2022 RULES: LTC / 5th Year Option

[Goodell]

With the NFL salary cap (and ours here also) expanding, perhaps it's not such an issue this year, but seems in the past that we had some problems with retaining quality draft picks when picking up the 5th year option and then signing to a LTC the year afterward with all the salary increase requirements for those adding up. Most successful first round draft picks in the NFL, I think, may have their 5th year picked up, but both sides working toward long-term deals before or hopefully not long after that if the player is a good one.

For most former first rounders, we even put language on there now that it probably makes sense not to pick up the 5th year option for most players because of the big increase if you want to LTC later since that also requires another big raise.

The 5th year option price in the NFL is complicated and higher priced for various performance levels. We simplify it to 66% of the transition tag across the board.

With limited LTCs per year for us, many teams will use their LTCs elsewhere and just pick up 5th year options for eligible past first round picks playing well. Then the next off-season perhaps use an LTC on them before they hit free agency. So it's a big jump in pay for 5th year option and then next year at least a 20% raise (LTC minimum) if not more depending upon grade and other salaries in the league.

I think we have a couple of options to look at quickly before we turn 5th year and LTC options on this season.

- Leave everything as is. Salary cap increases more this season so plenty of cash and both 5th year and LTC have some existing logic that makes sense.

- Adjust LTC but leave 5th year as is (as 66% of transition tag prices seem like it's in the ballpark or lower for most - https://overthecap.com/fifth-year-option-projections/ ). A raise required still for LTCs in general, but don't require quite as high as a 20% raise but instead lower that to LTC has to be at least a 10% raise for player to accept at minimum. So becomes easier for 5th year to be picked up and LTC'd the next year reasonably, and also perhaps makes LTCs more reasonable with lower minimums given that we add on signing bonuses, etc. to the average prices. We used 20% in the past because franchise tag values included needing a 20% raise, but that's the only reason we had it that high and not as applicable arguably for general LTCs for all players versus elite franchise tag level players in the highest demand. We'll probably make some other LTC adjustments (like more options for rip up contract or add to end of existing one).

- Leave LTC as is generally, but lower 5th year option prices.

- Allow teams to have LTC options for longer extensions when picking up the 5th year option based upon the 5th year price (66% of transition tag) at a minimum but if higher graded at a higher price similar to normal LTC value around similar graded players. For teams with a lot of former first rounders (which we have here more than reality with some teams having a handful of first rounders sometimes), this increases the number of LTCs essentially for them, but really only useful for the best players at the higher prices. We already do this for franchise tags, letting teams either do the 1-year tag or extend it into LTC options. This kind of replicates the complicated NFL 5th year option prices if we have it give higher graded players a higher price at extended contract, and mirrors that NFL teams for the most part are looking to extend players worthy of being picked up for the option year beyond that.

Comment if other thoughts. Thanks!

[Goodell]

Quick correction on 5th year option prices. It's not 66% of transition tag prices across the board for all, but that's just for first rounders who weren't in the top 10. Top 10 first rounders currently are at full transition tag price.

[DerekM]

There wasn’t an option but for LTC’s I wish that it would factor the average of his contract for players that were backloaded or restructured because paying that minimum increase of their final year gets to be insane.

[TrevC]

There wasn’t an option but for LTC’s I wish that it would factor the average of his contract for players that were backloaded or restructured because paying that minimum increase of their final year gets to be insane.

This has been a huge concern for me as well so I am glad it is being brought up. I am hoping we are able to vote on this soon

[JonC]

I would love to see three options:

1. Decline 5th year option.
2. Pick up 5th year option as a one-year deal.
3. Pick up 5th year option and roll into LTC (extending maximum LTC to 6 years)

[Goodell]

Hoping to turn on some functionality tonight. Have a family thing during the day, and first wanted to get a little feedback into some tinkering with the LTC calculations and possible expansion into 5th year options.

Currently it calculates the average of players of same position with similar or lower grade (throwing out the top/bottom extremes) and gives options based upon: 5-year LTC requires SB = 200% of LTC Salary | 4-year LTC requires SB = 150% of LTC Salary
3-year LTC requires SB = 100% of LTC Salary | 2-year LTC requires SB = 50% of LTC Salary.

I may be able to tweak the average to also include SB/yr to give full cap value average. Wondering then what the options might look like.

For an example to work with, say a player's average cap value in the league comes back at 10M.

2-year: 7M salary + 6M SB (3M/yr) right at the 10M/yr ave. (salary 70% of the cap value ave)
3-year: 8M salary + 10.8M SB (3.3M/yr 10% more) for 11.3 M/yr (salary 80% of the cap value ave)
4-year: 9M salary + 15.18M SB (3.795M/yr 15% more) for 12.795 M/yr (salary 90% cap value ave)
5-year: 10M salary + 22.77 SB (4.554/yr 20% more) for 14.554 M/yr (salary 100% cap value ave)

What do you think about new LTC calculated options based upon that. Pulling in the entire cap value when making the average (including annual SB) to get more of a complete financial average for players with high SBs and low salaries. Then giving options that start at that average cap value and go up 10% more salary per year and increasing SB/yr (10, 15 then 20% SB/yr increases).

If you have a better way to structure the LTC options let me know. Hoping to maybe implement that soon and turn on some functionality later tonight.

[tino38]

Curious when this goes into effect? Within the gameplay myself and many others made decisions on loading up large S/B last year to use LTC on a player this year, not seeing a change in the LTC equation incoming for this year…

[Goodell]

Before every new season we have off-season rules discussions and possibly update rules prior to turning the game back on for a new year. Lots of discussions in the past and current off-season about LTC and concerns about restructurings effecting those if based upon salary only.

Unless I'm not understanding, the biggest benefit to doing a low salary high SB contract in hopes of next LTCing them would be avoiding any possible 20% raise requirement on the existing salary by having it low. That only applies if that's higher than the average. As part of the overall LTC discussions and 5th year option impacts, thinking of lowering that raise minimum to just 10% raise at minimum on LTC.

My hope is the new LTC calculation ends up more affordable and more reasonable without requiring a huge raise at minimum. Need to look more at that and see if any additional thoughts, but that's the hope is we revise LTC to get more info on the averages, but overall make it more reasonable. Need to do a couple real examples to make sure the aim there is met.

[JonC]

My only burning question on this is how much things get skewed by the large number of trades we see. Will that artificially deflate cost? My understanding was that the LTC process ignores signing bonuses for that reason, anyway.

[Goodell]

Thought there was more interest in adjusting ltc to include cap value based on past discussions, but maybe keep pretty much same this season but alert that may change next year especially with possible new restructures and salary lowering options.