The Truth About Tom Brady's New Contract (with Special Guest Star Matt Schaub!)
Of the three major professional sports leagues, football has the methodology of compensation that is the least broken and the fiscal system that is least susceptible to ruin at the hands of compulsively spending owners, and it's all because of the NFL's policy of utilizing non-guaranteed contracts.
Unlike the NBA and Major League Baseball, where nearly all contracts are fully guaranteed, most of the deals in the NFL are year-to-year endeavors fueled by signing bonuses, sometimes really big signing bonuses.
Unfortunately, one byproduct of the NFL's contractual system is that the reporting of players' signing new deals lends itself to misinterpretation by the fans and by many media members. This phenomenon was on full display this week when New England Patriots quarterback Tom Brady inked a new pact that should allow him to retire a New England Patriot at age 40 in 2017, if he so chooses.
Here's what I mean:
On Monday afternoon, the story was broken by SI.com that Tom Brady had agreed to a contract extension with the New England Patriots. Here are the details that were immediately reported:
1. The extension would pay him a relatively paltry $24 million over the three-year period of 2015 through 2017. (Brady's current deal was set to run out after 2014.)
2. In the process, Tom Brady's salary cap figure for the next two years came down by nearly $15 million for the combined period of 2013 and 2014.
Without seeing the mechanics behind the deal, and taking everything at face value, the knee-jerk reaction is to think that Tom Brady is some sort of football philanthropist, voluntarily forfeiting money because football is really just a well-paid hobby as opposed to his vocation. And while he probably has been underpaid for his productivity at times in his career, Tom Brady didn't spend his day Monday happily turning himself into the quarterback charity case that some make him out to be.
Even worse, the reporting of the details of Brady's extension, without truly finding out what's involved with any restructuring, lends itself to headlines like this one that the Houston Chronicle ran in its blog section on Monday night:
Pats sign Brady to deal much smaller than Schaub's
It's one of those self-perpetuating headlines that involves no real analysis, drives us further away from the actual contractual effect of Brady's deal, and eventually lands us at a place that makes Matt Schaub's contract look much worse (for the Texans) than it really is, and Tom Brady's contract look much better (for the Patriots) than it really is.
So with all of that in mind, here are the real details of Tom Brady's new contract:
1. Tom Brady's cap number goes way down the next two years but he will actually make more money than he would have under his old deal in 2013 and 2014. Before Monday, the remainder of Brady's existing deal had consisted of $19.5 million in salary and $10 million in roster bonuses over the 2013 and 2014 seasons. In his new deal, he will receive fully guaranteed salaries of $1 million in 2013 and $2 million in 2014, and a $30 million signing bonus paid out as follows:
- Paid $10 million of that bonus this season - Paid $5 million on Feb. 15, 2014 and - Paid $10 million in the 2014 season - Paid $5 million on Feb. 15, 2015.
So essentially, Brady will make $3 million more in 2013 and 2014 (or more accurately, from 2013 into very early 2015, if you want to nitpick) under his new deal. So for the near term, from a cash standpoint, Brady actually got a raise.
From a cap standpoint, Brady's 2013 figure will be $13.8 million ($6.8 million in past bonuses, $6 million in the prorated portion of the new bonus, and the $1 million salary), a reduction of $8 million. His 2014 cap figure will be $14.8 million.
(Fun fact: Under this new deal, Brady went from the highest 2013 cap figure among quarterbacks to ninth. Of the other quarterbacks in the top ten, only one even made the playoffs in 2012, Peyton Manning. This might deserve its own post.)
2. Brady's three-year extension from 2015 through 2017 is as fully guaranteed as any long-term salary money you'll see in an NFL contract. Here's the catch about breaking news on NFL contracts -- the deals always sound bigger than they actually are, or more accurately bigger than they will wind up being. So when Matt Schaub signs a four-year, $62 million extension (and our city goes ape shit in the process), people lose sight of the fact that the odds of him seeing all of that money are sketchy at best.
