Is a Fully Guaranteed Contract for Lamar Jackson Actually as Bad as it Sounds?

“That look when someone gives you a Deshaun Watson jersey.”

Let me begin by saying that I am in no way implying that this is what Lamar Jackson is seeking from the Ravens. There have been a ton of rumors and fake news about these very discussions, and I’m not trying to be in that camp. This is simply an exercise, nothing more. A few more days, but no more than a week remains for the two sides to reach an agreement on a contract extension before Jackson’s self-imposed week 1 deadline. At that point contract talks probably go on hold, and the discussion becomes about options in 2023. Franchise tag and would he accept it? Or a brand-new contract.

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In recent months since Deshaun Watson signed a fully guaranteed contract with the Browns worth $230M over five years, Kyler Murray, and Russell Wilson have signed deals that were not, fully guaranteed. Watson is only the third Quarterback to receive such a deal. Before Watson was traded to Cleveland, Aaron Rodgers coming off his second straight MVP season with a franchise that doesn’t seem interested in building around him, basically held all the leverage and got a fully guaranteed extension. Kirk Cousins is now on his 3^rd fully guaranteed contract or extension.

Is Watson’s deal game changing? Probably not. He’s not the first guy to get one. He won’t be the last. Two good quarterbacks did not get fully guaranteed deals considering three quarterbacks did. So, I don’t feel like some precedent has been set if in fact this is the hang up in the negotiations between the Ravens and Jackson.

But let’s not get so dismissive of the Watson deal as a model for a minute, frankly because Jackson didn’t sexually assault 24 (or more) women. Consensus is the Browns are doing Browns things, and I don’t disagree given the circumstances. Between the lines Watson is a fine player. He’s not Lamar Jackson though. Given the time that he hasn’t played, he’s certainly been leapfrogged in the conference by Joe Burrow, Justin Herbert, and certainly behind AFC newcomer Russell Wilson. Watson is probably middle of the pack in the AFC as far as talent goes, and yes, that makes the Browns look foolish. But as a model, is it for a better player?

Let’s entertain the idea of what it could look like for Jackson. Is there a right way to do it?

First things first, assume a deal doesn’t come out of the blue this week, Jackson has another great season, and this is for 2023, avoiding the franchise tag.

Next, how much? Jackson would earn more than Watson. He’s a better player, and not a scumbag. How much more? How about a nice round number of $250M. $20M more than Watson. How long? Watson’s deal for five years goes through his age 31 season. Lamar Jackson will be 26 in his 2023 season. Six seasons would take him through age 31 and would be able to be a free agent entering 2029 if he played it out.

How much of a signing bonus? Well, the more of bonus you give up front, the lower the base salaries can be early on. Dak Prescott has the highest signing bonus in the game at $66M. Let’s top that at $75M.

So, let’s look at what 6/$250M, $75M up front, 100% guaranteed could look like.

The $23M cap hit in 23’ is about equal to his 22’ cap hit. Jackson will have also earned $75M for signing on the dotted line, $3,000,000 for being on the roster when the new league year begins. Before he takes a snap, Jackson’s bank account is $78M richer. Make it $83M at seasons end when his base salary/game checks come in.

After 2024 he will have pocketed another $18M, taking his two-year earnings up to $101M. Roughly $10M more than Watson will take home in that time frame. And $50.5M per year for those first two years. Contracts overall, Aaron Rodgers’ average annual value is $50.1M, Russell Wilson’s extension takes him to $49M AAV, and Jackson’s best comparison as a peer, Kyler Murray earns $46.1M AAV.  

But if we are talking the entire length of a deal, one potential hang up could be the average annual value of the deal which is roughly $41.6M. That would be good for 7^th among his peers. But some of his peers are not making $101M in two seasons, nor would have $250M coming to them, no matter what. Kyler Murray won’t have taken home $100M+ until 2025 ($105.2M). He is only guaranteed to take home $103.3M of his deal. If things go sideways in a hurry, the Cardinals can easily cut bait entering 2026 with a modest $20.2M dead money cap hit.

