The Denver Broncos are fortunate to have Drew Lock under a cost-controlled contract for the next three seasons, thanks to the rookie pay scale in place.
That’s especially good news when you hear about other teams that now have to pay big bucks to their quarterbacks, such as the Dallas Cowboys with Dak Prescott.
But if Lock proves to be the quarterback the Broncos can build around, it won̵
However, to understand how the situation could really evolve, it helps to examine Prescott’s situation and what he and his agent can think of when it comes to their contract negotiations – and how it can record Locks situation when he is eligible for an extension.
What really means in a QB contract
First, it’s no secret that quarterback contracts are the biggest financial commitment among veterans. We can see how it has worked with QBs who are still at the beginning of their careers, such as Russell Wilson averaging $ 35 million a year for his last four-year extension and Kirk Cousins averaging $ 33 million a year for his last two-year extension.
But the average salary per year is not the primary indicator of how good a contract is for a player. The total guarantees – especially full guarantees – and new money both play a role.
In the latter case, if a player signs an extension when he still has a year left on his current deal, the player and his agent will want to get more money on top of what the player is already planning to do in the last year.
For example, Cousins would earn $ 30 million in 2020 from his previous contract and $ 21.5 million of that money was converted into part of the $ 30M signing bonus. Thus, in terms of new money, Cousins received $ 66 million (which is where the $ 33 million APY figure comes from). His $ 61 million full guarantees include the $ 30 million signing bonus, which means in terms of new fully guaranteed money, he gets $ 39.5 million.
Then there is the cash flow, which is about how much money cousins get each year. Although signing bonuses are pro-rated for cap purposes, they are paid out for cash purposes during the year the contract is signed – which means Cousins gets his $ 30M signing bonus this year, along with a base salary of $ 9.5M.
In 2021, Cousins receives a base salary of $ 21 million, which means that cash flow in 2020 and 2021 amounts to $ 60.5 million. The final year of the deal requires a base salary of $ 35 million. So if you hear someone say that Cousins gets $ 35 million in the last year of his extension, that sounds like a lot – but it fades in comparison to the $ 60.5 million he gets in 2020 and 2021.
For more explanation on the importance of cash flow, you can read what Over The Cap’s Jason Fitzgerald had to say about Prescott’s contract negotiations and how cash flow is compared for different QBs. Particularly noteworthy is the contract for Wilson, who received a more favorable cash flow in his contract, as he collects most of his business earlier in his contract than other QBs.
This is important for Prescott because when you hear reports that Prescott rejected a deal that had $ 45 million in the last year of the offer, it doesn’t mean he and his agent made a bad decision. If Prescott does not collect most of the money in his contract until the last year or two, it is not as good for him, as one where he collects a greater amount of money during the first two years.
It is true that many quarterbacks will collect the full amount of their contracts because a good QB is sure to hold their roster spot for a long time. But we have seen that this is not always the case given that Joe Flacco, Andy Dalton and Cam Newton were all released before their contract expired. Everyone, earlier in their career, was considered at least one QB that a team could build around.
It is also true that Cousins got his three-year contract which he signed with the Vikings back in 2018 fully guaranteed. But it was a three-year agreement – if a QB takes a five-year agreement, it will be much harder to get the final year of the agreement fully guaranteed. Flacco, Dalton and Newton are all examples of QBs that diminished as they age, so it can be risky to guarantee too much money to a long-term QB.
Why the duration of the agreement is important
But that takes us to another point when it comes to Prescott, and that’s the length of the contract he and his agent are looking for. It has been reported on Prescott denies reports that he turned down a five-year, $ 175 million deal and that Prescott wants $ 45 million in the final year of the deal.
SI Cowboys insider Mike Fisher reports that the Cowboys have a standing offer of $ 175 million over five years, equivalent to $ 35 million APY. Per Fisher, Dak wants less maturity on his business and is looking for a four-year contract.
The question is really about contract length. As Fisher reports, Prescott wants a four-year deal while the Cowboys are seeking a five-year deal.
