NFL Free Agency: The Hidden Dangers of Big Contracts

Ryan Riddle@@Ryan_RiddleCorrespondent IFebruary 8, 2015

Getty Images/Kevin C. Cox

For NFL teams, the point of this whole free-agency thing is to improve the roster with talented players who can compete at a high level immediately. Veteran free agents are proven commodities who offer a distinct advantage you can’t get from plugging rookies in right away.

On the other hand, the acquisition of such known talent rarely comes at a discounted price. Teams looking to add star power via free agency are at high risk of overpaying thanks to the many interested buyers driving up the cost. This is the inherent danger of playing the free-agent market loosely.

There are, however, more conservative ways to approach this building tool. One way in particular is to avoid the coveted top-tier talent and stick to those hidden gems who could be acquired at a relative discount.

Maybe these hidden gems are coming off an injury or a down season—maybe they were underperforming for years in the wrong system or not being used appropriately. Whatever the case, targeting these guys may save money, but they’re far more likely to turn into dead weight compared to an elite talent.

Fans and media alike get all warm and fuzzy when a big-name free agent signs with a new team.

FOXBORO, MA - JANUARY 18:  Darrelle Revis #24 of the New England Patriots celebrates after an interception in the third quarter against the Indianapolis Colts of the 2015 AFC Championship Game at Gillette Stadium on January 18, 2015 in Foxboro, Massachuse
Elsa/Getty Images

Elite free agents can offer a wave of hope to a struggling franchise, propel a team from the basement to the penthouse of a division and pack the seats of an otherwise empty stadium. But a far less celebrated element to the free-agency racket is re-signing core players rather than letting them aid the enemy, leaving a void where a dependable star once stood strong.

For general managers, trying to figure who to pay and who to let walk can often be the most important decision they make.

The reason this aspect is so vital to a team’s success in both the short term and long term is because it’s also the one phase of free agency that no team can avoid. That goes for all of those new-wave GMs out there who emphasize and implement a trendy draft-first philosophy.

Maybe your staff is excellent at identifying talent in the draft, but mishandling the salary cap by overpaying for star athletes can have dire consequences. Herein lies the fascinating and mysterious area of team building that will be the crux of this article.

A recent example of this could be developing in Baltimore with massive defensive lineman Haloti Ngata set to count $16 million against the cap in 2015, according to The Baltimore Sun’s Mike Preston.

Nick Wass/Associated Press

Preston reported this week the Ravens are looking to negotiate an extension for Ngata in an effort to gain some cap relief as he enters his final year under contract. If both sides can’t come to agreeable terms, this could be the end of the road for Ngata in purple.

At this point, Ngata’s $16 million cap hit would rank 20th in the NFL and sixth among defensive players, per Spotrac.com. That’s a hefty price to pay for a 31-year-old defensive lineman whose best years are likely behind him.

Of the top 20 cap hits for defensive players in 2015, only Jared Allen (32) and Julius Peppers (35) are older than Ngata.

PITTSBURGH, PA - JANUARY 03:  Joe Flacco #5 of the Baltimore Ravens drops back to pass in the first quarter against the Pittsburgh Steelers during their AFC Wild Card game at Heinz Field on January 3, 2015 in Pittsburgh, Pennsylvania.  (Photo by Jamie Squ
Jamie Squire/Getty Images

Keep in mind, QB Joe Flacco’s contract is about to get ridiculously expensive after the 2015 season, jumping from a cap hit of $14,550,000 to $28,550,000 in 2016. In addition, the Ravens still have free-agent receiver Torrey Smith to re-sign this offseason, and they should be interested in retaining the services of free-agent running back Justin Forsett—if they can afford him.

This balancing act is not unique to the Ravens. Tough decisions like these are all part of the gig.

In order to handle such difficult business decisions, GMs have to be able to disconnect from the emotional attachment teams naturally develop with key players. This "survival of the fittest" mentality is best practiced by the New England Patriots.

The reason this cutthroat mentality is a necessary evil in the NFL is because the salary cap doesn’t allow teams the luxury of carrying much excess weight, financially speaking. This is even more important for any team trying to keep up with the rapid acceleration of contracts at the quarterback position.

Jan 9, 2015; Ashburn, VA, USA; Washington Redskins new general manager Scot McCloughan (right) speaks during his introductory press conference at Redskins Park. Mandatory Credit: Geoff Burke-USA TODAY Sports

It’s understandable to fear the loss of an important contributor, but every player has a cutoff point where his price tag overrides whatever value he brings to the football field. This reasoning can be applied to either retaining a current player or acquiring a new one via free agency.

