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.
Tom Brady is not a football philanthropist.
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.