New York Giants General Manager Joe Schoen was asked at last Tuesday’s press conference about shopping for free agents, and he said that he and his staff always ask, “What’s the walk-away?” The question was asked in the context of external unrestricted free agents that the Giants may try to sign. It equally well applies to the Giants’ own free agents, most notably quarterback Daniel Jones.
There has been much speculation about what “number” Jones will warrant on a second contract. It has fluctuated wildly over the season, from not bringing him back at all to tagging him to giving him 2 years at $15M average per year (APY) to 4 years at $40+M APY, with tremendous recency bias. The great performance vs. Minnesota has escalated his price. The bad game vs. Philadelphia has dropped his price. It’s all a bit silly. None of us knows what Schoen’s “walk-away” number is for Jones nor what Jones’ own number is for not returning.
Let’s ask a different question: Not, what will Jones sign for? That is influenced by things other than pure football value considerations. Instead, what should the walk-away number for any NFL general manager be for a quarterback? If we posit that GMs sign quarterbacks to big contracts in the hope that they will lead their teams to the Super Bowl, a relevant question, to paraphrase former New York mayor Ed Koch, is: How’re they doin’?
Giving a quarterback a big contract isn’t often a good idea
Here are the top 16 contracts for current NFL quarterbacks:
Of the 14 playoff teams, only five had quarterbacks with contracts in the top half of the NFL (Patrick Mahomes, Josh Allen, Dak Prescott, Kirk Cousins, Tom Brady). Only three teams that made the Divisional Round had quarterbacks in the top half, and only one of the four teams to make the Conference Championship Games has a highly-paid quarterback.
The other playoff teams had either highly drafted QBs still on rookie contracts (Trevor Lawrence, Joe Burrow, Tua Tagovailoa, Justin Herbert, Daniel Jones, Lamar Jackson, Jalen Hurts), low-paid former journeymen (Geno Smith), or $782K Brock Purdy.
Is this just a quirk of the 2022 season? Or is it telling GMs that $30M+ APY at current salary cap levels is compromising a team’s ability to compete for a Super Bowl with the rest of its roster? Mahomes is worth the money, if anyone is. He’s been to two Super Bowls and won one, and he’s made the AFC Championship Game every year he’s been the starter. This year he passed for 5,250 yards and 41 TDs while throwing to Travis Kelce plus a bunch of middling wide receivers.
No other QB except Tom Brady can claim such success, and Brady never had anything near today’s mega-contracts (his highest cap hit was the $25M he took to go to Tampa Bay in 2020). Josh Allen has reached the AFC Championship Game once and lost in the Divisional or Wild Card Round three other times. This year was his biggest cap hit to date ($16.4M), but that jumps to $39.8M in 2023 and gets worse thereafter.
Joe Burrow is probably the next most successful QB in the NFL, having reached the Super Bowl in his second season and gotten to the AFC Championship Game in his third. Arguably he could ask for and get a huge contract, but it’s not clear whether doing so will compromise his future chances of winning it all if it affects the Bengals’ ability to retain Tee Higgins and Ja’Marr Chase, two of the primary reasons for his success.
Something like $25M APY should be the walk-away for GMs for quarterbacks. That would be about 11% of the salary cap, leaving enough money to build the rest of the team into a real contender. The fact that so many teams have blown past that number says that there are some bad GMs out there. What does Green Bay think about Aaron Rodgers’ $50.3M APY now that Davante Adams was squeezed out and left and the Packers missed the playoffs? How does Denver feel about the $49M APY they gave to what looks like a washed Russell Wilson? Is Arizona happy with Kyler Murray’s $46.1M APY given all the issues with him? And what in heaven’s name was Cleveland thinking by giving Deshaun Watson a fully guaranteed $46M APY contract? Giants fans have to hope that Joe Schoen has processed the fallout from these deals.
Thinking about the overall financial picture
A championship team requires a core of impact players, not just a QB. Below is a comparison of some financial numbers for the eight teams that made the Divisional Round:
The top part of the chart shows the APY cost of the top ten most highly paid players for each team. GMs use cap wizardry to allocate salary cap hits in specific seasons, but APY is a general indicator of how they value specific players and how many costly contracts they are willing to commit to in pursuit of a championship. For reference purposes the team salary cap in 2023 is projected by Over The Cap to be $225M and to increase $20-30M per year for the next few years.
