Last offseason I laid out the issues surrounding the negotiation with Larry Johnson and how much money it would take to get the deal done. As it turns out, I was almost spot on with my prediction of $20 million in guaranteed money. I'm not a capologist (although Peterson is free to contact me to discuss my future as one), but I'll take my shot at the Allen deal.
I think the Chiefs, and more importantly Peterson, believe Allen is worth a sizeable long-term contract. He led the league in sacks last season with 15.5 in only 14 games. Allen has led the Chiefs in sacks in three out of his four seasons. He's the cornerstone of a rapidly improving defense, a fan favorite, was drafted by the Chiefs, and will only be 26 years old when next season begins.
The beauty of it all is that the Chiefs don't really have to compete with any other team for Allen's services. Sure, now that he carries the franchise tag as an unrestricted free agent, he has the ability to negotiate a new deal with another team. But in today's NFL, franchise players don't get huge contracts from other teams because the price (both in bonus, salary and draft picks) is too high. The Chiefs and Allen are essentially married, so it's time they sat down and pledged a lifelong commitment to that union.
The art of the negotiation is that all parties involved walk away from the agreement with most of their needs met. In no successful negotiation does one party get everything they desire. So who are the main parties and what are their key needs in this negotiation? There are three of them. Let's look at each.
Jared Allen is at the center of the negotiation. His key need, like every other NFL player, is the feeling of being wanted, with security. The NFL is the only major professional team sport where contracts are not guaranteed. With that model in place, players rightfully desire, and at times demand, a long-term contract with significant guaranteed money.
This type of contract is proof that the team wants them to be a part of their program, provides security in knowing they won't be released any time soon, and protects their livelihood in the event of injury. Allen is looking for the Chiefs to provide him with a sense that he is wanted, and with security.
The Kansas City Chiefs are also a key player in this negotiation. Their key need is to fill their roster with young, talented football players. Ideally, they would be players the Chiefs drafted and developed themselves. Obviously, Allen fits that mold.
The Chiefs also need to sign those players in a fashion that will not wreck the salary cap in current or future years. They also need to be protected in the event that player misses time for a reason other than injury (i.e. league mandated suspension). No longer are teams mortgaging their future for short-term success. Managing the salary cap is vital to NFL franchises and the Chiefs are no exception.
Ken Harris is the last key player in this negotiation. His needs seem minor to most fans, but will play a role in these negotiations. He needs to be able to show other players (and more importantly, potential clients) he can get them, at minimum, fair market value. The best way for an agent to show this ability is to make a splash with a long-term deal encompassing a large amount of money.
So what contract numbers will meet the needs of all three parties and make them happy? To answer that question, I used an analysis similar to the one I used with Larry Johnson's contract situation last offseason, borrowing a page from CNNSI.com columnist Peter King. Here it is in a nutshell.
The Chiefs can apply the franchise tag to Jared Allen this year and next year. The tag for a defensive end this year carries a price of $8.9 million. If we assume a seven percent increase in that value over the next two years, the value is $9.5 million and $10.1 million in 2009 and 2010 respectively. Together, that equals $28.4 million.
Since the Chiefs will be asking Allen to sign for several years, we add $1.6 million to round the signing bonus to $30 million. We spread the contract out over eight years.
Those three years of franchise tags average out to $9.5 million a year. Since Allen receives a large signing bonus, we discount that number to $9.0 million per year and arrive at a total of $72 million. We spread the salary out over the eight years to keep the cap hit reasonable over the course of the contract.
To summarize, Allen receives an eight-year deal worth $72 million with $30 million in guaranteed money. The contract includes the provision that Allen repays the prorated value of the guaranteed money if he misses any games due to a league mandated suspension.
|YEAR||SALARY||CAP VALUE||TEAM CAP||ALLEN CAP %|
If I understand the collective bargaining agreement correctly, guaranteed money is only spread over the first five years of a contract (i.e. $6 million per year in this case). With this structure, Allen would receive $30 million guaranteed and $37.5 million in the first three years of the deal.
Secure enough? I think so. Harris, of course, gets his name on a large contract attached to an NFL Pro Bowler.
The Chiefs would lock Allen up for eight years. Can they count on him for eight years? If he stays in good shape, the answer is yes.
At the conclusion of this contract, Allen would be 34. Giants defensive end Michael Strahan finished this season with nine sacks at the age of 36. Because of how the cap hit is spread out, the Chiefs would have the ability to make a year-by-year decision based on Allen's production after five years.
Further, Allen's portion of the salary cap (assumed to increase three percent per year) never strays higher than 7.5 percent. If the cap should increase by more than three percent per year, that percentage of the cap goes down even more.
Again, I'm not a capologist, but this is a fair contract that meets the needs of all parties involved. Mr. Peterson, Mr. Harris - it really isn't that difficult.