Contract Futures: Incentives For Rookies

Now that all of the picks from rounds 3 through 7 have been signed, I wanted to take a minute to discuss a feature of those deals. Teams are split about the length of those deals. Some do three years in length and some, like the Eagles, do four.

A feature of the four year deal is that it has a salary escalator built into the fourth year. This is because restricted free agency makes it likely for a player on a three year deal to get tendered at a much higher base salary for his fourth year assuming he is any good. In order to make players forgo that potential upside, teams write somewhat more limited upside into the contract.

For example, according to a league source, Kurt Coleman’s deal includes an escalator that gives him a raise from a minimum salary in his fourth year up to a $1.1 million base salary if he plays in 35% of defensive snaps in two of his first three seasons, and if just one of a basket of other things happen: Coleman intercepts 7 passes in any year; Coleman leads the team in interceptions; Coleman leads the team in interception return yardage; or, most importantly, if the team as a whole reaches an unspecified incentive (such as total interceptions or total tackles, or the like).  As I understand it, usually the team incentives are written such that the team is likely to achieve that incentive at least once in the next three years.

His fourth year base salary can further escalate to $2 million if Coleman plays in a Pro Bowl in his first three years, as well as one of the same basket of things above happening.

This structure appears to be consistent for all of the late round picks, as I understand it – 35% playing time in two seasons as the primary trigger, and $1.1 million as the escalated salary.

Teams vary in how they structure incentives like this. According to the source, however, the Eagles are somewhat unique in that most teams offer an escalator to $1.308 million (or, in the case of the Texans, $1.408 million) rather than $1.1 million. Last year, the Eagles’ escalator was $1.0 million, as opposed to the rest of the league which used between $1.22 million and $1.308 million.

To compensate for that difference, the Eagles offer the second $2 million escalator. As I understand it, that is not typical league-wide.

Whether this second escalator is actually an achievable number is an open question, but three later round Eagles under Reid have made the Pro Bowl in their first three years in the league: Jeremiah Trotter, Brian Westbrook and Trent Cole. Plus, Stewart Bradley and Brent Celek, for example, were relatively close – Bradley had a good shot last year before he got hurt, given the press he was getting, and Celek was a victim of some extraordinary tight end play in the NFC. So it isn’t like that second tier isn’t possible if the player is any good.

That said, it is only a fair offset if about one in every four players who qualifies for the first tier also qualifies for the second tier. I am skeptical about whether that is likely to be the case. Overall, I’d guess this is a savings for the team.

From what I have seen, it doesn’t seem like the Eagles are paying more in signing bonus to their rookies to compensate for this difference. That means one of two things: either the agents see the second tier escalator as a fair offset for the lower first tier escalator, or they just don’t think it is worth their energy to argue about for guys who have to focus first and foremost on making the roster. I asked another league source about this issue, and he told me that generally agents care about this difference, but when the team shows that it has done the same for similar players and that there is precedent, the agents back off.

The real question is why do the Eagles make the effort to do things differently than the rest of the league in this case? My take is that they value top tier talent more than lower tier talent. They’d rather bump an exceptional guy higher and save that money on the backup-type players. They’d rather pay $2 million to a guy who makes a pro bowl early than pay an extra $200k to a situational player, like an Omar Gaither.  Chances are they will extend the pro bowler anyway, so it is an investment in the future in a way, while for the mid-level guy, who they might not keep, it is just throwing good money away.

That's just reading tea leaves though. More complications for an organization that likes them.