Quarterback Joe Flacco climbed to a new financial stratosphere when the Ravens made him the highest paid player in NFL history with a $120.6 million contract.
Flacco received a $29 million signing bonus and is due option bonuses of $15 million in 2014 and $7 million in 2015 in the deal he signed Monday. He also emerged as a partner of sorts with the Super Bowl champions, joining a small fraternity of quarterbacks whose performance and salary-cap figures are pivotal to the health of their respective franchises.
Because of his lofty contract, which includes a $62 million payout in the first three years, Flacco is positioned for his deal to be restructured prior to the 2016 season when his salary-cap figure balloons to $28.55 million with an $18 million base salary. Barring an unexpected rise in the NFL salary cap, that's when the Ravens are likely to address Flacco's contract to lower his salary-cap impact.
"Depending on the salary cap, that's what will determine when we get to the fourth year, what they're going to have to do," Flacco's agent, Joe Linta, told The Baltimore Sun. "We really viewed this as sort of a three-year deal to make sure the first three years Joe was paid accordingly with the top guys in the league."
Once quarterbacks get to Flacco's level economically, they quickly become candidates for restructures.
That's what recently transpired with Pittsburgh Steelers quarterback Ben Roethlisberger, whose salary-cap figure for this year was lowered by $6 million to $13.95 million. Roethlisberger was scheduled to receive a base salary of $11.6 million but $9 million of that was converted into a signing bonus and prorated over the next three years. He's now being paid a $2.6 million base salary this year.
The mechanism works for the quarterback to get an immediate influx of cash, and for the team to gain more salary-cap freedom to retain or acquire new players.
"That's what happens with these franchise type guys, whoever has the big salaries, is you work with the team to reduce the cap number," said Bruce Tollner, one of Roethlisberger's agents, in a telephone interview. "You're not doing much as far as changing the deal except you get your money guaranteed, which is nice. Most of the time, you're just guaranteeing the salary. It's a nice little tool to work with the cap. As the player, you work with the team to help your teammates and you work in the best interests of the organization.
"So, it's a win-win situation. When you're at that point in your career, you're absolutely in an elite fraternity and a partnership between the organization and their quarterback. It's about teamwork on and off the field. Some of the new deals even have language in there that says the team has the right to address the deal and guarantee the money at any time. You just need to be on the same page."
The New England Patriots recently gave quarterback Tom Brady a $30 million signing bonus and extended his existing contract by three years. It reduced his salary-cap figure to $13.8 million for this year.
Brady is on the opposite end of the spectrum from Flacco because his new financial arrangement was designed to ensure that he'll retire with the Patriots and that his contract won't become unwieldy for the salary cap.
It's something that's on the horizon eventually for Flacco, provided that he excels. If the Ravens wanted to, they could ostensibly move on from Flacco after three seasons and save money against the salary cap. That's not what they expect to happen, though, or they wouldn't have paid him the way they did.
"Flacco is now on a higher level," said former sports agent Joel Corry, who analyzes the business of football for National Football Post. "He's got a unique status."
The Ravens are betting on Flacco continuing his upgraded play, which includes 11 touchdowns and zero interceptions during a historic playoff run Flacco capped with three touchdowns in a victory over the San Francisco 49ers when he was named the Super Bowl's Most Valuable Player.
Flacco has a fully guaranteed base salary of $1 million in 2013 for a total first-year compensation of $30 million.
The 2008 first-round draft pick has a $6 million base salary in 2014 that's guaranteed for injury only, but that voids once the first option is paid. His salary-cap figure is $14.8 million in the second year.
In 2015, Flacco has a $4 million base salary guaranteed for injury only, which voids when the first option is paid. His salary-cap figure is $14.55 million.
Although Flacco's contract is expected to change before the 2016 season, he's due the following base salaries and cap figures in the latter portion of the deal as it currently stands.
In 2017, Flacco has a $20.6 million base salary and a $31.15 million salary-cap figure. In 2018, the final year of the contract, Flacco has a $20 million base salary and a $24.75 million salary-cap figure.
The likelihood of Flacco's contract remaining untouched that far into the deal is extremely low, though.
"You've seen this happen with Ben Roethlisberger, Eli Manning, Peyton Manning, Brady," Corry said. "You only do that with elite players. Otherwise, you're setting up a situation where the player gets cut when he gets to the higher cap numbers. By restructuring, it helps you retain more of your core players and stay competitive in free agency.
"That's becoming the trend lately with Tom Brady doing that. You have to have a very high level of trust between the team and the player. It's critical that you have that or you can't work together on something like this."
By design, Flacco has an extremely low salary-cap figure for this year.
With a cap impact of $6.8 million for this fiscal year assigned to Flacco, the Ravens are $11.263 million under the salary-cap limit of $123 million. That should allow the Super Bowl champions to potentially retain some of Flacco's teammates, including unrestricted free agent inside linebacker Dannell Ellerbe, veterans under contract like wide receiver Anquan Boldin, and a restricted free agent class that includes tight ends Dennis Pitta and Ed Dickson and defensive lineman Arthur Jones.
By striking this deal prior to Monday's NFL deadline, the Ravens avoided having to make Flacco their franchise player. That would have entailed either a $19.1 million exclusive tender or a nonexclusive tender of $14.896 million.
"I know it's going to be less on the cap than an exclusive or nonexclusive franchise tag would be," Flacco said when asked about his contract relative to the salary cap. "I know we have a lot of good players on the team, and I love to play with those guys so hopefully it works out very good for the organization and we can keep as many people as we need."
Linta indicated that Flacco has always been cognizant of how his big contract would affect his teammates' job security.
"The fact that we were able to keep the cap number low enough in the first year that it preserves their ability to re-sign at least some of these guys and keep the core of the team together was important," Linta said. "It was really a mutual assured destruction to put the franchise tag, either one of them, on him. It was a big benefit to both parties to be able to figure something out. It came up in conversation that we wanted to make sure we could work with them on the cap to help preserve the team and keep the team together."
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