New CBA and draft strategies

[smg93]

It seems to me that the bottom line effect of all this is to lower the value of draft picks. If a team can only be guaranteed of a player's services for a shorter period of time then the pick is relatively less valuable.

Yes, exactly.

 

[shakadave]

I agree with 14thdragon. I think that teams are going to extend players in their rookie deals more than they have done so in the draft making the draft more important in finding young, talented players.

smg93: "We'll see in four years."

I think we'll see in ONE OR TWO years! Don't you think that the Pats and other teams will at least try to find a loophole in the new rookie contract rules, and extend some of these contracts while they're only a year or two old, essentially converting them into 7-year contracts (for picks 1-16), 6-year contracts (for 17-32) and 5-year contracts (for Round 2+)?

But then again, maybe the rookies will "just say no"!

 

[Miguel]

I think we'll see in ONE OR TWO years! Don't you think that the Pats and other teams will at least try to find a loophole in the new rookie contract rules, and extend some of these contracts while they're only a year or two old, essentially converting them into 7-year contracts (for picks 1-16), 6-year contracts (for 17-32) and 5-year contracts (for Round 2+)?

But then again, maybe the rookies will "just say no"!

FWIW - Under the new CBA a rookie's deal can not be renegotiated for 2 years.

 

[Miguel]

It seems to me that the bottom line effect of all this is to lower the value of draft picks. If a team can only be guaranteed of a player's services for a shorter period of time then the pick is relatively less valuable.

In the past few years

How many 2nd round picks were signed to longer than 4 year deals??
3rd round picks??
4th round picks??
5th round picks??
6th round picks??
7th round picks??

 

[PromisedLand]

In the past few years

How many 2nd round picks were signed to longer than 4 year deals??
3rd round picks??
4th round picks??
5th round picks??
6th round picks??
7th round picks??

I don't know, Miguel. You keep track of all the contract stuff - if you know, why don't you enlighten us?

What I do know is that the Patriots felt strongly enough about the difference between a 5 year and a 6 year deal that they let Ben Watson hold out rather than sign for one less year. They felt that the sixth year was that important. That deal would be illegal now. So at least for the bottom half of the first round, at least one very successful front office thought the issue was very significant.

I believe that some first round picks have been pressured to sign for seven years in the past. That too will now be illegal. So maybe we just have a first round issue, but that where a lot of the players who will later command big money are drafted anyway, so even if it's only a first round issue, it's still an issue.

As to how often it would matter for 2nd round and later picks I can't say.

 

[Miguel]

I don't know, Miguel. You keep track of all the contract stuff - if you know, why don't you enlighten us?.

I don't know.I happen to think that the number of draft picks that are affected by this change is small. I could be wrong. I am not that interested in this topic to spend the time looking up the data.

 

[Miguel]

In the actual case we see shortening rookie contracts which takes us a step closer to that extreme scenario. Each step closer reduces the value of a draft pick to the teams until in the extreme they are almost worthless.

Are you predicting that in the next CBA that the length of rookie deals for Day 2 picks will be shortened to less than 4 years??

If so, what is the basis for that prediction??

If not, then the 4-year deal is the extreme scenario.

 

[mgteich]

With regard to Round 2 and beyond, presuming that the RFA/ERFA structure is still in the CBA, there is little effect except on teams like the patriots that were looking to sign 2nd rounders to 5 year deals. The CBA protects the players by having all the contracts limited to four years. I agree with Miguel that very few players are affected, but the CBA does preserve the status quo, and the change potentially affected many players.

The real change is in the first round. Many players will now be free agents one or two years earlier. This is especially true of players who are drafted by the patriots. The five year vs. six year fight is over. As Miguel and I predicted, the CBA took care of this strategy.

Is trading up before #16 now more valuable to the patriots? Of course! Having an option to have a top player play for peanuts is valuable. Also, in five years there will be more players available in the free agency pool.

In the past few years

How many 2nd round picks were signed to longer than 4 year deals??
3rd round picks??
4th round picks??
5th round picks??
6th round picks??
7th round picks??

