrence a 5-year, $275m extension:
The structure of No.16’s deal enables the team to keep the “window” open with the current core before the money jumps up in three years. That’s enough time for the FO to prep for the pay raise by drafting younger, cheaper options at key spots balance out a roster that feature a… https://t.co/odqcS37a2M
— Bucky Brooks (@BuckyBrooks) June 14, 2024
Trevor Lawrence was drafted in 2021; he has played three seasons, and the Jaguars have picked up his 5th year option for the 2025 season. His extension, although it is already signed, really doesn’t ‘kick in’ until 2026 (though his signing bonus will be paid this season). His deal is heavily backloaded, and per Over the Cap the cash flows in the early part of the contract are much lower than those of Joe Burrow, who also signed a 5-year, $275m extension (in September 2023).
While both contracts are for 5 years and $275m, Burrow was paid over $31m more in cash in Year 0, and Lawrence makes up that difference slowly.
Burrow also has more guaranteed money:
In the chart near the top of the article, Joe Burrow is the latest player to show up on the red line that denotes the top of the market deal.
Lawrence’s deal has the same APY, but it was signed a year later; it has lower guarantees, and, while it has the same overall value, much of that value is in the form of non-guaranteed money at in the final two years of the contract (2030 & 31). When the Trevor Lawrence contract gets added to that chart for 2024, it will end up on the blue ‘Justin Herbert’ contract trend line. In fact, it was the Justin Herbert contract that provided the basic structure for the Lawrence deal, which is why the Lawrence deal differs in so many ways from that of Joe Burrow.
What does this mean for a future Jayden Daniels extension?
The Joe Burrow outcome
If Daniels reaches something close to his maximum expected potential over the next three seasons and is perceived as a guy who can be top-5 signal caller in the league during his extension period, then he should expect to sign a 5-year extension worth $435m (a projected value of $87m per season).
The Justin Herbert/Trevor Lawrence outcome
If Daniels plays well enough to cement himself as an unquestioned starting NFL quarterback, but fails to win playoff games and show that he is among the league’s very best, then he will likely sign a 5-year extension worth about 95.5% of the Joe Burrow outcome, meaning that the contract will have an overall value of about $415m (a projected value of $83m per season).
Here’s what his estimated 10-year outlook would be under each scenario:
[Note that only the value of the rookie contract & its guarantees are known at this time; all other numbers in this table are estimates that I came up with on my own]
Under the Joe Burrow outcome, Daniels will sign contracts worth an extra $20m, but the difference in guaranteed money between the two outcomes is nearly $30m – the difference between being successful and really successful in his first 3 years in the league.
Salary Cap
I also projected salary cap growth to 2033 using two different figures. Based on actual league cap figures for 2011-2024, I used a growth rate of 5.956%. Based on figures from 2016-2024, I used 6.42%.
There was not a substantial difference between the two figures in projected salary cap; however, I based the percentage calculations that follow on the more optimistic figure of 6.42% in an effort to provide the “best case” outcome in this article.
Based on these projections of salary cap, Jayden Daniels’ contracts (rookie, 5th year option, 5-year extension) would cost the following percentages of cap space:
Of course, with good structuring, the annual cost of Daniels’ contract (under either scenario) can be constrained until about 2030 or 2031, when he will be in his 7th or 8th season, and when he will be just 29 or 30 years old. Still, at some point, the price of success cuts deep in the NFL.
The Commanders currently have a 4-year window in which the NFL’s Collective Bargaining Agreement gives them a huge potential benefit. The front office will need to take advantage of that window by building a very strong roster very quickly, and maybe stockpiling some cap space for the future.
Again, that window of opportunity can be stretched out to 7 or 8 seasons through creative salary structuring, but, ultimately, the cost to keep a successful NFL quarterback is high.