An Insider's View of 2 of the Biggest Contracts in 2013 NFL Free Agency

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An Insider's View of 2 of the Biggest Contracts in 2013 NFL Free Agency
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A Super Bowl win made Kruger a ton of money

The Baltimore Ravens may have won the Super Bowl in 2013, but so far they have lost in free agency.  They will likely lose future Hall of Fame safety Ed Reed before the week is out.  This follows two of their best young defenders leaving Baltimore minutes into the new league year.  Outside linebacker Paul Kruger and inside linebacker Dannell Ellerbe both signed monster deals as soon as free agency kicked off on Tuesday.

I will break down each deal and allow you, the readers, to decide who you feel got the best deal.  Kruger got the most money overall, but in the NFL, the contract is all about the guaranteed dollars.  Let’s see who fared the best in that regard.

All contract details courtesy of NFLPA.com.

Paul Kruger, Outside Linebacker, Cleveland Browns

Signing Bonus: $6 Million

The signing bonus is the check the Browns cut to Kruger as soon as he put his signature on the contract.  This is guaranteed money and Kruger is free to spend this as soon as he can deposit the check. 

But mind you, this is the amount before taxes.  So in truth, Kruger will probably only see about $4 million of this bonus. 

Another fact that most fans do not see in regard to contracts is the default language in the contract.  While the signing bonus is guaranteed, the Browns protect themselves by putting language in the contract that allows them to recoup a part of the signing bonus should Kruger do something that is not in the best interest of the team.  Conduct detrimental to the organization like a major crime can trigger the default language.

       Paragraph 5              Roster Bonus            Total Cash         Avg. Per Year

2013:   $715,000                $6,285,000             $13,000,000           $13,000,000

Paragraph 5 in contract terms means the base salary for a player.  As the name suggests, on a standard NFL contract, the fifth paragraph of the contract is where the salary capologist will plug in the salaries for each year of the deal.

Mark J. Rebilas-USA TODAY Sports

In Kruger’s contract, his base salary of $715,000 is fully guaranteed.  The three types of guarantees NFL agents typically use are cap, skill or injury guarantees.  A cap guarantee means if the team releases the player due to salary cap constraints, the player still collects the entire sum of his salary. 

If a player is simply released due to age or deteriorating skills and he has a guarantee for skill, the player still collects his salary.  If a player has an injury guarantee and cannot play due to the injury, the player still gets paid.

In Kruger’s deal, he is guaranteed for all three categories in 2013.  Kruger also has a roster bonus due on the first week of the 2013 NFL season.  That roster bonus is guaranteed as well. 

Most of the time, this amount of $6,285,000 is spread out over the 17-week NFL season.  NFL players do not get paid year round.  Players are paid their contract in 17-week increments during the course of a season. 

That is why it is imperative for NFL players to have good financial people in place to help them save and spread that money into the offseason. 

Paragraph 5                 Total Cash                Avg. per Year

2014:   $7,000,000                  $20,000,000                $10,000,000

The 2014 contract year for Kruger’s new deal in Cleveland is 100 percent guaranteed as well.  Kruger’s base salary is $7 million.  The total cash number for the deal after two seasons in $20 million.  Kruger gets that money no matter what unless, as I explained above, he commits an act that is detrimental to the team. 

The deal averages out to be $10 million a year for the first two seasons.

Paragraph 5                 Total Cash                  Avg. per Year

2015:   $7,000,000                  $27,000,000                $9,000,000

The 2015 season is where the rubber meets the road for Kruger and the Browns.  After 2014, Kruger has zero guarantees left in his deal.  If he is underperforming, the Browns can release him and take a $7.3 million hit against the salary cap.

Let me explain that.  Kruger received a $6 million signing bonus and a $6.285 million roster bonus.  The Browns, to save cap space, will split those totals up over the entire five years of the contract.  So take $12.285 and divide by 5.  That equals $2,457,000 a year in cap room on top of the player’s salary that counts against the salary cap. 

Rob Carr/Getty Images

In 2015, Kruger would count $9.457 million against the cap for the Browns.  Since none of the money is guaranteed, the Browns could restructure his deal or flat-out release him.  If they did release him, the bonuses that were spread out over the length of the deal would instantly re-total and hit the Browns' salary cap.

Also of note: If Kruger plays for the Browns under this deal for three years, his average per year goes down from $10 million to $9 million.

