Why guaranteed deals are rare for NFL stars like Lamar Jackson

ByStephen Holder ESPN logo
Tuesday, April 11, 2023

WHEN THEMINNESOTA Vikings signed Kirk Cousins to a fully guaranteed three-year, $84 million contract in 2018, some wondered if it would create momentum that would align the NFL with other leagues. But since then, Cleveland Browns quarterback Deshaun Watson is the only NFL player to have signed a massive, multiyear deal that was fully guaranteed.

It is against that backdrop that Baltimore Ravens quarterback Lamar Jackson searches for a new deal. If not fully guaranteed, it's believed Jackson is looking for more guaranteed money than Watson received when he inked a record five-year, $230 million deal on March 13, 2022.

But while elite players in the NBA and Major League Baseball enjoy the security of fully guaranteed deals, NFL stars such as Jackson keep waiting, and there's no reason to believe that will change anytime soon. Reasons vary, including the fact other NFL stars haven't seemed to prioritize guaranteed contracts.

"I do not believe in fully guaranteed contracts," Indianapolis Colts owner Jim Irsay said during last week's NFL annual meeting. "I think that a [guaranteed] percentage is one thing, but I think that what I've seen in the NBA, in Major League Baseball, I just don't see it as positive competitively. I don't see it as a positive element at all."

Irsay is hardly alone, according to Marc Ganis, who has close relationships with many owners and whose sports consulting firm, Sportscorp, has worked with roughly two-thirds of the NFL's teams.

Ganis said the attitude toward fully guaranteed deals among owners remains "totally and wholly negative," with the Watson contract not viewed as a precedent that will force their hands.

The Ravens balked at providing Jackson a fully guaranteed deal, sources told ESPN's Adam Schefter and Chris Mortensen last September. Last month, Baltimore applied the nonexclusive franchise tag to Jackson, who does not have an agent and is representing himself. That tag allowed Jackson to seek an offer from other teams, which the Ravens would have the right to match or receive two first-round draft picks in return.

Despite being a 26-year-old former MVP in his prime, as of Monday, it's believed Jackson has not received an offer sheet, and multiple teams have announced they do not intend to pursue him. There is reason to believe the level of guaranteed money he is seeking is one of the reasons.

"Lamar might not be the right player to fight this fight," said one team's general manager who spoke to ESPN on the condition of anonymity. The GM cited Jackson's recent injury history -- he's missed 11 games, including the playoffs, the past two seasons. Jackson also might be hindered by his self-representation, and the fact he's not an unrestricted free agent, making negotiations more complex, especially because Baltimore can match any offer.

Ravens owner Steve Bisciotti seemed to anticipate the impact Watson's deal would have on Jackson's negotiations. Watson had four good seasons with the Houston Texans, but he asked to be traded in January 2021 before allegations of sexual assault surfaced two months later. Watson sat out the 2021 season and served an 11-game suspension last season after an investigation determined he violated the NFL's personal conduct policy by committing sexual assault on massage therapists, as defined by the NFL. Watson, who had a no-trade clause, had initially rejected going to Cleveland, but the Browns' offer apparently convinced him to change his mind.

"Damn, I wish they hadn't guaranteed the whole contract," Bisciotti told reporters at the March 2022 league meetings. "I don't know that he should've been the first guy to get a fully guaranteed contract [Watson wasn't the first, but he received the most guaranteed money]. To me, that's something that is groundbreaking, and it'll make negotiations harder with others. But it doesn't necessarily mean that we have to play that game, you know? We shall see."

WHILE THE ATTENTION on this matter -- for now -- focuses on Jackson, making guaranteed contracts more prevalent would provide the greatest benefit to the league's lowest-paid players, who have minimal, if any, long-term security. The rookie minimum salary for 2023 is $750,000. For vested veterans with at least four years of experience, the minimum is $1.08 million.

Generally, the amount of total guaranteed money in NFL contracts -- including guarantees for injury only -- has been consistently increasing. From 2012 to 2022, the amount of total guarantees in contracts executed during the first three days of the signing period has increased 207%, according to Roster Management System. That's considerably larger than the 73% increase in the salary cap in the same time frame.