 

[smg93]

Are you predicting that in the next CBA that the length of rookie deals for Day 2 picks will be shortened to less than 4 years??

If so, what is the basis for that prediction??

If not, then the 4-year deal is the extreme scenario.

When an analyst does a sensitivity analysis for a given set of factors, one of the scenarios he runs contains extreme variables (In this case one year contracts). The exercise is done with one year contracts and not 4 year contracts as the extreme variable because the trend of the new CBA is to shorten rookie contracts, not lengthen them. You do this to validate a position rather than to say that it's a prediction of what will happen.

If the CBA only affects the first half of the first round, that's still sixteen potential stars who will be added to any year of free agency if none of them decide to sign an extension. And as promisedland said, if they are stars, why sign an extension when there is every chance that they can cash in on free agency? I have to think that bona fide stars will think very hard before they decide to opt out of free agency. If only half of them sign extensions, that's still eight more big time free agents available to sign and not even the Redskins could sign all of them.

 

[PromisedLand]

Are you predicting that in the next CBA that the length of rookie deals for Day 2 picks will be shortened to less than 4 years??

If so, what is the basis for that prediction??

If not, then the 4-year deal is the extreme scenario.

No, I am not predicting that. The shortening of rookie deals I was referring to is that which has already taken place. I was discussing the extreme example, as I thought I explained, to explain the point I was making about the effect of shortening rookie contracts on the value of draft picks.

 

[PromisedLand]

When an analyst does a sensitivity analysis for a given set of factors, one of the scenarios he runs contains extreme variables (In this case one year contracts). The exercise is done with one year contracts and not 4 year contracts as the extreme variable because the trend of the new CBA is to shorten rookie contracts, not lengthen them. You do this to validate a position rather than to say that it's a prediction of what will happen.

Thanks, smg93, that is a great answer to the question Miguel asked me. I answered him too, but your explanation is better.

 

[Miguel]

When an analyst does a sensitivity analysis for a given set of factors, one of the scenarios he runs contains extreme variables (In this case one year contracts). The exercise is done with one year contracts and not 4 year contracts as the extreme variable because the trend of the new CBA is to shorten rookie contracts, not lengthen them. You do this to validate a position rather than to say that it's a prediction of what will happen.

What position are you exactly validating??You and PromisedLand seem to be saying that the new limits has devalued the draft.

Who are the cheapest players on the rosters?? Players in their rookie deals.
What players are most likely to be underpaid?? Players in their rookie deals.

I do not see how the new limits will change the above two factors. Therefore, I believe that the draft will keep its value.

If the CBA only affects the first half of the first round, that's still sixteen potential stars who will be added to any year of free agency if none of them decide to sign an extension.

It is only potential if one accepts that all 32 teams had a policy of signing all of their 1st round picks to 6 year deals. We know that it is not true since Graham and Mankins were signed to 5-year deals.

And as promisedland said, if they are stars, why sign an extension when there is every chance that they can cash in on free agency? I have to think that bona fide stars will think very hard before they decide to opt out of free agency.

That's nothing new. Some stars like Brady and Seymour decide to stay with their teams giving up a chance to hit free agency. I do not see why the reasons Brady and Seymour decided to forego free agency would be changed with the new limits.

If only half of them sign extensions, that's still eight more big time free agents available to sign and not even the Redskins could sign all of them.

It is only 8 more if
1.) one believes that every team had a strict policy of signing their 1st round picks to 6-year deals. That is simply not true. Go back to the 2004 draft, the last year signing bonuses could be prorated over 6 years.