As we get farther into the deal, we must estimate what the salary cap could be, and make sure that Jackson wouldn’t be taking up so much of the cap that it is detrimental to the team. I believe this is also where people also get hung up on the idea that a fully guaranteed contract is a losing bet because it’s so much money, you can’t afford to put a decent team around them.

The 2022 salary cap is $208.2M. Post pandemic, the cap will continue to rise. Based on rises over the years, the lowest rate it would probably rise is about 6%. Meaning the 2023 cap would increase $12.5M to $220.7M. It would then go up another $13.2M to $233.9M in 2024.

Let’s stop there for a second.

In 2022, Lamar Jackson will account for 11.2% of the team’s salary cap. Saying you can’t build a team around him for at least two more years is just not true. They have built a really great team around him at this percentage. We’ll get to the other years shortly.

Using estimated numbers, Aaron Rodgers is accounting for 13.2%, 14.1%, then 15.9% of the Packers cap. Kyler Murray lower in the beginning, but 20.3% in 2024. Deshaun Watson is cheap in 2022, but could account for 24.4% in 2023, and 21.5% in 2024. Kirk Cousins third fully guaranteed extension has him accounting for 14.9% in 2022, and 16.1% in 2023. By these measures, pretty team friendly for the Ravens. Will it stay that way?

Let’s continue down the path at 6% cap growth through 2028.

How about that? If the salary cap increases at just a modest rate, Lamar Jackson never accounts for more than 20% of it under this structure. He also accounts for less of it as he gets older which allows for room to add supplemental pieces. But could the salary cap increases be even larger, and make the cap hits here even more reasonable?

Jason Fitzgerald who founded “Over the Cap” thinks so. In this article from 2021, he points out by looking at the publicly owned Green Bay Packers financial records, there was a spike in the salary cap when there was a spike in the revenue in 2015. The year the then new TV contracts kicked in. Revenue growth was 4.3% in 2014, up to 11.4% in 2015. That equated to a 7.7% cap increase in 2015, and an 8.4% hike in 2016, as some of that 11.4% growth goes to the players’ salaries.

2023 is big year as Sunday Ticket will be purchased by likely Amazon or Apple for billions of dollars. Further, Fitzgerald suggests that as we climb out of the pandemic, 2023 might still see part of that impact. But 2024 he expects a spike. Fully recovered from the pandemic, TV revenue growth, he believed that instead of around $10M per year growth, it might be more like $17M a year. He estimates around a $260M salary cap in 2024, and a $300M cap in 2027.

So let us play this out at $17M increases.

Slightly better for sure. Even this is a little modest. If Fitzgerald is right and the cap takes a big hike over the next couple years to hit $260M in 2024, that would mean Jackson would account for only 12.7% of the cap that year. If it’s indeed up to $300M in 2027, that’s still only 16.3% he’d account for.

So, you be the judge. Go back to the title question. If…If, a fully guaranteed deal is what Jackson is seeking, higher than that of scumbag Deshaun Watson, is this structure and amount actually as bad as it sounds? Follow up question. Is it possible that in 2026, 2027, 2028, that a $49M cap hit would be maybe somewhere near the bottom half of the top ten in the league? Cap hits of $58M+ could be commonplace while the Ravens and Jackson are on the books for almost $10M less.

All that is left to wrap your head around is the risk. If it came down to it, you aren’t getting out of the deal until the final year and spreading out $49M in dead money over two years, if you really, really, had to get out. Can you live with Lamar Jackson for at least 5 more years? If you can’t, then you wouldn’t be seriously looking to extend him no matter what structure you use. Jackson would be wise to turn down any deal that the Ravens could cut bait from in three to four years with a manageable dead money hit. He’s earned more than that.