For example, quarterbackAaron Rodgers' 2013 contract extension with the Green Bay Packers worth $110 million came with 30% fully guaranteed ($33 million). In Rodgers' most recent three-year contract signed in March 2022, $101 million (67%) of the $151 million total was guaranteed at signing.

"In the old days, it was always a signing bonus with no [additional] guarantee," Irsay said. "And then, as time moved along, [owners said], 'Well, a partial guarantee is just like a signing bonus, so what's the difference?' And it's true, there's not a huge difference in that because with the signing bonus, if you gave it to someone, you're not gonna get it back."

But guaranteeing salaries into the third year of the deal is typically about as far as NFL owners are willing to go.

"The Watson contract could end up being a blip on the radar looking back on the NFL contract system in 20 years," said Andrew Brandt, a former vice president and general counsel for the Green Bay Packers. "It might be like, 'Oh, remember that?'

"Because what we've seen since -- and I watched closely the deals done after Watson in 2022, which were Kyler Murray, Derek Carr and Russell Wilson -- is, yeah, they were all for good money. But they're the traditional structure of one year and two years where you can't get out of the contract, and then you can if you're the team [in Year 3]. So, I guess we are at a breaking point, and Lamar's the test case."

None of the three quarterbacks Brandt mentioned, all of whom have signed multiyear deals since Watson's contract was executed, negotiated anything near a fully guaranteed deal. Wilson's $242 million contract with the Denver Broncos included $124 million in guarantees on the day of signing (51%). Murray (45%) and Carr (40%) had even smaller sums that were fully guaranteed.

Contracts that limit guarantees to the front end give considerable leverage to teams in the latter years of those deals. When players are not owed guaranteed money in those scenarios, it can make them vulnerable to being cut or traded while the team suffers limited, if any, financial consequences.

The same cannot be said of the player in those instances.

To offset the risk toward the end of the deal, elite players are getting higher annual salaries throughout the contract -- even though the chance exists they might not see all of that money if they are injured or their performance declines.

Cousins' agent, Mike McCartney, told ESPN last year that he and his client were intentional about pursuing a fully guaranteed deal. The plan, he said, was to "go for the full guarantee with a little less money and hopefully change how contracts are done for years to come."

"It won't matter if other players after me choose to go a different route," Cousins said after signing the deal in 2018. "It is what it is for my situation, but players after me will have to decide what they want to do.

"There is nothing I can pave unless people come after me. History will probably write that more than right now. We'll have to look back and see how this league goes from here."

Five years later, the only player to follow Cousins' lead was Watson, and Jackson's quest is proving unsuccessful.

"I've talked to the agents involved in these deals," said Brandt, who is also a former player agent, "and they kind of have this resignation about them, to be honest with you."

FULLY GUARANTEED DEALS in the NBA and MLB were achieved through precedent and negotiation. Jim "Catfish" Hunter's fight to leave theOakland A'sin 1974 led to baseball's first instance of free agency and paved the way to his lucrative, guaranteed contract from theNew York Yankees. Larry Bird's contract with theBoston Celticsin 1983, the first NBA contract with the total value guaranteed at the time of signing, set in motion a move toward making a majority of NBA contracts reflect that structure.

"The power has always been in the players themselves," NFLPA executive director DeMaurice Smith said during a recent appearance on The Pivot podcast, noting that other players insisted on similar deals after Bird's achievement.

However, Smith admits there has not always been similar insistence from elite NFL players.

"We get to Cousins' contract," Smith said. "That dude, in modern times, effectuated the first fully guaranteed [NFL] contract -- at least in my lifetime. And yet, after he does his contract, we had three to four first-ballot Hall-of-Fame quarterbacks who don't insist on guaranteed contracts. They might have gotten a higher [salary without the guarantee]. But who does it hurt?"

Smith didn't name names, but he could have been referring to quarterbacks like Tom Brady, Patrick Mahomes and Rodgers, none of whom seemed to prioritize a fully guaranteed contract during their negotiations in recent years.

One agent, who spoke to ESPN on the condition of anonymity, pointed out that those quarterbacks effectively had a majority of their deals guaranteed between built-in injury protections and the likelihood they wouldn't get cut. In such instances, a fully guaranteed deal is, arguably, window dressing.