17 17 D.J. Williams Broncos LB Miami (FL) - 6 year
18 18 Will Smith Saints DE Ohio State - 6 year (voidable)
19 19 Vernon Carey Dolphins G Miami (FL) - 5 year
20 20 Kenechi Udeze Vikings DE USC - 6 year
21 21 Vince Wilfork Patriots DT Miami (FL) - 6 year
22 22 J.P. Losman Bills QB Tulane - 5 year
23 23 Marcus Tubbs Seahawks DT Texas - 5 year
24 24 Steven Jackson Rams RB Oregon State - 5 year
25 25 Ahmad Carroll Packers DB Arkansas - 6 year (voidable)
26 26 Chris Perry Bengals RB Michigan - 6 year
27 27 Jason Babin Texans DE Western Michigan - 6 year (voidable)
28 28 Chris Gamble Panthers DB Ohio State - 5 year
29 29 Michael Jenkins Falcons WR Ohio State - 6 year (voidable)
30 30 Kevin Jones Lions RB Virginia Tech - 5 year
31 31 Rashaun Woods 49ers WR Oklahoma State - 6 year (already traded)
32 32 Ben Watson Patriots TE Georgia - 6 year

Please note that some of the players signed to a 6 year deal could have the 6th year voided.

2.) every player drafted in the bottom half of the 1st round will turn out to be a star. I seriously doubt that has ever come true.

 

[smg93]

The position is that the draft has been devalued primarily from the standpoint of keeping a rookie under a rookie contract which as you yourself pointed out was where the player was the most "underpaid."

If rookie deals can not go for more than the 5 years for the #21 pick under the new CBA than don't you think these agents will be clamoring for four year deals? Now that the CBA has cut these rookie deals by one year from 6 to 5 years, do you think agents will not change there stand and still be happy with a 5 year rookie deal? Of course not. They'll likely want to cut short that contract by a year since as you pointed out, the rookie deal is where players are the most underpaid.

On your second item, if teams had their way, they would sign all their players to 15 year rookie contracts (assuming SB's can be spread out by 15 years of course) because once again, these contracts are where they are most underpaid. Knowing they can sign players and cut them whenever they want is a luxury that NFL teams have as you know. That's the point of limiting rookie contracts in the first place. That's why length of rookie contracts is a CBA topic. That is also why when the Union negotiates for a new CBA, one of the likely topics as it was this year was to shorten the rookie contracts to prevent strategies like this. Free Agency would be pretty dead if rookie contracts were allowed to go for 15 years. Under that scenario, do you really think that Brady, Branch, Seymour, and Givens would ever be let go until after the 15 year period assuming they are still playing at a decent level in the end of their contract? Frankly, at the end of that 15 years, all of those guys would be in their mid to late thirties and why would you want to sign a guy at that age to a big FA contract. It is under that scenario where drafts would be extremely important because you know that teams aren't going to let go and cut their blue chip stars if they still are under the contracts where they are at their most underpaid.

On your third item, sure there will be players who sign an extenstion but just because Brady and Seymour did, it doesn't automatically mean that most will. David Givens and I think Andruzzi are examples of that.

On your fourth item, that's still 10 out of 16 teams who signed players for six years. In fact I'd be willing to bet that if all of those teams were given a choice they would have signed their players to 6 year contracts. I'm sure the players who signed for five did so at the prodding of their agents. If signing bonuses in 2004 could have been spread out over 8 years, how many teams would have signed players to 7 or 8 year contracts? Instead, they had to opt for either 5 or 6 year deals because that's what the CBA called for.

This is precisely why the impact of the draft has been lessened. If you went to the extreme and had the CBA state that rookie contracts could only be one or two years long, you would have a greater amount of FA's available by year 3 therefore lessening the impact of a bad draft because there would be more seasoned FA's that are still at the beginning of their career that teams can choose from.

I'm not a capologist like you, but I simply believe in the laws of supply and demand. Teams will be able to re-stock rosters through FA because there will be more players available because not all rookies will want an extension. Im not even so sure that Seymour would have extended his contract two years ago if he knew that he would have been an FA last year instead of holding out and staying away from parts of training camp. In my mind, when there are more players available, that means salary expectations for these FA's will also be less simply because there is more talent to choose from, and teams are still constrained by a salary cap. Greater supply due to more FA talent combined with finite demand in the form of a salary cap will lessen the cost for FA's and therefore make it more palatable for teams to re-stock rosters with young NFL veterans. That's just plain Adam Smith Economics 101.