The Bills, Eagles, Chiefs, and 49ers have allocated roughly two-thirds of their available funds for the next few years to their top ten players. That leaves something like $70-80M per year for the other 43, which means a lot of minimum or near-minimum contracts.
How the Super Bowl contenders built their teams
Philadelphia has gone whole-hog on difference-makers, with 10 contracts above $10M APY (plus five more at $7-13M APY). They’ve been able to do that because they have what appears to be a top-tier QB in Jalen Hurts on a second-round rookie deal ($1.5M APY). That window will close soon, though, with Hurts likely getting a contract extension for top dollar next season, and several older players in their top ten being jettisoned to make room. They will surely consider it to be worth it if they win it all this season, but whether it is a sustainable excellence depends on whether they can find equally impressive replacements at lower prices once Hurts gets paid. General manager Howie Roseman will have to either swap top-tier players in and out next season, or restructure contracts, or add void years, or all of the above since he currently only has about enough cap space to sign his 2023 draft class. Making it more challenging is the $28.4M in dead money he has for 2023, second highest in the NFL.
Buffalo has already paid its QB, whose cap hit begins to accelerate in 2023 and onward, and so they can afford fewer big contracts, yet their top ten exceed Philadelphia’s in cost, and they have only made the AFC Championship game once and not yet gotten to the Super Bowl. Josh Allen’s cap hit goes from $39.8M in 2023 to $41.8M and $51.3M the following two years, although none of it is guaranteed after 2024. Nonetheless, Buffalo finds itself in tight circumstances - a seemingly excellent team that has not quite realized its potential and that is not going to find itself in better financial shape in the future.
Kansas City has Mahomes with a huge APY number (and cap hits in the mid-$40Ms for the next three years) and only seven other big contracts on the books. There is a big dropoff from Marquez Valdes-Scantling at $10M APY to the next most expensive player. This is the most top-heavy of all the playoff rosters. The ripple effect of Mahomes’ contract was the Chiefs’ decision to trade Tyreek Hill rather than sign him to a big second contract. The Chiefs make it work only because of the brilliance of Mahomes and his one remaining stud receiver, Travis Kelce, a tight end who gets much less money than elite WRs do.
San Francisco, the other top-heavy team, is an anomaly, with no quarterback that costs much, and an elite running back, tight end, and off-ball linebacker among their top seven contracts. We didn’t get to see if they could actually pull off the feat of winning a Super Bowl with the last pick in the draft as their starting QB under contract for the next three years and with big money spent on supposedly low-value positions. But just getting as far as they did may cause the rest of the NFL to re-think who should get the big contracts.
Cincinnati was the only serious Super Bowl contender this year that had fairly little of its budget devoted to its ten most costly players ($109M). That will be changing soon, however, since we can expect Joe Burrow to get a Mahomes-like second contract. Will the effect of a Burrow contract be parting ways with top-flight WR Tee Higgins, drafted in the same year as Burrow but in Round 2, meaning that 2023 is his final contract year?
What does it mean for the Giants?
The Giants are clearly in the best financial shape of the eight teams that made the Divisional Round, with 51 players under contract and $41.8M in effective cap space after their draft class is signed. It will get even better assuming that Kenny Golladay, who has the second largest contract on the team, is released during the off-season, although some dead money will be added.
The Giants’ problem is a lack of difference-makers. Their two likely returning highest-paid players, Leonard Williams and Adoree’ Jackson, are key contributors but not candidates to be Pro Bowl or All-Pro players based on recent performance. (Williams did make the Pro Bowl once with the Jets.) Andrew Thomas, Kayvon Thibodeaux, Saquon Barkley, Daniel Jones, and Evan Neal are either in that playmaker category or have the potential to get there, and Dexter Lawrence, who is not even in the Giants’ top 10 in APY, will be soon. Decisions on Thibodeaux and especially Neal are years away. For the other four, signing second contracts could wipe out all of that $41.8M in cap space depending on how the contracts are structured. Somehow the Giants will need to fit in difference-makers at high-leverage positions such as wide receiver and cornerback. Joe Schoen had better find some gems in the draft and maybe make a headline trade too.
