In 2010, the St. Louis Rams picked Oklahoma quarterback Sam Bradford first overall in the NFL draft. The following summer, he signed a six-year, $78 million deal that included $50 million in guaranteed bonus money, all before playing a single down in the NFL. Laced with performance-based incentives that topped out at a potential $86 million payout, it was the richest rookie contract in the history of the NFL.
And it probably will hold that record for some time because of new salary cap rules applying to rookie pay.
This year, when the Indianapolis Colts draft Andrew Luck with the first pick in the 2012 NFL draft, he will probably sign a deal worth somewhere in the neighborhood of $23 million – a comparatively paltry sum. That’s because the NFL’s new collective bargaining agreement (CBA), reached last summer with the players, has stricter rules for the way that a team’s salary cap can be used for rookie salaries.
Here’s how it works: One of the major terms of the CBA was a rookie wage scale, in which first round draft picks can only sign four-year deals. The team has the option to add a fifth year to the contract, if the player performs well. Carolina Panthers quarterback Cam Newton, last year’s top pick, signed a four-year deal for $22.3 million. The Panthers have the option to pick him up for the fifth year, for which he would earn the average of the Top 10 quarterback salaries in the league.
There is a set pool of money that a team is allowed to spend on rookies (last year, it totaled $874 million). Unlike the old system, that sum has to include bonuses and performance incentives. Under the old rules, Bradford’s $50 million guaranteed bonus was allowed to exist outside the rookie pool, because he wouldn’t be paid that guaranteed money until after his first season. Under the new system, money paid to rookies applies to both a team’s salary cap and the rookie pool, making huge bonus guarantees like Bradford’s impossible.
This is good for the league, and the draft, in several ways. For one, rookie contract holdouts will be a thing of the past, as there is only a set amount of money available even for top-flight draft picks. Last year’s draft crop was the first affected by the new rules, and most rookie contracts were signed within a week of the start of the allowable contract negotiation period, in late July.
It makes the draft more exciting, too, because teams will be trading and jockeying more actively for top positions. Before, the exorbitant amount of money involved made the top slots huge financial risks for NFL teams, so there wasn’t as much activity at the top of the board. A bad pick, like the Raiders $36 million bust on Jamarcus Russell in 2007, could have salary cap repercussions for years. Now, teams can pursue potential stars without the huge downside, so trading up for top picks will likely become more common. The Redskins, for instance, traded up to the Ram’s No. 2 overall pick for 2012, positioning themselves to draft highly-touted Baylor quarterback Robert Griffin III (considered by many to be just as good as Andrew Luck).
Finally, it leaves more cap money for proven veterans, who will no longer see their earnings eclipsed by rookies, many of whom may not see any playing time for a few seasons. When Bradford’s deal was done, he got more bonus money than either Tom Brady or Eli Manning, both Super Bowl winners renewing their own contracts that year. Another side effect: minimum salaries for all players have gone up, and minimum salaries for veterans are higher than those of rookies. A rookie now earns at least $375,000 per season, a second-year player $450,000, and so on.
Going high in the draft is still a boon for players like Luck and Griffin. But they won’t be breaking the bank for their respective teams.