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Spagnola: Inside Tony Romo’s Contract Numbers

Posted Apr 5, 2013


IRVING, Texas – Since so many always seem to be so indignant of other people’s money, feeling the need to be such smart alecks, here is a note for one of them, Donovan McNabb. I’m guessing everyone still remembers him, right? The former Philadelphia Eagles quarterback?

         Hey Donovan, see you felt the need to point out Cowboys quarterback Tony Romo only has one playoff victory to show for that $55 million guarantee he received in his six-year contract extension, but you failed to point out that lone Cowboys playoff victory since 1996 was over you, dude, 34-14, in that 2009 season. In fact, you lost to Romo and the Cowboys three times that year by a combined score of 78-30, with 74.2 your highest QB rating in any of the three games.

         And if memory serves me right, once Romo became the Cowboys fulltime starter during the 2007 season, he went 5-2 in head-to-head meetings with you, and those three losses to the Cowboys and Romo in 2009, BTW, probably had a lot to do with you being exiled from Philly after that season.

         Some nerve.

         But then McNabb is not the lone wolf here. There is a long line, made up of a whole lot of local wise guys, too, along with the usual national suspects. But in this era of freest speech, soon to be replaced by the term of uninhibited speech, we’ve come to expect such uniformed opinions.

         Ah, the life of the quarterback. No wonder they get paid so much.

         My guess is Romo probably laughed all the way to the bank a week ago Friday, just as he smiled meekly when I asked him as he was leaving Cowboys owner Jerry Jones’ office after signing the extension his reaction to all those talk-show hosts trying to blame the Cowboys’ initial inactivity in free agency on him for not signing sooner.

all the guarantees expire in three years without any restructures, so there are safety measures if Romo loses it by age 36.

         As Jones once said of all those taking pot-shots at him after he bought the Cowboys – actually, 24 years ago, that would be rescued the Cowboys – “They can’t make my money hurt.”

         Touché.

         Now then, after getting all that out of the way, let’s get down to the nitty-gritty of Romo’s contract, widely advertised as a six-year, $108 million extension, which would mean he’s averaging $18 million a year, and that he’s been guaranteed $55 million.

         First of all, since this is an extension, meaning added to what already existed on the final year of his previous contract – $11.8 million – the entire package is now seven years, $119.5 million, which now lowers the average to $17 million. I know, I know, what’s a million when you are talking more than 10?

Next, if you examine how the seven years are structured, a reasonable person would assume this is then a four-year, $65.5 million package since first, all the guarantees expire after the first three years (we’ll get to those in a moment), and secondly, the base salaries those last three years are $14 million, $19.5 million and $20.5 million – the normal backend fluff to these contracts that make them look better than they really are.

So get out the calculator, those three seasons total $54 million of the $119.5 package. And since the $25 million signing bonus is spread over the first five years of the seven-year package, Romo retiring or being released after four seasons would only count $5 million against the cap in $2017 when his cap hit would be $19 million, barring earlier cap-space creating restructures.

Big difference in the scheme of things, no?

Now then, this guaranteed money that seems to have everyone’s panties in a wad. I told you guys last week that this purported $55 million guarantee is really a $40 million guarantee that can escalate to $55 million.

Here is how the guarantees work. The $25 million signing bonus is his, and prorated over the first five years of the contract, counting $5 million each of those first five seasons for cap purposes, no matter what. Also, and these are no brainers once you give a guy a large signing bonus, the first two years of base salary are guaranteed, totaling $15 million ($1.5 million this year). Thus the $40 million.

Then, if Romo is on the team’s roster the third league day of 2014 (highly likely), $7.5 million of his 2015 base salary ($17 million) when the salary cap is expected to finally spike upward after these flat years is guaranteed. And, if he is on the roster the third league day of 2015 (they certainly hope), then another $7.5 million of that 2015 base salary is guaranteed, so nearly all of it. (Note: Romo’s bases, though, in 2014 [$13.5 million] and 2015 have restructure painted all over them.)

But as you can see, all the guarantees expire in three years without any restructures, so there are safety measures if Romo loses it by age 36.

Now hopefully that gives you a clearer perspective of what this contract really is – or isn’t – and really no different than many of these $100 million contracts that normally are stuffed with package-expanding bases that by then begin screaming for restructure.

A chart was put together by ESPN Stats & Information of the first 13 NFL $100 million contracts, the ones before Romo and Joe Flacco upped the total to 15 this past month. Now five of the 13 guys are still playing under their $100 million maximum value deals, including top guy Calvin Johnson ($132 million, and by the way he’s never won a Super Bowl), along with Larry Fitzgerald, Adrian Peterson, Mario Williams and Drew Brees.

But so far, of those 13, the assumed-retired Brett Favre, first to sign a $100 million contract in 2001, has the highest estimated amount earned at $54.6 million, or just more than half that $100 million deal. Next in estimated amount earned is Drew Brees at $40 million of his $100 million package, all this past season in the first year of his five-year deal.

Hey, remember when everyone was pulling their hair out over Albert Haynesworth’s $100 million contract with the Redskins? Well, he earned just an estimated $34.8 million of it. And at the low end of the $100 million babies (gosh, I can remember back in baseball when guys were first called $100,000 babies) is Daunte Culpepper, who earned only an estimated $28.4 million of his $100 million deal.

And by the way, of the now 15 guys now with $100 million contracts, only three so far have won Super Bowls during their careers: Favre, Brees and now Flacco, all three winning Super Bowls before signing those $100 million deals.

Now don’t get me wrong. The Cowboys would love if Romo could play at a high level the next seven seasons, but if he doesn’t or physically can’t, there are some outs. If he does, then the money is all well spent.

Just hope, from a perspective standpoint, this all helps give a little understanding about how this contract works, one that came in just about where both sides probably thought it would from the beginning.

So a fair deal.

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