Since quarterback Peyton Manning’s arrival in Denver in 2012, Broncos wide receiver Demaryius Thomas has been one of the best receivers in the league. It would be easy to downgrade Thomas’ performance because Manning is throwing him the ball, but Thomas has also helped Manning reach new career highs in yards and touchdowns.
The 2014 season is the last year on Thomas’ contract, so the Broncos need to give him an extension to keep him in orange for the near future. It’s already obvious the Broncos want to get something done with Thomas, but a contract extension could be a little trickier than the last few deals by the Broncos.
General manager John Elway needs to get a deal done with Thomas and save enough cap space to re-sign tight end Julius Thomas. Nearly everyone expects that the cap will rise in the future, so that should give the Broncos some future flexibility to sign linebacker Von Miller, but it doesn’t help them as much with Thomas.
A Tight Salary Cap
There are two types of contract extensions: those where the old deal is ripped up and those where years are simply added to the deal. In the case of the latter, there is very little incentive for the player unless they are getting a large signing bonus.
The Broncos have avoided giving large signing bonuses in recent years, opting for roster bonuses instead. However, they increased their usage of signing bonuses in 2014 in order to sign pass-rusher Demarcus Ware, safety T.J. Ward and cornerback Aqib Talib.
According to records maintained by the NFL Players Association, the Broncos have $4.3 million in salary-cap space. Even if the Broncos used every last dime of that to sign Thomas, that would still not be enough to make him one of the top-paid receivers in the league.
The top-paid wide receivers in the league are Calvin Johnson and Larry Fitzgerald at over $16 million per year, according to OvertheCap.com. Excluding Johnson’s $48.8 million in guarantees, Fitzgerald and Mike Wallace each had guarantees in their contracts totaling $27 million.
|Top WR Contracts|
|Player||Total Value||Average Per Year||Guaranteed||2014 Cap Hits|
Per OvertheCap.com, Thomas has a cap number of $4.7 million in 2014. Of that, Thomas has $3.3 million in base salary and $1.8 million left in prorated signing bonus.
It doesn’t take a mathematician to see that it’s going to be hard to pay Thomas what he deserves, stay under the salary cap in 2014 and leave enough left over to re-sign Julius Thomas. To have a chance, the Broncos are going to have to push large sums of money into the future with signing bonuses or guarantee larger roster bonuses in future years of the deal.
To save cap space, the Broncos can release tight ends Jacob Tamme and Joel Dreessen and save $5.5 million, per OvertheCap.com figures. Both Tamme and Dreessen played fewer snaps than tight end Virgil Green last year, so their days in Denver may be numbered.
Even with that cap space, the Broncos may not have enough to give Demaryius and Julius what they deserve while maintaining enough flexibility to make moves during the season. It’s obvious the Broncos have a plan, but that doesn’t mean it’s going to be easy.
What’s He Worth?
One of the questions every team must ask itself when giving out large sums of money to a player is if he is worth it. Teams must settle on dollar figures even for the best players. At some point, there are diminishing returns.
According to Vic Lombardi of CBS Denver, the Broncos have already made an offer to Thomas, so they clearly have a starting point in mind. Either that offer was a nonstarter for Thomas or no official offer was made because Mike Florio of ProFootballTalk reported that there was nothing going on between Thomas and the Broncos.
When talks do heat up, where should the two sides land on compensation? To determine compensation, we first have to look at his production over the last couple of years.
Thomas is just one of 19 wide receivers with more than 2,000 yards over the past two seasons. A list that doesn’t include some of the highest-paid receivers in the league, including Fitzgerald, Wallace, Percy Harvin or Dwayne Bowe.
|Top Wide Receivers|
|Player||PFF rank||DYAR Rank||DVOA Rank||Group of 19 (2012-2013)|
|ProFootballFocus.com, FootballOutsiders.com, Pro-Football-Reference.com|
Thomas can point to his production over the last season to make his case to be one of the highest-paid receivers in the league. Unfortunately, the list also points out just how risky it can be to pay big money to wide receivers.
According to ProFootballFocus (subscription required), Thomas was the fifth-best wide receiver in the league last season. Football Outsiders had Thomas as the most valuable wide receiver in the league in total value using their DYAR (Defense-adjusted Yards Above Replacement) statistic and seventh in value per play using their DVOA (Defense-adjusted Value Over Average) statistic.
Compared to the 19 receivers with 2,000 or more yards over the past two seasons, Thomas came in third behind Johnson and Brandon Marshall. Thomas had 109 percent of the receptions of the group average, 118 percent of the yards and 148 percent of the touchdowns.
Taking the average of the four methods gives us an overall ranking of fourth in the league. The fourth-largest average salary at wide receiver is Harvin’s $12 million and the fourth-largest guarantee is Vincent Jackson’s $26 million. Harvin’s total value of $64.2 million is also fourth in the league.
If we bump those numbers up 8.1 percent—the same as the rise in the salary cap—a potential contract for Thomas would be between $65 and $70 million over five years with about $28 million guaranteed. The Broncos certainly want to move forward now before Bryant, Jordy Nelson and Randall Cobb hit free agency or sign extensions in the coming year.
Impacts on Julius Thomas
One of the byproducts of the deal with Demaryius Thomas could be the impact on Julius Thomas. A tight salary-cap situation in 2014 is going to make it very hard for the Broncos to secure a deal for both players, but that simply means they will have to work out a deal for their young tight end next season.
The franchise tag for tight ends is about $5 million less than that of a wide receiver in 2014, so that could be an option for Julius in 2015. The Broncos may be watching the situation between Jimmy Graham and the New Orleans Saints to determine how to proceed with Thomas. Graham contends he is a wide receiver because he played in the slot or split wide so much in 2013.
How the arbitrator rules may affect not only how the Broncos use their tight end, but also if they have to try to cram a deal under the 2014 cap or if a delay of a year would be more prudent financially. Waiting a year on Julius also means getting a second year of production to confirm the first one.
The Broncos have been one of the best teams in football as far as cap management. The Broncos don’t give out many large signing bonuses that could be cap nightmares down the line, and they frequently give themselves a way out of contracts without paying guaranteed money if a player doesn’t perform to expectations.
Despite these facts, the Broncos face a tough cap situation in 2014 after their offseason spending spree. The Broncos won’t lose either Thomas, but they may have to use different strategies than they have over the last couple of years to compensate them or risk having to pay more in the long term.