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Davante Adams’ next contract and the cost of doing business

“With that particular situation, it’s how you interpret what the highest wide receiver in the National Football League is getting paid.”

Milwaukee Journal Sentinel-USA TODAY NETWORK

If the Aaron Rodgers saga didn’t consume Packers coverage this offseason, wide receiver Davante Adams’ expiring contract would be the biggest story in Green Bay in some time. Adams, currently on the last year of his deal, is apparently asking for a new contract north of $25 million per year, which is more than any non-quarterback has received on a contract extension of more than two years, other than the recent extension of pass-rusher Joey Bosa of the Los Angeles Chargers.

After missing some OTA practices to spend time with his young daughter, Adams returned to the team this summer. When asked if he will report to training camp without an extension, he stated, “Yeah, I’ll be here. I signed up to work and play. I’m from East Palo Alto, California. I grew up with zero dollars. I’m not forfeiting any of my money that I’ve earned and signed for already. I’ll be there for sure.” On July 23rd, NFL Network’s Ian Rapoport reported that contract talks had broken off between the two sides, in the middle of Rodgers Watch 2021.

That night, Adams posted the infamous “The Last Dance” picture to his Instagram story, a photo that alluded to the Chicago Bulls’ final season with Michael Jordan before general manager Jerry Krause attempted to rebuild the team post-Jordan. Rodgers, soon after, posted the same photo to his Instagram story.

Last Wednesday’s pressers in Green Bay included Rodgers’ first true explanation of his offseason to the media, which, rightfully, stole the show, but both Packers general manager Gutekunst and Adams were able to talk about their stances regarding the receivers’ next contract. Gutekunst rebuffed the report that the two sides weren’t talking, claiming, “[an Adams extension] is very important for us moving forward” before Green Bay’s training camp practice. Adams took the podium post-practice and was asked “Would you be willing to not be the highest-paid wide receiver if it means staying with [Rodgers]?” His response was quick: “Yeah. No. That’s not going to happen.”

On Thursday, in another pre-practice presser, Gutekunst replied, “With that particular situation, it’s how you interpret what the highest wide receiver in the National Football League is getting paid.” On Saturday, NFL Network came to town to cover the Packers’ practice, showing up with former Green Bay receiver turned media member James Jones. The question came up again: What is the cost it would take to keep Adams in-house beyond 2021?

Here is a rundown of the half-joking conversation between the two about Adams’ contract situation.

Jones: I’m going to call Russ Ball and tell him $25 mil a year. Is you cool with that?

Adams: That’s it? 25? Look, man, the stage has been set. [DeAndre Hopkins] set the stage, whether or not they want to respect that number or whatever...nah, I’m just playing ball. You’re trying to get me in trouble.

First of all, it’s interesting that Jones, who has been in the building in Green Bay, mentioned executive vice president/director of football operations Russ Ball instead of Gutekunst, but that’s another story and another angle for another day. Secondly, Gutekunst’s comments about what exactly Adams considers to be the highest-paid receiver in the league goes hand-in-hand with Adams’ comments that Arizona Cardinals wide receiver DeAndre Hopkins drastically reset the receiver market in the NFL at over $25 million a year.

Understanding the NFL salary cap is somewhat like understanding America’s tax code. People understand it’s important, but at the end of the day, most people value what they’re getting in return more so than understanding the ins and outs of what matters or why it matters. That’s perfectly understandable, but the nuances in the NFL’s cap system, especially with a deal like Hopkins’ now on the books as a point of reference, is why both Gutekunst and Adams have understandable perspectives as to what “highest-paid” means for the receiver position.

Last September, fresh off of being traded from the Houston Texans, Hopkins signed a two-year, $54.5 million contract extension with the Cardinals, despite already having three years left on his deal. Functionally, this added years to his contract, but was not a new contract on its own, in that it wouldn’t have been structured the way it was without those existing three years.

Below are the contract details from Hopkins’ remaining three years in his original Texans deal, plus the two extra years he signed up for with the Cardinals, according to Spotrac.

via Spotrac

While Hopkins’ contract extension could be reported as a $27.5 million per year deal, that doesn’t change the fact that Hopkins is functionally playing on a deal that will pay him out an average of $18.8 million per year over the course of five years. This is where Gutekunst’s “it’s how you interpret what the highest wide receiver in the National Football League is getting paid” comment gains some traction.

