Salary Cap Update: The Revis Breakdown

All offseason, we’ve been doing our best to keep you up to date with salary cap issues surrounding the uncapped year, the Final Eight Plan and the ongoing contract renegotiations. Our thanks, as ever, go to Jason from the unofficial Jets cap site for his input. We’ve tried to verify all of this information carefully, but there are always incomplete or inaccurate reports floating about, so we welcome your queries, corrections and any new information you may find.

It’s an emotional moment. This was the article I was hoping to get a chance to write, yet for a long time it looked like that might not happen. Other than potentially one day writing about the Jets winning a Superbowl, this is the most eagerly anticipated article of my TJB “career”… Darrelle Revis is back! They may not have given him the lifetime deal many of us were hoping for, but it’s definitely exciting to be able to add him back to the already formidable Jets defensive lineup.

I’ve been searching for details of his deal and, while we don’t yet have ALL of the required information, we have enough to chew on for the time being. Please note that I’ve more or less assumed that the new CBA rules will be similar to the current rules and that the numbers below are what’s been reported so far, which is often subject to change.

Let’s jump right in to the details after the jump…

Specifics

This appears to be how it will most likely breakdown, although there are several contingencies:

Year One: Salary $7.5m
Year Two: Option Bonus $18m, Salary $7m
Year Three: Salary $7.5m
Year Four: Salary $6m
Years Five-Seven: Total Compensation $9m, but will be voided at the end of year four if he does not hold out, making him an unrestricted free agent.

The original salaries for years 2-4 are actually 10m, 11.9m and 13.8m instead, but as soon as the option bonus is paid, they reduce to the numbers above.

If there’s a lockout, the option bonus will instead be due on the first day of the next league year.

Effectively, it’s a 4 year, $46m contract, based on what’s been widely reported so far.

Guarantees

The number of guarantees depends on when you are considering. The widely reported number is $32m, but this sum is not fully guaranteed yet. However, within a few years, he will effectively be guaranteed up to $40m.

Let’s look at the doomsday scenario. If Revis suffered a career ending injury before Monday and the Jets released him, they would be on the hook for his 2013 salary, which has been guaranteed for injury. That’s the higher number of $13.8m, because the option in 2011 has not yet been exercised. Similarly, if he was released before Monday for performance reasons, he would get the same sum, because $13.8m of his 2011 and 2012 base salaries is guaranteed for skill. The only way I could ever imagine that coming into play in the next five days would be if he suffered a non-football injury that was going to prevent him from playing, but would not be covered by his injury guarantee. So, he has $13.8m guaranteed as of today. (Now everybody knock on wood.)

Early in the season, his base salary for the year will become guaranteed, so he will end up with $21.3m no matter what happens during the 2010 season. So, from early in the season until the first day of the next league year, he will have $21.3 guaranteed.

When the option bonus becomes due, they will have to either release him or pay it. Releasing him is highly unlikely because of the dead money cap hit that would arise in respect of that future guaranteed salary, which is why this money can be considered effectively guaranteed from the start. If they do release him, he walks away with just that $21.3m, but once they’ve paid it, obviously the $18m can be considered to be fully guaranteed money. When this happens, the salaries in years 2-4 reduce, as noted above, to 7m in 2011 (none guaranteed), 7.5m in 2012 (guaranteed for injury) and 6m in 2013 (guaranteed for skill). At that point, he will have earned $25.5m and can be considered to have $6m of fully guaranteed money yet to be paid, which is where the $32m figure comes from. This sum doesn’t become fully guaranteed until the option bonus is paid.

On the first day of the 2011 season (assuming no lockout), his $7m base salary will become fully guaranteed. If there is a lockout, he’ll most likely miss out on this altogether, but assuming he does receive it, that will take his total guarantees to $38.5m. On the first day of the 2012 season, his $7.5m salary (of which $6m was previously guaranteed) will become fully guaranteed. After the 2012 season (year three), he’ll have been paid a total of $40m and his final year salary of $6m can no longer be considered to be fully guaranteed, because it is only guaranteed for skill, but it will become fully guaranteed on the first day of the 2013 season.

In summary:
– Until Monday – $13.8m is fully guaranteed
– From early in the season until the next league year – $21.3m is fully guaranteed
– From the above date until the start of the 2012 season – $31.5m is fully guaranteed, plus another $7m will have become guaranteed on the first day of the 2011 season if there is no lockout.
– At the start of the 2012 season, $1.5m of his salary, which was only previously guaranteed for injury, will become fully guaranteed.
– At the start of the 2013 season, his $6m salary, previously guaranteed for skill only, would become fully guaranteed.

Who Caved?

There has been much debate over who “blinked first”. As with any negotiation, the teams met in the middle and we will likely never know how far away from each side’s desired result the outcome was. The Jets basically paid $6m than they had previously offered and almost certainly frontloaded the deal more and guaranteed a higher sum of money than they would have preferred to. On the other hand, Revis’ side were insisting on “full” guarantees, which they clearly didn’t get and were obviously nowhere near $40m better off than the Jets’ previous offer. ($40m having been reported as the size of the gulf between the two sides’ demands, although we don’t know if this was in terms of total compensation, as Gary Myers assumed, or guaranteed money. I actually favor the latter).