 

[Miguel]

If rookie deals can not go for more than the 5 years for the #21 pick under the new CBA than don't you think these agents will be clamoring for four year deals? Now that the CBA has cut these rookie deals by one year from 6 to 5 years, do you think agents will not change there stand and still be happy with a 5 year rookie deal? Of course not. They'll likely want to cut short that contract by a year since as you pointed out, the rookie deal is where players are the most underpaid.

Interesting hypothesis. We will see what happens in real life. My prediction - Picks 17 through 32 will all be signed to at least 5-year deals.

On your second item, if teams had their way, they would sign all their players to 15 year rookie contracts (assuming SB's can be spread out by 15 years of course) because once again, these contracts are where they are most underpaid. Knowing they can sign players and cut them whenever they want is a luxury that NFL teams have as you know. That's the point of limiting rookie contracts in the first place. That's why length of rookie contracts is a CBA topic. That is also why when the Union negotiates for a new CBA, one of the likely topics as it was this year was to shorten the rookie contracts to prevent strategies like this. Free Agency would be pretty dead if rookie contracts were allowed to go for 15 years. Under that scenario, do you really think that Brady, Branch, Seymour, and Givens would ever be let go until after the 15 year period assuming they are still playing at a decent level in the end of their contract? Frankly, at the end of that 15 years, all of those guys would be in their mid to late thirties and why would you want to sign a guy at that age to a big FA contract. It is under that scenario where drafts would be extremely important because you know that teams aren't going to let go and cut their blue chip stars if they still are under the contracts where they are at their most underpaid.

FWIW - I hate the use of looking at extremes.

On your third item, sure there will be players who sign an extenstion

which directly contradicts yours and PromisedLand's point - "And as promisedland said, if they are stars, why sign an extension when there is every chance that they can cash in on free agency? I have to think that bona fide stars will think very hard before they decide to opt out of free agency."

I'm not a capologist like you, but I simply believe in the laws of supply and demand.

FYI - I also believe in the laws of supply and demand.

Teams will be able to re-stock rosters through FA because there will be more players available because not all rookies will want an extension.

Just because you and PromisedLand say that the new limits will cause more players to be available does not mean that it is true. I have already shown that not every team had a strict policy of signing players to 6-year deals.

Im not even so sure that Seymour would have extended his contract two years ago if he knew that he would have been an FA last year instead of holding out and staying away from parts of training camp. In my mind, when there are more players available, that means salary expectations for these FA's will also be less simply because there is more talent to choose from, and teams are still constrained by a salary cap.

At the beginning of April, the average team was under the cap by $10 million. That is not being constrained.

Greater supply due to more FA talent combined with finite demand in the form of a salary cap will lessen the cost for FA's and therefore make it more palatable for teams to re-stock rosters with young NFL veterans. That's just plain Adam Smith Economics 101.

FYI - I graduated with an economics degree. I did not need a refresher course.

IMO, the reasons why stars like Brady, Seymour, Manning, Palmer, Vick, and Tomlinson forgo free agency have NOT been eliminated with the new limits. Therefore, I do not believe that the new limits will cause more FA talent to be available than would have been available if there were no new limits.

The Pats are right now 16.9 million under the cap.
Let's say that the Pats will have a $1.5 million injury reserve.
Let's say that it will take $1.2 million to sign players 52,53, and a 8 man practice squad.
Let's say that it will take $3.3 million to sign their draft picks.
All of the above numbers are on the high end, BTW.

That leaves the Pats $10.9 million in cap room to use.
The Pats will either use that cap room to extend players or use the phony LTBE/NTLBE move to move cap space into 2007. If it is the former, then the number of Patriots free agents in 2007 will decrease. If it is the latter, the Pats will not be constrained by the cap in 2007 so they can freely spend in free agency. Either way, your contention that "Greater supply due to more FA talent combined with finite demand in the form of a salary cap will lessen the cost for FA's and therefore make it more palatable for teams to re-stock rosters with young NFL veterans" will have a hard time becoming reality.

