May 19, 2021


Beyond law

Agent’s Take: The NFL’s most leveraged contract and what it means for the 2021 NFL Draft

Barring a major surprise, quarterbacks will be taken with the first three selections of the 2021 NFL Draft on April 29. Trevor Lawrence of Clemson is the presumptive No. 1 pick by the Jaguars. BYU’s Zach Wilson is expected to go second to New York after the Jets traded starting quarterback Sam Darnold to the Panthers earlier this week. The 49ers recently moved up to the third sport to select either Ohio State’s Justin Fields, Alabama’s Mac Jones or North Dakota State’s Trey Lance. There is plenty of speculation that Jones will be the 49ers’ pick.

The draft becomes really interesting with the fourth overall pick held by the Falcons partially because of quarterback Matt Ryan’s contract. Ryan became the NFL’s first $30 million-per-year player when he signed a five-year, $150 million contract extension in 2018. There are three years left on Ryan’s contract. He is scheduled to make $23 million this year, $23.75 million in 2022 and $28 million in 2023 for a total of $74.75 million.

Ryan’s remaining salaries aren’t the issue. They are reasonable by starting-quarterback standards. The bonus proration still in the deal is the problem.

Ryan has the NFL’s most leveraged contract thanks to four contract restructures for salary cap purposes since signing in 2018. The first restructure took place in March 2019 when $8.75 million of Ryan’s 2019 base salary was converted into signing bonus to create $7 million of immediate cap space. Ryan’s 2020-2023 cap numbers each increased by $1.75 million in the process.

The second restructure occurred in December 2019 right before the end of the regular season as $12.5 million of Ryan’s 2020 base salary was turned into an option bonus where his 2023 contract year became an option year that was picked up the following March. This maneuver cleared $9.375 million of 2020 cap space while raising Ryan’s 2021 through 2023 cap numbers each by $3.125 million.

A third salary conversion was done in March 2020 as $6.95 million of Ryan’s 2020 base salary was converted into a signing bonus. Ryan’s 2020 cap number further decreased by $5,212,500. His 2021 through 2023 cap number each increased by $1,737,500. This made Ryan’s 2021 cap number $40,912,500, which was the second largest in the NFL only behind Steelers quarterback Ben Roethlisberger’s $41.25 million.

The last restructure took place about three weeks ago. Ryan’s 2021 cap number had become the largest in the NFL because Roethlisberger renegotiated his contract. Twenty-one million of Ryan’s 2021 base salary became a fully guaranteed roster bonus to give the Falcons $14 million of immediate cap relief. Ryan’s 2022 and 2023 cap numbers jumped by $7 million each to become $48,662,500 and $43,612,500, respectively. Ryan has the NFL’s largest cap number for 2022. There’s now more bonus proration ($24,912,500) in Ryan’s 2022 cap number than salary ($23.75 million). Prior to the Falcons playing the restructure game with Ryan’s contract, his original 2022 and 2023 cap numbers were $36.8 million and $31.75 million.

The fourth-pick dilemma

The Falcons face quite a dilemma at No. 4. Atlanta is perfectly positioned to find the heir apparent to Ryan, who turns 36 in May. A quarterback selected with the pick is likely to sit for two years because of the multiple restructures creating difficulties in moving on from Ryan next year, presumably through a trade instead of cutting him. Unless Ryan regresses tremendously in 2021, the Falcons should be able to get at least a fourth-round pick in return for him next offseason. That’s the draft-choice compensation the Ravens and Jaguars received in 2019 and 2020 when trading quarterbacks Joe Flacco and Nick Foles.

The Falcons would have a $40.525 million cap hit for trading Ryan in 2022, which would create $8,137,500 of 2022 cap room. In turn, $43,912,500 2023 cap space would be freed up with the acquiring team taking on Ryan’s $28 million 2023 salary in a trade and his $15,912,500 of 2023 bonus proration becoming a Falcons 2022 cap charge.

The $40.525 million hit of dead money, a salary cap charge for a player no longer on the roster, would be unprecedented. The Eagles shattered the record for dead money related to an individual player for one league year in NFL history with $33,820,611 by trading quarterback Carson Wentz to Colts last month. The $40.525 million would be the NFL’s third-largest cap hit for 2022.

A trade next year is further complicated by Ryan having a $7.5 million third day of the 2022 league year roster bonus due mid-to-late March. This $7.5 million becoming a Falcons financial obligation would make delaying a trade until June 2, when the $15,912,500 of 2023 bonus proration wouldn’t accelerate onto Atlanta’s 2022 salary cap, less of a realistic possibility. Twenty-eight million of cap space would be gained by waiting until 2023 to trade or release Ryan.

Alabama products

Selecting the best player available with the fourth pick, regardless of position, whether it’s Florida tight end Kyle Pitts, Oregon offensive tackle Penei Sewell or one of the wide receivers (LSU’s Ja’Marr Chase, Alabama’s DeVonta Smith or Alabama’s Jaylen Waddle), would suggest a belief that Ryan can play at a high level for at least the duration of his contract. Taking a wide receiver could mean that seven-time Pro Bowler Julio Jones’ days in Atlanta are numbered, where he could be traded prior to the 2022 draft. Jones, who is 32, was limited to nine games in 2020, primarily because of hamstring problems and 2018 first-round pick Calvin Ridley took advantage with a breakout season. Ridley had 90 catches for 1,374 yards with nine touchdowns. Coincidentally, the Falcons have had success with Alabama receivers as Jones and Ridley starred for the Crimson Tide.

Unlike Ryan, the Falcons haven’t restructured Jones’ contract this offseason. A trade before the 2022 draft would leave the Falcons with $15.5 million in dead money, where $3.763 million of 2022 cap room would be gained.

The other alternative is acquiring additional draft capital to shore up more needs by trading down. If a quarterback is the target of a team wanting to move up, the Broncos and Patriots would be the most logical trade partners. The Broncos have the ninth overall pick while the Patriots pick 15th. The Washington Football Team and the Bears don’t have long-term solutions at quarterback but have the 19th and 20th overall selections.

The Falcons are reportedly open to trading out of the fourth slot. ESPN’s Chris Mortensen reported that Falcons general manager Terry Fontenot is focused on a quarterback while head coach Arthur Smith thinks Ryan has gas left in the tank.

For what it’s worth, CBS Sports’ most recent mock drafts are split. Two have the Falcons taking Pitts with the fourth pick. One has the pick being used on Lance. Another has the Falcons trading with the Broncos and taking Sewell ninth.