The answer is that both sides caved, but we don’t necessarily know that Revis and his team’s reported demands where deliberately much higher than their actual desired result, to which this could perhaps be close. It ultimately came back to the sort of numbers that cap experts had been suggesting reflected his true market value all along. He was never going to get $15m a year right off the bat. With that said, we were surprised to see how heavily frontloaded the deal was and I’m sure the Jets stretched themselves further than they would have liked too, although they did include some protections.

A vacationing Jason chimes in:

While the finances do indicate that this is a good deal for the Jets because they are nowhere near the money Revis originally wanted (and the 32.5M in two years being some type of magic number as to why this is better than the Aso deal is a joke) that cap structure does make me think they caved somewhat. I have a feeling Rex Ryan really wanted him back and told his boss without him they could not have the Super Bowl quality defense they need. The Jets could have come up with these same financial numbers and virtual guarantees with just a small bonus in 2010 and/or 2011. The fact that they opted for the huge year two bonus is clearly a point the Jets gave in on and one that could have big impact on the club in the future.

Ultimately, if Revis was still holding out, the only people that would win would be the rest of the NFL. Nobody wanted that, so both teams had to cave to some extent. They did, and we fans can now reap the benefits of having an exceptional talent back in the fold.

The Band-Aid

Yes, this was the so-called band-aid proposal that was required to get Revis back into camp. They’ve essentially fronted him some money to ensure he plays this season and, in exchange, they get to control his rights for at least one more year. You may remember me saying that it wasn’t as simple as just increasing his base salary for 2010 because to do so would mean that he would have to agree to a brand new deal that was compliant with the uncapped year rules, such as the 30% rule and the reallocation rule, and I suggested this might be almost as difficult as agreeing on a longer term deal. The complexity of this article is your proof that I wasn’t making this up.

The purpose of this band-aid deal was never to sign him for four years and let him hit free agency though. It was always intended to be something which lets them complete a deal to get him in camp, but also allows them to work towards a long-term extension, preferably under the less-punishing constraints of a new Collective Bargaining Agreement. I still believe that’s what they will work towards. The allure of unrestricted free agency might be appealing to Revis, but he’ll end up playing for the highest bidder, which could perhaps be the Jets anyway. Therefore, if they give him an extension that he’s happy with before his contract voids at the end of the 2013 season, I see no reason why he wouldn’t sign the deal rather than test the free agent waters, which was obviously always a possibility, albeit a year sooner, with his old deal.

Here’s what Jason thinks:

I think the way we have to look at this deal is that its really a 3 year band aid. the Jets essentially have given Revis a 3 year 40 million dollar deal that is essentially all guaranteed. Its more or less a 19 million dollar raise over his old deal. The Jets have also given Revis far more leverage than he would have had in the past.

Nnamdi Asomugha Money

Revis was quoted as saying he was “humbled” by the process, but perhaps shouldn’t feel like that. He has earned a contract which compares favorably with that of Nnamdi Asomugha, the league’s highest paid cornerback, no matter which way you slice it and he justifiably earned himself this with his stellar play on the field last season. If he isn’t happy with the deal – which yesterday he told SalPal he was, but it wasn’t particularly convincing – then this underlines how his agents gave him an unrealistic expectation of what his true value was in the current climate.

Let’s compare his new contract to that of Asomugha in a few diffferent ways, to underline how similar it is:

- The structure is very similar, with a six year contract that easily voids after the first three for Asomugha, and the same thing for Revis, only with the one remaining year of his old contract added onto the front of his deal. (As a free agent Asomugha didn’t have any years left on his contract when he signed).
– Revis was under contract for one year at $1m. If you ignore the buyback option, his 4 year, 46m deal represents 3 extra years and 45m of extra money. Asomugha’s deal? 3 years, 45m. I don’t know if he got the extra 50 cents.
– In the year before the contract voids, Revis will have already received $40m and has a reasonable $6m salary that is guaranteed for skill. In the same year of his deal, Asomugha will have “only” received $28m and is scheduled to receive at least $17m, but possibly a sum based on the Quarterback franchise amount, which could be around $20m. None of this is guaranteed, though, which basically means he won’t see that money and his deal will end up being a $28m, two year deal.
– When the media pointed out the $16.25m average in the first two years of Revis deal as being higher than Asomugha’s average, that was a stretch. Comparing it to that $28m, two year deal though underlines how well he did for himself, despite still having three years left on his contract.
– Through seven years in the league, Asomugha earned $46m. Revis will have earned $61m. He is well on the way to being the highest paid cornerback of all time, especially when it’s doubtful Asomugha’s next deal will be any higher than the one Revis just signed.

More Holdouts?

Here’s what the Jets did to protect themselves from Revis holding out again:

The deal will only void at the end of the 2013 season if he doesn’t hold out before then. If it doesn’t void, the final three years will stay. What does that mean? If Revis decides to hold out after receiving the frontloaded part of his contract in the first two years, he will remain under contract for the next five seasons (at an average of less than $5m per season).

