Is Mark Sanchez the Most Overpaid Player in the NFL
Forbes recently put out an article looking at the most overpaid football players of 2011 and they names Jets QB Mark Sanchez as the most overpaid player in the NFL. Needless to say this has drummed up some controversy as Sanchez has a terrific record in the playoffs and shows flashes of brilliance to go along with his inconsistencies and habit for throwing the ball to the wrong colored jersey from time to time. The problem with articles such as this one is the authors are often not familiar with the NFL salary cap, the NFL draft, or the way that accounting for an NFL contract works.
Just looking at this from a pure contractual standpoint Mark Sanchez is not the highest paid player in the NFL nor is he anywhere near being the highest paid player in the NFL. Sanchez' contract currently has an average value of slightly over 10 million per season. That average can grow if he continues to QB the team deep into the playoffs, but it would be a slight increase at best. Even among young players at the position Sanchez is not the highest paid player. Lions QB Matthew Stafford has a deal worth $12 million per year while the Rams Sam Bradford has a $13 million a year contract. Among veterans Sanchez is not even in the ballpark of highest paid players.
The problem with these articles is that they do not take into account the fact that the timing of the payments has no bearing as to the actual value of the deal. Under the old rookie contract system Sanchez was going to have a contract that paid him $10 million or so a year with a large percentage of that in the first three years no matter what. Teams choose different timings for the payments and different mechanisms to pay the players in order to best budget their team to fit under the NFL salary cap system. These salaries come in the form of signing and option bonuses, roster bonuses, workout bonuses, incentivized payments, and of course base salary. Forbes chose to strictly look at base salary in 2011. Lets compare the cash payouts for Sanchez, Stafford, Bradford, and Rams LT Jason Smith through the years to see just how misleading this type of analysis is.
|Name||Year 2||Year 3||Year 4||Year 5|
So the reason that Sanchez makes slightly more money in the third and fourth year of his deal is because the other players earned a much higher amount in their second year of the contract and have contracts that continue to grow. Most of these players can all unlock more money in their contracts. Stafford, who has been injured in both of his first two years, can gain an extra $1.5 million per season while Bradford still has some small escalators in his contract as well. Smith has a few million more per year that he can earn if he can become a consistent contributor, something he is slowly working his way into becoming for St. Louis. But who is more overpaid---Sanchez earning 32 million in 2010 and 2011 or Stafford earning 36 million in the same timeframe? Despite two games of gaudy stats Id side with Sanchez as the better value at this point since he has played in 33 regular season games and 2 AFC Championship games.
Why the difference in pricing? The salary cap. Teams have to pay out deals to give the team the most possible flexibility under the cap as long as the player is on the team. Teams also have to protect themselves in the event the player busts, a high probability for Quarterbacks. In a study I did a few years ago slightly over 50% of QB's drafted in the top 10 totally busted. That doesn't mean 50% are great, just that 50% are at least passable. The others are detriments to have on a team.
Now all these highly drafted players have huge salary guarantees that the team must pay even in the event the player busts and is removed from the team. The savvy NFL GM and Cap Manager want to do their best to pay that guarantee and give themselves an opportunity to run from the contract, even if it means paying a bit more than some people think they should in the short term. Remember that signing and option bonuses are prorated over the life of the contract which will lead to dead cap money when the player is cut. When that money, along with other guaranteed salary, is too high the player is going to be safe from release and the team is stuck with a high priced distraction. The Jets chose to use more of a "pay as you go" system with Sanchez to best protect themselves in the event of failure. Here are the costs of cutting the players during the course of their rookie contracts from year 3 onward.
|Name||Year 3||Year 4||Year 5||Year 6|
Now no players get cut after only 2 years, so the Year 3 value is almost meaningless, but that Year 4 value is important. A $5 million cap hit is entirely acceptable for a team if the player pulls a Gholston and just cant hack it in the NFL. Cap hits over $10 million are not acceptable meaning the team is stuck with those players and there is almost no leverage for the team to go and ask the player to take a paycut. If Sanchez was to play poorly in 2011 the Jets have a position of strength in 2012 to go to Sanchez and say we are going to cut you if you don't reduce your $11.75 million in compensation. The other players on the list would see that scenario as a poker player bluffing with a 6 and 9 in their hand while they have a pair of kings in the hole.
The proof of the strategy is when it comes to cap room. My estimates have the Jets with around $9 million in cap room in 2011 so the Sanchez strategy has yet to prove a problem for the team. The estimated team payroll is high in 2012, but there is a great deal of flexibility with Mark's contract to push money into 2013 or just ask for a reduced salary in lieu of performance incentives if he plays poorly. The Lions already had to rework Stafford's deal for cap relief in 2011. He will now carry an $11.2 million cap charge in the fifth year of his deal meaning the team could be stuck with a talented player who plays 8 games a year for a very long time. The Rams are believed to have a great deal of salary already on the books in 2012 and may have to do something similar with Bradford for cap relief. That's all the proof you need as to why Sanchez is making as much as he makes this year and why you can't just look at one year and determine that he is the most overpaid player in the NFL.