However, Brady's three-year extension actually runs contrary to the normal NFL modus operandi. The 2015 through 2017 portion of his deal is fully guaranteed for injury at anytime, and fully guaranteed PERIOD so long as Brady is on the roster throughout the 2013 and 2014 seasons. In other words, the only way Tom Brady doesn't see every nickel of this deal is if he spontaneously decides to retire at some point (which I would put at a 0.001 percent chance and that's only because Tom Brady has a life of day-long sex romps with Gisele Bündchen awaiting him every day in retirement).
So now, perhaps this would make you say "Well, Sean, then Tom Brady's deal is actually a LOT like those guaranteed NBA and MLB contracts, huh?" And I would say, sort of. But there's more....
3. Make no mistake, Brady's three-year extension from 2015 through 2017 serves two main purposes, and neither of them is to give the Patriots a "home town deal" from 2015 through 2017 First, from a functional standpoint, because the NFL salary cap allows teams to spread signing bonus money out prorated over the life of a contract, the years 2015 through 2017, first and foremost, serve as a placeholder for the pro-rata portion of the aforementioned $30 million that Tom Brady is getting paid in signing bonus money these next two years.
Second, because it is virtually guaranteed, the three-year extension establishes a floor for Brady's compensation from 2015 through 2017, and more importantly establishes a golden parachute in the event he is catastrophically injured at any time during the life of the contract.
In other words, of all the things that the last three years of Brady's deal are expected to do, making sure he gets paid half of his market value salary-wise out of the kindness of his heart is at the very bottom of that list, and I would argue that it's not on the list at all. So, to that end....
4. If you want to bet with me right now that Matt Schaub will make more money than Tom Brady in 2015 and/or 2016, I'll be happy to take your action. And I guess this is where I say, I'm looking right at you, Jay Lee of the Houston Chronicle! On paper, as of this moment, Matt Schaub is slated to make salaries of $12.5 million in 2015 and $14.5 million in 2016. More importantly, his cap figure for those two seasons is set to be $17 million and $19 million, respectively.
And MOST importantly, Schaub is not guaranteed a dime of that 2015 and 2016 money, and barring a Schaub-led Super Bowl victory by the Texans over the next two years, he has zero chance of seeing all of that money in either of those years, in my opinion. Might he see some of it as the Texans quarterback going forward in 2015 and beyond? Maybe. But he'll be 34 heading into the 2015 season so Schaub's not being back at all after 2014 is certainly a possibility, depending on how these next two years go.
In my mind, Brady's salaries are no less a moving target than Schaub's in 2015 and beyond, they're just potentially moving in a different direction. Whereas Schaub's salary figures represent ridiculously high ceilings (like Sistine Chapel high), Brady's 2015-through-2017 salary figures are baseline floors that can be raised or supplemented with more bonus money come 2015, especially if the salary cap goes up at any point over that time.
There are reasons, I suppose, to think that Brady will just live with his $24 million income over those three seasons. After all, he doesn't really need the money. He himself is worth well over nine figures, and his wife is the highest paid supermodel in the world. Together, they are the third highest paid celebrity couple on earth, behind Jay-Z/Beyonce and Mariah Carey/Nick Cannon.
But he didn't really need the money this week when he reworked/extended his contract to make the deal more cap friendly. And yet that deal also became more "Brady friendly" for the next two years.
The three years after that were signed for around what career backup Matt Flynn signed for in Seattle. I mean, if you're Tom Brady, there are "home town" deals, sure. But less than half market value? Matt Flynn dollars?
Tom Brady is, by all accounts, a great teammate, a fierce competitor, and inarguably one of the greatest quarterbacks of all time. Maybe the greatest quarterback of all time.
Let's just wait until we get to the 2015 offseason and see what happens with those next three years before we start canonizing him as some sort of selfless football philanthropist.
Listen to Sean Pendergast on 1560 The Game from 6 a.m. to 11 a.m. weekdays, and watch the simulcast on Comcast 129 from 6 a.m. to 8 a.m. Also, follow him on Twitter at http://twitter.com/SeanCablinasian.
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