Newly hired GM Scot McCloughan for the Redskins shared his thoughts about free agency to Mike Reiss of The Boston Globe back in 2008 (when he was the GM of the 49ers):

[Free-agent splashes] can look good on paper because it’s a quick fix and fans can say, 'They’re trying to get better,' but you can’t lose sight of the bigger picture. ...

... We don’t want to be known as a free-agency team. Our approach is that it’s a tool you have to use, a valuable tool, but what we’re trying to do is draft well and identify guys we want around and do an extension prior to free agency. We’re lucky enough to have some money in free agency, but we’re not going to spend just to spend. ...

... A lot of times, in free agency, you are getting guys who have been trained different, and you can’t lose sight of that because some guys have trouble fitting into the new system. That’s why it’s so important to draft. You get your guys, and you get to develop them yourself.

McCloughan makes some great points here, and his philosophy on free agency seems to be a wise one. But how does that concept fit with re-signing the players you do draft before allowing them to hit the free-agent market? After all, there are only so many slices of pie that can be distributed among 53 players, especially when two or three of them are taking up about half of the allotted cap space.

This is a burgeoning issue with the Seattle Seahawks as they prepare to dish out the most lucrative contract in NFL history to QB Russell Wilson. This all comes on the heels of Seattle offering running back Marshawn Lynch one of the richest contracts in the league at the position, according to Ian Rapoport of NFL.com.

Scott Eklund/Associated Press

Per Rapoport, "The deal is believed to include more than $10 million for Lynch in the 2015 season alone. Lynch currently is slated to make $5 million in 2015, the final year of what originally was a four-year, $31 million deal."

Wilson's minuscule contract has created an incredible competitive advantage for the Seahawks, allowing GM John Schneider to add numerous impact free agents over the last few years while retaining his core players. Unfortunately for Seahawks fans, those days are officially over. 

This struggle going on in Seattle, along with the growing trend of potentially overpaying for quality QBs, led me to wonder: Are teams that invest in the league’s highest-paid players having more success than the rest of the NFL?

To find the answer, I got a little help from the founder of overthecap.com, Jason Fitzgerald. He was kind enough to direct me to a great resource at USA Today for accessing historical data on NFL salary caps.

Using data from that source along with spotrac.com, I was able to create a list of the 10 highest-paid players (in terms of counting against the salary cap) in the NFL dating back to 2001 (omitting the uncapped year of 2010). From there, I looked into how those teams ended up each year.

It would stand to reason that the players taking up the most cap space in the NFL got to that point by being one of the best in the game. Even if this is not always the case, it should be a pretty solid indicator of a player’s perceived value to the team. It would also be logical to deduce that having one of the best players in the NFL should reflect in that team’s overall success, right?

However, over a 13-year sample size, the teams with the highest-paid players only won 52.24 percent of their games. That’s just a 2.24 percent improvement above the league average.

Avg Winning % of Teams with the Top-10 Cap Hits
YearWinning %Super BowlsQBs
2010Uncapped yearN/A4
USA Today & Spotrac.com

The teams that had top-10 salaries from 2014 only averaged out to win 49.45 percent of their games. This is virtually the same for 2013 (49.41 percent).

In 2010, the top-paid players in the NFL only managed a combined winning percentage of 40.63 percent, the lowest mark in the last 13 capped years.

In fact, only one team of the top 10 actually surpassed the .500 mark that year.

Furthermore, over that same span, only one team in 13 years had a top-10 player in cap cost and still won the Super Bowl. The Pittsburgh Steelers won the Super Bowl in 2008 when Ben Roethlisberger had the highest salary-cap hit, counting $27,701,920 against the cap.

Interestingly, there were a total of six quarterbacks on the list in 2001 and 2002. In the 2014 and 2013 numbers, 12 QBs found their way on the list, double the total of the first two years.

The trend over the years seemed to indicate that more value is placed on the quarterback position in recent years as opposed to the early 2000s. This makes me wonder if NFL teams are creating a financial bubble at the quarterback position.

The best way to know if this is true would be to calculate the average percentage of the salary cap being consumed by quarterbacks over the years. Unfortunately, this is information I don’t have access to at the moment.

Jack Dempsey/Associated Press

What we can take away from this article is that teams tend to have the most success when their most talented players are being underpaid. This affords teams the ability to load up on talent rather than putting all of their eggs in one basket.

It also reinforces the idea that an elite player earning an elite contract is often less valuable than a solid player acquired at a major discount.

The most valuable free agent of all time is arguably Peyton Manning. Despite all of his accolades, he has generated zero Super Bowls for the city of Denver.

These are all things to keep in mind as the nation prepares for the annual free-agent frenzy. 

Ryan Riddle is a former NFL player who writes for Bleacher Report.


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