In practical terms, if he holds out, the Jets could simply sit on his rights from 2012 until 2016. Effectively, they could prevent him playing for any other team from the age of 27 to the age of 31. If he refused to play at all, the peak years of his career, his earning power and his value will go down the toilet. All the Jets would lose out on would be his value in the event of a future trade but his career would basically be over, so there is nothing to be gained by any other team.

Mike Florio (embargo lifted) thinks this won’t prevent a holdout, but I don’t think he’s thought that through. It’s not just the potential threat of being unable to join another team until his thirties, but also the dangling carrot if he doesn’t hold out and instead plays out the last two years of his deal.

Not only will he earn a total of $13.5m in those two years – a sum much lower than his desired average, but not to be sniffed at, especially with the different persepctive a year of lost earnings will take on as he gets older – but he is potentially going to be a free agent, available to the highest bidder (which, who knows, could be the Jets) in 2014. Importantly, the Jets do not have the right to franchise him when the contract voids.

Not only that, but he retains an enormous amount of leverage by not holding out. He can tell the Jets he will hit the open market, which will mean they will be compelled to try and offer him a long term extension to his satisfaction, otherwise they risk losing him for nothing (or at best a third round compensatory pick).

So, I don’t think a holdout would benefit Revis, especially when he is going to be in a strong bargaining position if he plays out his contract. I’m sure that was deliberately set-up as an added deterrent and to show Revis that they would be looking to renegotiate sooner than that. The Jets will be especially keen to restructure before the deal voids, because there is a dead money cap hit of $9m that will hit the cap at that point.

Jason adds:

It’s that late dead cap hit that is the real winner for Team Revis. While the Jets have protected themselves from a holdout it would be a nightmare to have that type of dead charge when Revis becomes a free agent. It gives Revis tremendous leverage in 2012 and 2013 when his salaries fall and he wants a new deal. Will he hold out? No, but from a cap perspective he holds the hammer this time around. He can simply threaten that if the team forces him to play for 6M he will refuse to sign a deal until after he tests free agency. Once he opts for free agency all that money accelerates regardless of whether or not he decides to come back to the Jets.

Discrepancies

At the moment, the deal doesn’t quite add up, so after talking to Jason, we believe the numbers may be slightly different from what’s been reported so far. We are comfortable that they are close though. Here’s some minor discrepancies:

- We believe that the option bonus may possibly have been a little higher than $18m, but with a smaller sum payable by Revis to get the Jets to exercise the option. The net bonus would still be $18m, but the cost of the exercise might be something like the $1.3m he would have had to pay when he would have voided his old deal, prior to the Jets exercising the two year buyback.
– The 30% calculations don’t quite add up, because the maximum raise has been calculated at $2.5m, which is slightly higher than 30% of his reported 2009 salary. We are assuming that either he received something extra that was never publicly reported or that some of his earnings previously thought to be salary were actually bonus money, so he had prorated bonus money that could be included in the 2009 calculation.
– It’s unusual for no workout bonuses to be included in a Jets contract, so the reported “salary” probably includes these, which may also explain the 30% discrepancy. This was especially important in this deal because the pre-option bonus numbers (7.5/10/11.9/13.8) and the final numbers (7.5/7/7.5/6) all had to comply with the 30% rule, which states that the maximum rise (or fall) cannot exceed 30% of the salary in the final capped year ($2.5m as mentioned above).

Can They Still Extend Everybody?

As you may recall, I previously wrote an article outlining how it might be realistically possible to extend the core four, plus Santonio Holmes, Braylon Edwards and Antonio Cromartie, if that were the approach they chose to take in 2011. However, due to the complexities of the CBA, my assumption was that nobody would get extended before the end of this year. So, how do these recent deals affect that projection?

Well, I was pretty accurate in terms of my projections for the new Mangold and Ferguson deal and did not make a projection for Revis, so I was working on the basis of the following cap hits for 2011:

Mangold – $7m
Ferguson – $10m
Revis – $5m

That’s $22m in total, but the actual reported 2011 cap numbers have been calculated as (approximately):

Mangold – $5m
Ferguson – $10m
Revis – $11m

That’s only an extra $4m. My previous projection had a “buffer” of exactly $4m, so if all else remains equal, it can still be done. IF that’s the approach they choose to take. I don’t have to tell you that there were many variables at play in terms of the size of the cap, veteran releases and the size of each new contract, but I did try to be prudent.

You may be wondering how Revis only had a cap charge of (around) $11m, when his 2011 earnings are $25m. The answer is that the $18m option bonus is prorated over the six years remaining on the pre-voided deal, which works out at $3m per year. That’s why there’s a big potential dead cap hit when the deal voids in 2013, so that’s where they will be very keen to lock him up long term and avoid that. The good news is that the 2012 cap hits for Revis, Mangold and Ferguson are not significantly higher than in 2011. By 2013 many high priced guys currently on the roster will be gone, so “cap jail” is far from a foregone conclusion.

Conclusion

With my sincerest apologies for the length of this article, I vote we forget all about money now and focus on the upcoming season. That was the most exhausting offseason ever.