That brings us to the last line in the chart above. The salary cap is a real thing, but also an accounting device. Teams routinely use signing bonuses and unlikely-to-achieve incentives to fit under the cap while paying players more in the current season. The actual cash projected to be spent in 2023 by the eight 2022 Divisional Round teams is well under the $224.8M salary cap. The Giants especially have very little cash spending committed for 2023 ($125M, second lowest in the NFL). So if Joe Schoen really wants to, he can go crazy on higher-rent free agents and multi-year contracts for the Giant free agents he wants to keep. Here is how much actual cash was spent by NFL teams in 2022:
Last year 24 of the 32 teams spent more cash than the $205M salary cap. The Giants were fourth-lowest in cash spending, almost $18M less than the 2022 salary cap amount. Some teams spent way over the salary cap amount in cash. For the Rams and a number of others, it didn’t work out well at all. For the Bills, it was a risk worth taking that didn’t quite get the desired result.
In 2023 Schoen will have plenty of cap room to sign players and even more margin for cash spending to the extent he is willing to structure contracts with prorated signing bonuses and difficult-to-attain incentives. What he actually does will reveal what his philosophy is as a GM and how he views the Giants’ chances. Schoen learned at the foot of Buffalo GM Brandon Beane, who wasn’t afraid to spend well over the cap when he thought the Bills had a good chance to win the Super Bowl ($267.6M in 2022). If Schoen keeps cash spending well below the salary cap amount in 2023, it’s telling us that he doesn’t see the team as ready to make a run. If the Giants improve to the level of true contender and he still keeps cash spending below the cap it will say that he is philosophically opposed to pushing large costs into the future via signing bonuses. That would be consistent with his stated emphasis on building a sustainable winner.
What about Daniel Jones?
Which brings us around to Daniel Jones. Jones’ agents will be able to make any number of comps to argue that Jones deserves a contract with an APY north of $40M: Kyler Murray, who at the moment seems like the second best QB in the 2019 draft, at $46.1M, is the obvious one. Derek Carr, no longer in the Raiders’ future, at $40.4M, is another. But the chart near the top of this article indicates that spending at these levels usually does not lead to team success, whether because it reduces the ability of the GM to strengthen the team elsewhere or because the QB himself is overrated, or both.
Surely Schoen’s walk-away number for Jones is lower than $40M. It should be considerably lower. Ryan Tannehill, often named as a benchmark for Jones talent-wise in the past, is probably a good comp contract-wise too. Tannehill led the Titans to the playoffs three consecutive seasons, and it might have been four had he not been injured late this season. He went 2-1 in the playoffs in 2019, losing to eventual Super Bowl champion Kansas City. Last season his team was eliminated by almost-Super Bowl champion Cincinnati.
Tannehill signed a 4-year contract in 2020 for $118M, per Over The Cap, i.e., $29.5M APY. The key feature, often absent from discussions about free agent signings, is that only $61M of the $118M was fully guaranteed. That is a trump card for Schoen in negotiations over Jones (and Saquon Barkley, too).
A reasonable guess is that Schoen does not want to go much over $30M APY for a player he didn’t want to take a risk on for $22M eight months ago, with a Year 1 cap hit in the $20M’s. That APY would be close to the estimated $32.45M non-exclusive franchise tag number for Jones, which gives Schoen some leverage. If Schoen is forced to something closer to $35M APY to get a three-year deal, he might agree to it if the details are favorable. That means a low 2023 cap hit and an out after Year 2 that makes the guaranteed amount only 60% or so of the total, so that the inflated salary of Year 3 only happens if the Giants have risen to the elite tier of teams by then. Something along those lines should be the walk-away number for Joe Schoen. Whether it will be, we’ll find out, since Schoen said at his presser that “We’re happy Daniel is going to be here.”