That will be true for every team who are way under the cap now (Green Bay, Philly, San Diego, Cincy, Jets, etc.)

 

[Miguel]

Instead, they had to opt for either 5 or 6 year deals because that's what the CBA called for.

That is simply not true. There were no limits to the length to rookie deals before this new CBA.

Here's a link to the old CBA.
http://www.nflpa.org/members/main.asp?subPage=CBA+Complete
Here's a link to the 2002 extension.
http://www.nflpa.org/members/main.asp?subPage=CBA+Extension+Features

 

[dryheat44]

Umm..I hate to jump in the middle of an argument, but I would say that for the majority of players who have been drafted in the top 10, their first contract is probably the one in which they're OVERpaid.

Doesn't change the crux of the argument, but I don't think a guy like Alex Smith is going to get the money he signed for last year again. I know Ryan Leaf won't. David Terrell, Ki-Jana Carter, Robert Edwards, etc. The first round is littered with guys who came into the league with the best payday of their career.

Of course, the player and his agent must assume they're going to be a star for a long time, so it is probably immaterial to the signing discussion. But it certainly is one example of players who may not be eager to hit free agency after a few years.

 

[smg93]

That is simply not true. There were no limits to the length to rookie deals before this new CBA.

Here's a link to the old CBA.
http://www.nflpa.org/members/main.asp?subPage=CBA+Complete
Here's a link to the 2002 extension.
http://www.nflpa.org/members/main.asp?subPage=CBA+Extension+Features

It is implicit because as you pointed out, signing bonuses in previous years could only be prorated for a determined length of time. Let's not play dumb here, you know that better than anyone else on the board.

 

[PromisedLand]

Hmmm... this thread I started seems to have turned into a rather long and heated discussion. That's a good thing, I think, because that's what these forums are for!

But I think the discussion may now be getting a bit more polarized than it really needs to be. I started this thread with a hypothesis that basically stated that shortening the maximum length of rookie contracts would tend to devalue the value of a draft pick. sg93 joined my camp in agreement. I still think that this position is valid, to a greater or lesser degree.

Miguel and others, during the course of the discussion, have added some data which tends to show that while our theory may be correct, in practice the effect may be minor, or even insignificant because:

a. Most picks in the first half of the first round, which can now sign for only 6 years, previously did not sign for more than 6 years.

b. Most picks in the second half of the first round, which can now sign for only 5 years, previously did not sign for more than 5 years.

c. Most picks in the second and later rounds, which can now sign for only 4 years, previously did not sign for more than 4 years.

d. Of those few affected by the new contract length limits, only some will become stars who will command big dollars in their second contracts.

Therefore I now agree that while my theory is correct, the practical effect will be small because in practice, there will not be that many players who would have been signed for a longer time under the old rules and who would also generate major interest in the free agent market.

sg93 and miguel, can we all agree on that much?

The only question remaining in my mind, then, is whether sg93 is correct in thinking that agents will always push for shorter contracts than the maximum, no matter what the maximum is, so that (for example) they will now be pushing for 4 years contracts for players drafted in the second half of the first round. I'm sure that will be the case, but I'm not sure whether the rookie market will force teams to agree, or whether the natural market forces would already cause contracts to gravitate to longer length.

 

[smg93]

Interesting hypothesis. We will see what happens in real life. My prediction - Picks 17 through 32 will all be signed to at least 5-year deals.



FWIW - I hate the use of looking at extremes.

Whether you hate it or not, that's what people do to validate positions.

which directly contradicts yours and PromisedLand's point - "And as promisedland said, if they are stars, why sign an extension when there is every chance that they can cash in on free agency? I have to think that bona fide stars will think very hard before they decide to opt out of free agency."

Doesn't contradict it at all. The point was that there will be more players available a year earlier and just because some of them choose to sign extensions, the mere fact that there are more players out there available a year earlier means that any player who doesn't choose to extend is one extra player in free agency.