“When does an extension become a contract?” is the NFL’s Ship of Theseus. If Adams signs a four-year extension to give him five years in Green Bay, that’s considered a contract. When Hopkins signs a two-year extension to give him five years in Arizona, that’s considered an extension. The reason being? Guaranteed money.

If Adams were looking to tack on two years to the end of a three-year deal, using Hopkins’ $27.5 million per year extension would have more legs, but looking at what Hopkins is going to make over his five-year agreement with the Cardinals drops his per year number significantly below $25 million, which Adams has conveniently ignored when talking about Hopkins as a market-setter.

Again, more important than average dollars per year is how a contract is functionally guaranteed. Here’s another look at Hopkins’ contract, with some analysis.

via Spotrac

In terms of cash, the blue boxes in Hopkins’ contract are guarantees, the yellow boxes are likely to be earned and the red boxes are essentially team options. According to Hopkins’ contract details, considering his dead cap hit (the cost it would take to release him) and the fact that his 2022 salary and 2022 roster bonus guarantee so early on in the 2022 offseason, Hopkins’ contract functionally plays out as a three-year, $60.1 million contract with team options in 2023 ($19.45 million) and 2024 ($14.92 million) that are made out of non-guaranteed pay-as-you-go game checks.

Yes, that means that over $34 million of Hopkins’ $54.5 million extension was “funny money,” money that is not guaranteed. The non-guaranteed salary is also such a high leverage point for the Cardinals’ salary cap that it’s extremely likely that the team will either extend, restructure, trade, or release the receiver in 2023. Now, compare Hopkins’ deal to Amari Cooper’s contract, the most recent receiver to sign a new, high-guarantee contract.

via Spotrac

Using the same color-coding, you can see Cooper’s five-year contract follows a fairly similar structure to the contract Hopkins ended up with after his two-year extension on top of his three-year deal. Cooper receives two years of guaranteed salary on top of his signing bonus, his third year will likely guarantee early on in the 2022 offseason, and then the remaining two years are pay-as-you-go options for the Dallas Cowboys.

Would Dallas be willing to replace Cooper for $40 million in cash over two years and $36 million in cap relief over two years in 2023 or $20 million in cash and $18 million in cap relief in 2024? They have the option to do so under Cooper’s contract structure. Here’s the important thing to remember: NFL guarantees typically run out after Year 3, no matter the length of the contract.

What is Cooper’s three-year take-home number before the team options kick in? $60 million, just short of Hopkins’ $60.1 million. In theory, the Packers could hand Adams a similar contract to Cooper’s, guaranteeing his salary in Year 1 and Year 2, a Year 3 salary that guarantees early in the 2023 offseason, and a signing bonus that gets him below $60 million over the first three years of his contract. Within that same contract structure, they could also tack on astronomically high salaries in Year 4 and Year 5 that get him over the $25 million per year mark for the lifetime of the contract, but those non-guaranteed salaries almost certainly will not be honored by the time 2024 comes around.

The cost of doing business, if you want to sign a high-tier NFL receiver, is clear: About $60 million over the first three years of a contract. After that, it’s all funny money that will lead to an extension, restructure, trade, or release in Year 4, the nearly-negotiated window for a player’s agent and a team to come back to the table.

If Adams is able to net $75 million over the first three years of his next contract ($25 million per year), he will be the true market-setter at the position, not Hopkins, who functionally is playing on a similar deal ($60.1 million over three years) to Cooper ($60 million over three years.) If the Packers somehow sign Adams to a deal that will pay him $25 million per year, at least in the headlines written and tweets sent the day Adams signs, but in a way that allows them to pay Adams less than $60 million over the course over the first three years of his new deal, then the front office will come away very, very happy, no matter the sticker price.

If I were to advise Adams, I would, in his best interest, tell him not to get caught up with the per year dollars attached to Hopkins’ extension filled with funny money. I would tell him to push for as much guaranteed money as he can net in the first three years of a new deal, as that’s truly what matters most in these long contracts.

If Adams can net $25 million per year over the first three years of his new deal, good for him as he successfully reset the market at the position. Is the post-COVID and post-new-television-money salary cap going to drastically rise in 2023, during the lifetime of when Adams’ new deal will extend through? Yes, but he can’t pretend that any wide receiver is getting close to that $25 million per number in the NFL today. There simply is not a reference point for that deal.

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