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Some thoughts on extending Rob Gronkowski

Miguel Benzan
Miguel Benzan on Twitter
5 years ago at 9:22 pm ET
Posted Under: Individual Salary Cap

Earlier this summer I started this blog piece. Never had the time to finish this. The news that the Patriots and Gronkowski are talking about a restructure spurred me to finally finish even though my main original point that Gronkowski is not underpaid will be proven wrong if indeed a new deal is consummated. The original working title for this blog piece was a great suggestion by a Twitter follower – “Rob”bed Gronkowsksi. Not so fast.

After the New England Patriots paid him his $6 million option bonus All-Pro tight end Rob Gronkowski tweeted on March 7th – “If ya think about it that Option pick up basically equals pay cut the next 4 seasons…I don’t work hard for those reasons. Haha”.

Rob Gronkowski's Tweet

Ever since then there has been some speculation that the tweet indicated Gronk’s displeasure with his contract. One such example is this discussion on CSNNE speculating that the Marcellus Bennett’s acquisition was insurance against a Rob Gronkowski holdout.

The purpose of this blog piece is to examine whether or not Rob Gronkowski is truly underpaid.

Background – Rob Gronkowski was drafted in 2010 and signed a four-year rookie deal with the Patriots. In August of 2012 with two years left on his rookie deal Rob Gronkowski signed a 6-year extension with the Patriots if they picked up the option ($10 million) for the last four years of the deal by the beginning of the 2016 League Year (March 9). In 2012 Rob Gronkowski received a $10 million signing bonus. In August, 2015 the Patriots paid Gronkowski $4 million of his $10 million option. The Patriots paid Gronkowski the remaining $6 million in March, 2016.

His 2016 cap number is $6,618,750 which consists of his
$2.25 million salary
$250,000 workout bonus
$468,750 in 46-man active roster bonus (Gronk was active for 15 games in 2016).
$50,000 in signing bonus proration of his 2014 offseason workout bonus that was fully guaranteed in 2012
$1,600,000 in proration of his 2012 8 million signing bonus
$800,000 in proration of his 2015 $4 million option bonus
$1,200,000 in proration of his 2015 $4 million option bonus

His 2017 cap number is $7,000,000 which consists of his
$4.25 million salary
$250,000 workout bonus
$500,000 in 46-man active roster bonus
$800,000 in proration of his 2015 $4 million option bonus
$1,200,000 in proration of his 2015 $4 million option bonus

His 2018 cap number is $11,000,000 which consists of his
$8 million salary
$250,000 workout bonus
$750,000 in 46-man active roster bonus
$800,000 in proration of his 2015 $4 million option bonus
$1,200,000 in proration of his 2015 $4 million option bonus

His 2019 cap number is $11,000,000 which consists of his
$9 million salary
$250,000 workout bonus
$750,000 in 46-man active roster bonus
$800,000 in proration of his 2015 $4 million option bonus
$1,200,000 in proration of his 2015 $4 million option bonus

The below table shows the increase in the League Salary Cap since 2012.

NFL Salary Cap since 2012

A NFL League Year goes from March to the following March.
Calendar Year starts on January 1 and ends on December 31.

Hopefully, I have provided enough background information.

Using the League Year barometer Rob Gronkowski is scheduled to receive the below amounts in cash
$15 million in 2015
$3 million in 2016
$5 million in 2017
$9 million in 2018
$10 million in 2019

Using the Calendar Year barometer Rob Gronkowski is scheduled to receive the below amounts in cash
$9 million in 2015
$9 million in 2016
$5 million in 2017
$9 million in 2018
$10 million in 2019

For Gronkowski’s tweet to be accurate – “If ya think about it that Option pick up basically equals pay cut the next 4 seasons”… he had to be referring to using the NFL League Year calendar because that its $15 million is a larger amount than he will receive in any of the remaining four years – hence the reference to a pay cut. This payout structure is typical when the player receives a large signing bonus upfront. The first year of the deal that contains a large signing bonus is the year in which the player receives the most cash during the deal. Recent examples – Josh Norman, Tom Brady’s extension, Jimmy Graham, Coby Fleener, Julius Thomas and Travis Kelce. I could list several hundreds of NFL deals with this type of payout structure. Rob Gronkowski cleverly pointed out this cash flow pattern in his tweet. His suggestion to “think about it” was unfortunately ignored and his tweet was perceived as expressing displeasure with his contract.

What I have done is compile the cash intake of all the top tight ends in the NFL using the calendar year system.

For the 2016 through the 2019 seasons
Rob Gronkowski –  $33,000,000
Jordan Reed  – $30,921,000
Julius Thomas – $30,900,000
Travis Kelce –  $30,146,000
Dwayne Allen – $29,400,000
Zach Ertz –  $28,818,527
Coby Fleener – $28,500,000
Charles Clay  -$25,000,000
Kyle Rudolph – $24,750,000
Ladarius Green- $20,000,000

That’s right. Rob Gronkowski is scheduled to receive the most cash out of any NFL tight end the next four seasons.