For the Cowboys, a longer contract is good for two reasons. First, it allows them to better spread a signing bonus because it can be pro-rated for five years (the maximum duration can be pro-rated) rather than four. It helps keep the lid smaller and reduces any dead money fees on a player.
Second, it ensures that the Cowboys can keep Prescott in the longer term as QB wages continue to rise. For Prescott, a smaller signing bonus means less cash in advance – and thus the potential for better cash flow can be reduced – and if he continues to play well, he has the opportunity to get in the rising quarterback salaries.
Some may point out that Prescott takes some risks with a shorter deal, because if his game declines, he will miss a bigger salary. But if he takes longer and his game decreases, the Cowboys could cut him anyway, which means he doesn’t pick up on the final years of the deal.
Prescott and his agent will point to extensions that Wilson, Carson Wentz and Jared Goff signed for four years, arguing that this is the length Prescott should also get. However, the Cowboys have made it their practice to make offers in five or six years for players they want to keep in the long run.
Add to that the fact that Prescott wasn’t a first choice, which means the Cowboys didn’t get the fifth-year option when drafting him. A team can always exercise the option for a first round of QB and hold on extension calls if they wish.
Not so with QBs taken in later rounds – when their four-year contract expires, the days of that QB on a cheap salary are over, if they prove to be the guy you can build around.
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What this can mean for locks
So what does everything have to do with Lock? First and foremost, there is the obvious comparison to Prescott: Lock has no fifth-year option on his rookie contract. So when 2023 arrives, Lock is eligible for unlimited free agency and although the Broncos can always use the franchise tag, it won’t be cheap.
The second point is also obvious: quarterback salaries continue to rise, so if Lock proves to be the guy in Denver, he may be in line with a bigger payday than maybe what Wilson is currently getting.
Although Prescott takes less money than Wilson, there are other QBs that will be set for extensions and at least one is likely to change the market. If Lock proves to be the guy, he is likely to exceed what Prescott gets in a deal.
The third is a less obvious point, but one important thing: if Prescott gets his way and only has to sign a four-year deal, it opens the door for other QBs. Why would Patrick Mahomes and DeShaun Watson say any deal in more than four years if that’s what Prescott gets?
And what does it mean for people like Lamar Jackson, Baker Mayfield or Josh Allen if they prove worthy of extensions?
Suddenly, the most important position in the NFL becomes one where players are unwilling to take a deal of five years or longer. The result: prices continue to rise as QB contracts expire more often.
There is also cash flow to keep in mind. The Broncos usually go with smaller signing bonuses, as they reduce dead money fees if they cut a player before his contract expires.
However, smaller signing bonuses, with large portions of a contract pushed into the last years with base salary, do not give the player as good cash flow as do larger signing bonuses, which represent more cash in the first year.
This is important because Lock is represented by the Creative Artists Agency, with Tom Conden as head of the football department. The condo is one of the toughest negotiators among NFL agents and has strong knowledge of how NFL contracts work.
It’s true that Condon couldn’t get many concessions in the rookie contract that Lock signed, but that’s when Lock needed to learn the playlist and get into training camp. If Lock leads the Broncos to the playoffs over the next three seasons – and especially if he gets them into a Super Bowl – things will be different than when Lock was a rookie.
And if other QBs who turn out to be long-term guys take four-year deals, it’s not hard to see the Conden requesting the same contract length, plus seeking the best possible cash flow for the contract. It could be a problem for the Broncos, who prefer to go with smaller signing bonuses and for most franchise players have signed them to offers for five years or more (Matt Prater is the exception, but as a kicker he doesn’t play a premium position).
Of course, the Broncos don’t have to worry about an extension for Lock for a couple of seasons. In addition, I have previously discussed that a big contract for a quarterback does not make it impossible to build a team around him, but that means you have to do a good job of drafting and developing players, while being smart about free agency and trading .
But the Prescott negotiations are something to keep in mind, as are all contract negotiations for a quarterback. They can all have an impact on a possible extension for Lock.
And given that quarterback salaries won’t decrease any time soon, fans should enjoy low cost years for Lock while they can. If he turns out to be the guy, the low-cost years will finally end.