Why the Ryan Deal is Held Up

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Show him the money

I don’t have any insider information, I’m just basing this information off my own logic. But I suspect the reason why the negotiations for Matt Ryan’s new blockbuster contract are looming this late in July has everything to do with the structure of the deal.

The Falcons have prioritized getting this deal done since the draft, and the hope was that this thing could get hammered out sometime in May. Then it seemed like things were picking up steam in June when talk of Richard Seymour’s imminent arrival in Atlanta started to pick up. That was because the belief was that once the Ryan deal would get done, the Falcons would then immediately sign Seymour. But then the Seymour talks broke off, and now we’re two weeks from the start of camp and no word is on the pipeline. We’re just waiting for Jay Glazer or Adam Schefter to break the news that Ryan deal is done.

But the nature of the NFL is that things don’t get done until deadlines. The Falcons still haven’t finished signing their rookies, as top pick Desmond Trufant and final pick Sean Renfree are still without contracts. Franchise free agents have until next Monday before they have to get a deal done. But technically the Falcons have no deadline for when a Ryan deal gets done. It seems like the opening of camp is a de facto deadline since I’m sure neither the Falcons nor Ryan want to have to ponder the possibility of the quarterback not showing up on July 25. Now I certainly think it’s a trillion to one shot that Ryan would ever even contemplate the possibility of holding out. But if/when Ryan first steps up to the podium in two weeks to address the media, I don’t think the first question he wants to be asked about is the progress of his contract.

So that’s why I think the Falcons probably will get something done in the next two weeks, but perhaps haven’t been going full-bore over the past four to six weeks.

But a big reason why it takes so long for these negotiations to get done is because of the sheer size of the deal. I think it’s almost a certainty that Ryan will eventually sign a five or six-year deal that averages at least $20 million per year. If the Falcons could have gotten him for significantly less than that, then I think a deal would have already been done. Given the market right now with deals signed by Joe Flacco and Aaron Rodgers, getting Ryan for even $19 million a year would be a bargain that the Falcons would have pounced all over.

I think the big issue with the contract is how much will be paid out over the first three or so years of the deal and exactly how that money gets structured.

In looking at the deals signed by Drew Brees, Joe Flacco, Aaron Rodgers, and Tony Romo over the past year, there seems to be a basic structure to how the Falcons will do their deal. I also looked at some of the recent contracts the Falcons signed with their own top-end free agents.

More than likely the deal will include an initial signing bonus and a second-year “falling off the log” option bonus. This was featured in both Flacco and Rodgers’ deals, as well as a regular feature of the big deals the Falcons often sign their own players to, with Sam Baker being a recent example.

For Flacco, he received a $29 million signing bonus with a second-year option bonus of $15 million. Rodgers got $35 million to sign and a $9.5 million roster bonus. More than likely that roster bonus will be structured to function like an option bonus (and prorated over the life of the contract rather than hit in one year). Baker’s contract this past off-season included a $10 million signing bonus and $4 million option bonus.

Also looking at recent big deals the Falcons have signed with players such as Baker, Roddy White, Justin Blalock, and William Moore it is probably safe to assume a basic structure in terms of the payout of Ryan’s deal.

In the first year of his deal, he’ll likely receive somewhere between 25-33% of the total cost of the deal. So if Ryan signs a six-year, $120 million deal that will likely mean that he’ll receive $30-40 million of it in the first year. That will likely include the large signing bonus and his first-year base salary. Flacco got roughly a quarter (24.9%) in his first year, while Rodgers was pushing 30.6% of his total payout in the first year.

That illustrates the problem with large contracts like these. There’s potentially a $10 million gap in which the Falcons and Ryan’s agent, Tom Condon, have to negotiate just the first year of the deal.

Another important aspect of the deal is how much is paid out in the first three years of the deal. Rodgers deal is the most of the recent quarterback contracts with $62.5 million. Flacco got $62 million. Brees got $61 million and Romo got $57 million in his extension. To be competitive with the others, one can expect Ryan to push at least $60 million if not potentially go as high as $63 million in order to top Rodgers. Exactly where that payout falls within that range is another point where the two sides will have to negotiate.

And then it really comes down to exactly how that money is going to be paid out. For Flacco, most of the money comes in the form of three bonuses, the aforementioned $29 million signing bonus, $15 million 2014 option bonus, and another $7 million option bonus in 2015. That leaves only $11 million of his $62 million three-year payout being structured as base salaries.

In the case of Rodgers, his $62.5 million comes with only $6.4 million coming via base salaries. The rest is made up of his signing bonus ($35 million), and a pair of $9.5 million roster bonuses due in 2014 and 2015. Rodgers also has $1.5 million in offseason workout bonuses due over the first three years and $600,000 potentially in roster bonuses that come in per-game checks starting in 2015. That is similar to how the Falcons structured John Abraham’s contract last year. Rodgers will receive a roster bonus of $37,500 for every game he’s on the active roster starting every year in 2015, which add up potentially to $600,000 if he stays healthy.

Brees however has $23.5 million of his $61 million payout coming via base salaries. The remainder is in his signing bonus ($37 million) and $500,000 in workout bonuses.

That indicates the differences in how the deal could be structured. Typically if the majority of the money can be in bonus form, the more cap-friendly it tends to be  since bonuses can be prorated over multiple years. But exactly how much is bonuses and how much is base salary is another key negotiating point.

These all represent many of the obstacles that must be overcome before the Falcons and Matt Ryan can come to terms on a brand new deal.

About the Author

Aaron Freeman
Founder of FalcFans.com

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