Agents like to use 3 years as a deal’s measuring tool.

Rob Gronkowski – $23,000,000
Jordan Reed  – $23,000,000
Travis Kelce – $22,146,000
Dwayne Allen – $22,000,000
Julius Thomas- $21,800,000
Zach Ertz – $21,318,527
Coby Fleener – $21,100,000
Charles Clay – $20,500,000
Jimmy Graham – $19,000,000
Kyle Rudolph – $17,500,000

Rob Gronkowski is tied with Jordan Reed for the most scheduled cash for the next three seasons.

If you do not want to suffer from reading any more of my salary cap geekness, I would stop right here and remember this – Rob Gronkowski is scheduled to receive the most cash out of any tight end the next four years and is tied for first when the time frame is shortened to three years.

When Rob Gronkowski signed his extension in 2012 with two years left on his rookie deal he immediately became the highest paid tight end by the new money metric with a 9M APY. Since then he has been surpassed by the following.
* After being hit with the franchise tag Jimmy Graham signed a $10M APY deal in July 2014 with the New Orleans Saints.
* In January 2016 and with one year left on his rookie deal Travis Kelce signed his $9,368,400 APY deal.
* In March 2016 and with one year left on his rookie deal Jordan Reed signed his $9,350,000 APY deal.
* As an unrestricted free agent Julius Thomas signed a $9.2M APY deal with the Jacksonville Jaguars in 2014.

When Gronk signed his deal the 2012 franchise tag for tight ends was $5.4 million. His new money APY was 9 million which was 75% more than the franchise tag. No tight end has come close to signing a deal that was 75% more than the current tag number for the tight end. The tight end franchise tag was $7.035 million in 2014, $8.347 million in 2015, and $9.118 million.

If we were to adjust Gronk’s contract for the increase in the cap that has occurred since 2012, his deal would be worth $11,587,313. That is, while Gronk is now the 5th highest tight end by the new money metric, it is mostly because of the large recent increases in the cap. This piece by Joel Corry shows that if one were to adjust deals for the cap only Jimmy Graham’s deal would be considered larger.

When a player signs an extension with two years left on his deal he is negotiating with only one team and is expected to give a discount to his current team since they are absorbing two years of his injury risk. Let’s not forget that since signing his extension in 2012 Gronkowski has missed a total of 16 regular season games (a season’s worth of games) – 5 in 2012, 9 in 2013, 1 in 2014, and 1 in 2015. In effect Gronk has gotten paid for 4 seasons while actually playing 3.

There are several articles on the Internet that talks about at what age when tight ends hit their prime and start to decline.
* http://bleacherreport.com/articles/1683775-when-does-age-catch-up-to-nfl-players
* http://socalledfantasyexperts.com/aging-curve-nfl-offensive-players-every-single-position
* http://fftoday.com/articles/bales/13_te_age.html

After reading all three and a subscriber-only article on ProFootball Focus it seems safe to state that Rob Gronkowski is playing at his peak and should be expected to decline after hitting the age of 31 which just happens to be when Gronkowski is currently scheduled to become a free agent.

So today when NFL Network’s Mike Garafolo tweeted that “Agents for Rob Gronkowski Drew, Jason Rosenhaus here at Pats today. Source says they’re working with team on new deal. Not imminent.” I have to say that I was surprised. Why surprised?
1.) What is in it for the Patriots? They took on two years of Gronkowski’s injury risk in 2012 to sign him through his prime years. The Patriots will have paid Rob Gronkowkski more cash from 2012 through 2016 than if he had played out his rookie deal, was tagged in 2014, and then signed Jimmy Graham’s deal in 2015.
2.) Consider extensions for Hightower, Collins, Butler, and Sheard higher priorities.
3.) The Patriots never extended Brady with more than two years left on his deal
4.) Very unlikely that a 2016 extension would create significant 2016 cap space for the Patriots
5.) Pats already have plenty of cap space in 2017, 2018 and in 2019.
6.) Any extension increases future dead money if Gronk declines sharply in the future, however unlikely that is.
7.) By showing up to training camp Gronkowski lost leverage in negotiations. If he leaves camp now, the Patriots can then send him a letter warning him that, in five days, the club has the right to place him on the reserve/left squad list. The standard “five-day letter” explains to the player that, if they do place him in that category, he can’t play again this season.
8.) Any 2016 extension is essentially an admission that Gronkowski and his agents made a mistake in agreeing to the 2012 extension. The mistake being not anticipating the increases in the salary cap since 2012.

Q:How much could a 2016 extension lower Gronkowski’s 2016 salary?
A:To $760,000

Q:How much could a 2016 extension lower Gronkowski’s 2017 salary?
A:To $900,000

Q: How does having the current option bonuses in his deal help Gronkowski in any negotiations?
A: If he were to retire, the Patriots can not ask for any remaining portion of his option (currently $8 million) back per the CBA

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Posted Under: Individual Salary Cap
Tags: gronk gronkowski

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