If the salary cap does drop, a new contract is a win-win for Aaron Rodgers & the Packers

No, Aaron Rodgers isn’t going anywhere this offseason.

In his comments on the Pat McAfee Show on Tuesday, Rodgers clarified some of his comments from Sunday night after the Green Bay Packers’ NFC Championship Game loss. Rodgers said that he expects to be back in Green Bay next year and that Sunday’s comments about the uncertainty of the NFL were to be taken at face value, as an older player who knows that nothing is absolutely certain.

However, one thing that Packers fans can count on is that Rodgers will be back in green and gold for 2021. Head coach Matt LaFleur said “he damn well better be,” while team president Mark Murphy said “we’re not idiots; Aaron Rodgers will be back.”

And why wouldn’t he be? Rodgers is about to win the MVP award. His partnership and buy-in with Matt LaFleur transformed the Packers’ offense into the NFL’s best despite minimal personnel additions. And throughout all of his words and actions, Rodgers has given every indication that he enjoys his time in Wisconsin, noting that he effectively “grew up” in the state.

So why are media outlets suddenly pushing a narrative about Rodgers wanting out? That’s a question only they can answer, but with no legitimate signs of off-the-field issues, perhaps the financial realities of Rodgers’ contract and the salary cap for 2021 — which is widely expected to drop significantly — play into it.

However, even that is overblown. The reason, to put it simply, is that both the Packers and Rodgers would benefit significantly from restructuring his contract this offseason.

The Packers and the Cap

For perhaps the first time since Ted Thompson returned to Green Bay in 2005 to take over as general manager, the Packers are facing some major salary cap issues in 2021. Some of this is self-inflicted as a result of several large free agent contracts the team gave out in 2019, but the biggest problem is that the cap is going to decrease due to lower league revenues as a result of the COVID-19 pandemic.

In 2020, the cap was $198.2 million. That number could drop as low as $175 million for 2020, a brutal and unexpected drop for a team that has relied heavily on steady increases over the last several years. A recent report from Sports Illustrated suggests that the NFL will try to keep the cap more flat over the next few years, effectively borrowing against future years’ increases to avoid a massive drop next season. However, teams still need to prepare for a worst-case scenario in case the league and NFLPA cannot come to an agreement.

So if the cap does indeed drop to about $176 million, as projected by Overthecap.com, the Packers as currently constructed project to fall about $32 million over that number based solely on current contracts on the books. (Because OTC only has the Packers with 46 players on the roster, this number adds in five league-minimum salaries to get to 51 players on the roster, the cutoff for cap calculations during the offseason.) Green Bay will also need cap space for its rookie draft class as well as a few more million to sign restricted free agents like Robert Tonyan and Chandon Sullivan and exclusive-rights free agents such as Allen Lazard.

Thus, the Packers would need to clear around $35 million in space by March 17th. A few obvious cuts are coming; Preston Smith, Christian Kirksey, and Rick Wagner are probably goners in this situation, with those three moves trimming about $18 million. A Dean Lowry release frees up another $3.3 million. But that still leaves Green Bay needing another $15 million or more before they can even consider adding any new players or signing unrestricted free agents.

What to do with Rodgers?

Enter Rodgers and his whopping $37.2 million salary cap hit in 2021. He is due to receive $14.7 million in base salary and a $6.8 million roster bonus shortly after the league year begins, along with a half-million in workout bonuses. Combined with his signing bonus proration from previous years, that gives him that cap hit. His cap numbers for the next three years are as follows:

2021: $37.2M
2022: $39.85M
2023: $28.35M

Based on the current structure, the Packers have about $20 million that they could convert into a signing bonus to spread out over the remaining three years of the contract. Doing so would offload two-thirds of that off the 2021 cap, splitting it across 2022 and 2023 and freeing up about $14 million.

The Packers can probably free up a few more million in cap money by extending Davante Adams and backloading a large portion of a new contract into 2022 and beyond. That seems likely, but with Adams’ existing cap hit coming in at $16.85 million, giving him a new deal won’t solve all the Packers’ woes. Neither would extending Za’Darius Smith to lower his $22 million cap hit. Unless they start cutting major contributors like safety Adrian Amos, Billy Turner, or the like in addition to extending Adams and Smith, an extension for Rodgers must be part of the equation for Brian Gutekunst and Russ Ball.

There is one significant drawback for the Packers, however: Rodgers’ cap number in 2022. Currently, that number is about $39 million, a bit more than his number in 2021. Any restructuring to spread out his cap hit would increase the 2022 cap number, and a straight change in 2021 of $20 million into a signing bonus would bump that up by $6.67 million to about $46 million total. Doing this would leave his contract looking something like the following while keeping his cash flow in each year the same:

That might be somewhat feasible in the scenario where the cap dips in 2021 and bounces back with a massive increase for 2022. If the league does elect to keep the cap more flat, of course, this option is less appealing, and a more complete restructure of the entire contract structure — perhaps by adding another year onto the end of the deal — would be a better way to go. That would also offer Rodgers the ability to increase his total compensation as well, while still spreading out his cap hit out.

Why it makes sense for Rodgers

For Rodgers, a contract extension is the better option compared to simply converting base salary to a signing bonus. It would get him more money, could add another year or two onto the back end of the deal, and afford him some added security even into his early 40s. That should also help ease his mind a bit about his legacy, increasing the odds that he would end his career with the Packers — a factor that he has admitted often weighs on him.

He played plenty well enough for the Packers to keep any thoughts of replacing him with Jordan Love filed away for the next few years — earning an MVP award will do that. An extension would ensure that he is not looking over his shoulder at a hard-charging potential replacement, allowing him to continue focusing on the game he loves.

Even an adjustment of his 2021 contract into a signing bonus would still be a positive, however. By doing that, he would become very difficult to release for another year, as his dead money in 2022 would be prohibitive. Cutting Rodgers next offseason under this scenario would require the Packers absorbing a dead money hit of over $30 million. The team would save about $15 million in cap space, but that would be a massive blow if the team still intends to remain competitive. Though theoretically an option, that would still be a difficult situation for the team to put itself in.

Thus, even a signing bonus conversion likely buys Rodgers another year of stability with the Packers and some additional leverage next offseason, particularly if he is still playing at a high level.

What’s the compromise option?

Ultimately, an extension that adds an extra year onto Rodgers’ contract seems like the best option for both sides. That will further spread out any signing bonus — which would include adjusting Rodgers’ base salary in 2021 and some amount of new money — over four years instead of three and into years where the cap should increase precipitously thanks to the addition of a 17th regular season game and an additional playoff game each season.

If Rodgers wants security — which he almost certainly does, given his recent comments about the uncertainty of the business of football — and the Packers want some added financial flexibility, there’s no reason the two sides should be unable to find their way to a new contract that gives them both what they want and need.