FYI - I also believe in the laws of supply and demand.

Just because you and PromisedLand say that the new limits will cause more players to be available does not mean that it is true. I have already shown that not every team had a strict policy of signing players to 6-year deals.

And just because you believe that the new limits will not cause more players to be available does not mean that it is true. Just because rookies have signed five year deals in the past certainly doesn't mean that teams don't want to sign their rookies to the maximum number of years they can pro rate (in the case of 2004 - 6 years) signing bonuses.

At the beginning of April, the average team was under the cap by $10 million. That is not being constrained.

Sorry, all types of salary caps mean that teams are constrained to a certain extent. Do you think that the average team would be under the cap by $10 million in October? Regarding caps being factors that constrain spending, See New York Yankees in MLB. They would be constrained if there was a hard cap in place in MLB.

FYI - I graduated with an economics degree. I did not need a refresher course.

Maybe you do, if you can't understand that more players available for a finite amount of money means that there's less money to go around for each player.

IMO, the reasons why stars like Brady, Seymour, Manning, Palmer, Vick, and Tomlinson forgo free agency have NOT been eliminated with the new limits. Therefore, I do not believe that the new limits will cause more FA talent to be available than would have been available if there were no new limits.

That's fine if you believe that. I happen to believe in something else because if all players like the ones you mentioned above had extended their contracts, free agency wouldn't be as big a source of controversy year in year out in terms of teams losing or gaining players.

The Pats are right now 16.9 million under the cap.
Let's say that the Pats will have a $1.5 million injury reserve.
Let's say that it will take $1.2 million to sign players 52,53, and a 8 man practice squad.
Let's say that it will take $3.3 million to sign their draft picks.
All of the above numbers are on the high end, BTW.

That leaves the Pats $10.9 million in cap room to use.
The Pats will either use that cap room to extend players or use the phony LTBE/NTLBE move to move cap space into 2007. If it is the former, then the number of Patriots free agents in 2007 will decrease. If it is the latter, the Pats will not be constrained by the cap in 2007 so they can freely spend in free agency. Either way, your contention that "Greater supply due to more FA talent combined with finite demand in the form of a salary cap will lessen the cost for FA's and therefore make it more palatable for teams to re-stock rosters with young NFL veterans" will have a hard time becoming reality.

That will be true for every team who are way under the cap now (Green Bay, Philly, San Diego, Cincy, Jets, etc.)

Unfortunately, you do not take into account that players may not want to sign. Also, we all know that just because the Pats have plenty of cap room, it surely doesn't mean that they'll sign Brady to a Manning type contract or Givens to sign for a Givens/Titans contract. Just because a team has cap room doesn't mean that they'll be able to or want to sign their upcoming FA's.

ten characters

 

[Boston Tim]

The only question remaining in my mind, then, is whether sg93 is correct in thinking that agents will always push for shorter contracts than the maximum, no matter what the maximum is, so that (for example) they will now be pushing for 4 years contracts for players drafted in the second half of the first round. I'm sure that will be the case, but I'm not sure whether the rookie market will force teams to agree, or whether the natural market forces would already cause contracts to gravitate to longer length.

2nd round picks get 4 year deals, but they also get poor signing bonuses. I don't imagine many 1st round picks will push for a 4-year deal knowing that the only scenario where this could realistically happen is if they forfeit their higher signing bonus (i.e. essentially asking for a structure similar to a 2nd round deal.) Given the fact that many NFL careers last just 3 years (even for 1st round picks), would you turn down a check for 1+ million?

It really isn't plausible that a 1st round pick would get both the fat contract and 4 years. What are they going to do to achieve this feat - hold out for an entire year (living on what salary during that time?) and enter the following year's draft (where they will not likely go as high as they did originally?)

I'd have to say that this CBA provision does nothing but enforce the status quo. Instead of having a rookie hold out of training camp until the team agrees to a decent length (i.e. Graham), the rules just force the team to settle on that length from the start.