Paragraph 5                 Total Cash                  Avg. per Year

2016:   $6,500,000                  $33,500,000                $8,375,000

Again, Kruger’s salary is not guaranteed in 2016, so he may be forced to re-negotiate of risk getting released if he is not playing up to the Browns' standards.  That being said, if Kruger is playing at a Pro Bowl level, the Browns are getting a very good player for $6.5 million, which will be a great deal for the team.

For Kruger’s part, if he can stay healthy and play out the 2016 season on this free-agent deal, he will have taken home $33.5 million in a four-year period.  That equates to $8.375 a year over that time.

Paragraph 5                 Total Cash                 Avg.per Year

2017:   $7.000, 000                 $40,500,000                $8,100,000

The chances of Kruger seeing this money are slim in today’s NFL.  By this point, he will be 31 years old.  The Browns will have re-done the deal by this point and added years on to the contract if Kruger is still playing well.  If he has fallen off in terms of his play, he will probably either be released or asked to take a pay cut. 

If, by some miracle, Kruger plays this entire deal out, he will have made $40.5 million from his contract.  This total does not include playoff shares or money made in offseason workouts.  As stated above, Kruger’s deal will average out to be $8.1 million a year on a five-year contract.

What makes this a solid contract for Kruger is that almost half of the total compensation is guaranteed.  $20 million out of the total sum of $40.5 million is Kruger’s to keep. barring catastrophe.  That is a very good deal for the former Utah star.

Win McNamee/Getty Images

 

Dannell Ellerbe, Inside Linebacker, Miami Dolphins

Signing Bonus:  $7 million

If you simply look at the signing bonus, you would say Ellerbe got the better deal, and in those terms you would be correct.  Ellerbe will be putting an extra $1 million into his bank account over Kruger’s deal.  But once into the heart of the first year, Kruger’s deal is better.

Paragraph 5               Workout Bonus         Total Cash            Avg. Per Year

2013:   $1,000,000             $25,000             $8,025,000             $8,025,000

Ellerbe’s base salary (Paragraph 5) is only $1 million in 2013.  But his contract is fully guaranteed for cap, skill and injury so with his signing bonus, his workout bonus and salary in 2013, Ellerbe will take home $8.025 million.  The workout bonus is paid at the end of the offseason if Ellerbe participates in 90 percent of the Dolphins' workouts.

Paragraph 5               Workout Bonus         Total Cash           Avg. Per Year

2014:   $6,000,000              $25,000             $14,050,000            $7,025,000

Ellerbe’s Paragraph 5 jumps up $5 million in 2014.  Again, his 2014 salary is 100 percent guaranteed.  If he handles his business and attends all the workouts, Ellerbe will have made $14.05 million in two seasons in Miami.  This is almost $6 million less than Kruger at this juncture, so the Kruger deal looks much better at this point.

Paragraph 5               Workout Bonus         Total Cash            Avg. Per Year

2015:   $8,425,000              $25,000              $22,500,000            $7,500,000

This is the year where Ellerbe’s contract trumps Kruger’s.  While Kruger could have $27 million after 2015, he could also get released and never see the last three years of the deal.  Ellerbe’s 2015 salary is guaranteed.  Ellerbe will see all $22.5 million.  That is an incredible deal considering his total contract amount is $35 million.  Over 64 percent of his contract is guaranteed.  Yet his average per year is only $7.5 million for the Dolphins.

Paragraph 5                Workout Bonus         Total Cash           Avg. Per Year

2016:   $6,450,000              $25,000               $28,975,000            $7,243,750

Like Kruger’s deal, by this point of the contract, the Dolphins will either re-do Ellerbe’s deal depending on his play or release him.  With a base salary going down the final two years of the deal, the Dolphins can have a solid player for fairly cheap if Ellerbe is still playing at a high level.

Paragraph 5                Workout Bonus         Total Cash          Avg. Per Year

2017:   $6,000,000              $25,000                $35,000,000            $7,000,000

In the last year of the deal, if Ellerbe were to play the entire five years out, he would average $7 million a year, but will have taken home $5.5 million less than Kruger’s total.

Ezra Shaw/Getty Images

In comparing the contracts, both did very well.  Kruger’s deal is better over the first two seasons, but Ellerbe’s is better over the first three in terms of structure.  Guaranteed dollars matter and if that is the only determinate, Ellerbe ended up with a better deal. 

Whatever view you take when looking at the contracts, the two former Ravens capitalized on a Super Bowl run and made the most of their opportunities. 

For Cleveland and Miami fans, here’s hoping they bring the same fortunes to your respective squads and are worth every penny.

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