The Quarterback Marketplace and the Salary Cap

Jimmy Garoppolo, heading into unrestricted free agency after a half-season rental in San Francisco, just signed a $137.5 million deal over five years with the 49ers.

Think about that. A quarterback with seven games’ worth of experience – 183 career completions – is being rewarded at the astonishing rate of three quarters of a million dollars for every past successful throw.

Now it’s not that simple. Even at fair market rate, the Patriots wouldn’t reward Tom Brady with $5 billion for his 6500-plus completions. It’s about future expectations, and Garoppolo is expected to be a franchise quarterback. So $27.5 million per year is the new normal. Which means the next time someone like Russell Wilson or Aaron Rodgers hits a contract year, agents will be talking about $35 million, hoping to settle above $30 million. And they will, soon enough.

The 2018 NFL salary cap will be about $178 million. Let’s take a look at some ratios.

The NFL rookie minimum salary will be $480,000, which is 0.27% of the salary cap. Garoppolo’s average salary is 15.45% of the salary cap. The ratio between those numbers is 57.3.

Now, let’s go back ten years. I’ll use approximations, but the idea is the same.

In 2008, the rookie minimum salary was $295,000 and the salary cap was $116 million. The crazy-high quarterback contract belonged to Carson Palmer, who was expected to make $67 million over the next five years – or $13.4 million per year.

In 2008 the rookie minimum was 0.25% of the salary cap – that’s consistent. But Palmer’s contract was 11.55% of the salary cap and you could obtain 45.4 undrafted rookies for Palmer’s cap compensation.

What’s going on here? This is an increasing effect of the 2011 renegotiated CBA between the NFL and the NFLPA. It addressed a serious problem – that contracts for first-round picks were getting out of hand and causing the value of top picks to decline. But it created a new problem – that contracts for first-round picks who end up being terrific players eat up far less cap room.

This affected the delicate balance between being able to put together a reasonable roster under the cap without discouraging teams from wanting higher picks. It’s this balance that leads to competitive balance in the NFL. Well run teams are rewarded. Owners willing to push the limits of the cap are rewarded. But no one gains from tanking and bad teams get value from picking high in round one.

I’m not claiming the NFL was broken or is broken. It obviously isn’t. But because of savings from the rookie cap, a quarterback with seven games of experience is getting a contract that would have been impossible for any player ten years ago. And we’re seeing a race developing for franchise quarterback salaries. Garoppolo’s 15.45% means someone will get 18% in the next big renegotiation.

Will that cause harm? Probably not. What will happen is that when the CBA is next renegotiated, there will be pressure to increase the cap as there’s always more attention on the highest contracts and bringing more players up to that standard is impossible without increasing the cap. Most people just see the $27.5 million average, not what that means for cap management itself.

And in this case, San Francisco is willing to channel its savings from the rookie cap adjustment into Garoppolo. Since franchise quarterbacks are hard to find these days, it may end up being a good decision. But there will be more holdouts in the near future as agents want their premier players getting a bigger share of those rookie cap savings.

The balance is changing right now, and things will get a little uncomfortable for the next year or so as teams adjust. But for the last three years – after the crazy-high pre-2011 first-round bonuses completely left the league – there’s been a period of time when it hasn’t hurt to stay under the cap. So ultimately, the Garoppolo deal and the current quarterback race is probably a good thing for the NFL.

And in San Francisco, as long as Garoppolo is as good as he’s looked in his first seven games…