At the same time, the union points to the league's resistance as a bigger factor in the lack of such deals. The NFLPA filed a grievance last year alleging collusion to keep elite quarterbacks from landing fully guaranteed contracts. The grievance reportedly claimed that owners, during a meeting in August, agreed to rebuff efforts by marquee quarterbacks to secure fully guaranteed deals.

And it's the union's position, a union source said, that owners might also be colluding against Jackson.

OWNERS WOULD ARGUE there are variables that separate them from pro baseball and basketball in their ability to affect fully guaranteed contracts.

Ganis said the nature of the NFL's salary cap makes it difficult for owners to hand out such contracts. In the NBA, for instance, the so-called soft salary cap allows teams to far exceed the per-team spending limit through a number of exceptions, like "Bird rights." The Bird exception allows teams to surpass the salary cap to re-sign players who have spent at least three years with their current team.

Baseball, meanwhile, has no salary cap. Tony Clark, executive director of the MLB players union, recently responded to push back from owners about the game's economics by telling reporters, "We're never going to agree to a cap."

In the NFL, which utilizes a hard salary cap, there are more limitations. The cap can still be manipulated to a degree, but if fully guaranteed contracts became more commonplace, it could create challenges if and when large contracts are voided and millions of dollars are left to be accounted for on a team's salary cap. The inability to circumvent the cap as easily as other sports would be problematic.

And because the NFL's collective bargaining agreement includes a high per-team spending minimum of 90% of the salary cap, Ganis said owners ultimately aren't spending any more or less on players with or without fully guaranteed contracts. The NFL's collective bargaining agreement mandates that players receive roughly 48% of leaguewide revenues, and that number won't change regardless of how the dollars are distributed.

"It doesn't [cost owners] a dollar more or a dollar less in the aggregate if you have guaranteed contracts," Ganis said.

Another impediment to higher guarantees is the so-called funding rule, a policy that calls for teams to place future guaranteed payments into escrow to ensure the availability of those funds. It means owners must be fluid enough to set aside massive cash payments that can be tough to come by, even for billionaires.

The union is vehemently opposed to the rule, saying it's outdated given the economics of today's NFL. The league has huge television contracts in place that ensure adequate cash flow, the NFLPA argues, making the rule obsolete.

Interestingly, one general manager told ESPN he also agreed the rule served no purpose.

"Until they eliminate the funding rule, I don't see [fully guaranteed contracts] happening," said the GM, who requested anonymity. "If they eliminate the funding rule, I'd be fine. I'm more with the agents on that one. It would make our jobs easier, to be honest."

Would the NFL ever agree to abandon the funding rule? That's unclear. But an NFLPA source viewed its continued existence cynically, suggesting it provides owners with a convenient excuse to not offer bigger guarantees.

Even if some owners were inclined to pursue fully guaranteed deals in spite of the funding rule, those with cash-flow challenges face another problem. Teams have been known to take loans against the franchise value to access needed cash. But in a current environment where interest rates have increased sharply, that is not an ideal option right now, according to one team's general manager.

This is something to watch in the near future as the Cincinnati Bengals and Los Angeles Chargers attempt to extend quarterbacks Joe Burrow and Justin Herbert, respectively. Those teams' owners might not have the liquidity of Browns owner Jimmy Haslam.

"For [Bengals owner] Mike Brown, it's a family business," Brandt said. "[Chargers owner] Dean Spanos? Family business. They don't have Haslam money. That's going to be interesting. Are the agents going to not push the envelope there? The teams are going to throw a ton of money at them, and the media's going to get excited about $40 million or $50 million a year or whatever. But is it going to be a secure deal? That's what I look at."

It is worth noting that for all of Irsay's defiance to fully guaranteed contracts, he also conceded that negotiation is at the heart of every agreement. Thus, he couldn't rule anything out.

"Each situation's different," he said. "As you know, the more valuable the player, the more valuable the situation, the more likelihood a guarantee's going to come into play."

Watson and Cousins stand alone for now. And, at the moment, there's little indication their status is likely to change.

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