It appears the length of the contract is what’s holding up a deal between the Dallas Cowboys and Dak Prescott, so today we look at what one year is really worth.
The Dallas Cowboys and Dak Prescott are not far apart on the terms of a new deal. They apparently haven’t been far for a while now. The market is essentially dictating the price to both parties so the average annual compensation and guaranteed cash are basically spelled out.
So contrary to popular belief, it’s not Dak’s outrageous demands or selfishness or greed that’s holding this up. It’s the length of the deal. Rather than asking for more Dak’s actually asking for less. Try that on for size, Dak haters.
Now before we throw him a parade and add him to the Christmas card list, let’s be clear: this isn’t about sacrifice or altruism. This is good business from Dak Prescott’s camp. A short-term deal may offer less overall dollars, but if Dak continues to perform as he’s been, he stands to make considerably more overall getting to the free agent market again as quickly as possible.
That’s where the two parties are at the impasse.
Multiple reliable sources have indicated, for quite a while now, the Dallas Cowboys want to sign Dak to a 5-year deal while Dak wants a 4-year deal. Each day that goes by Dak seems to get a little more leverage so it seems wise to explore what that extra year is worth on the market, right?
Based on yearly franchise tag values we can see the escalating average cost of re-signing franchise quarterbacks each year. From that we can determine the cost of re-signing a QB for the 2024 season compared to the cost of re-signing him for the 2025 season.
From 2017 to 2018 the franchise tag value increased about 9%. In 2019 it increased about 7%. In 2020 it increased nearly 8%. This gives us an average annual rate of growth of roughly 8%. So let’s say the Cowboys and Dak have agreed on $35 million annually here in 2020. At a growth rate of 8%, a franchise-caliber QB would cost about $47.5M annually to re-sign in 2024. One year later it would be $51.5M annually.
That figure may sound insane today but keep in mind the franchise tag amount in 2016 (four years ago) was just $19.9M. That’s how fast these contracts escalate year after year and that’s why the next guy who signs a contract often resets the market – regardless of where he ranks in talent. That’s also why it was costly putting this inevitable extension off as long as they did.
Looking at 2024
So if the Cowboys agree to a 4-year deal now, they’ll need to pay Dak $47.5M annually to keep him in 2024 and beyond (vs him playing on the final year of a 5-year deal at $35M). That’s a significant amount, sure.
Now let’s say the Dallas Cowboys seek to re-sign their signal caller again (which is highly probable). If they re-sign him in 2024 at $47.5 per year it will be cheaper than if he plays out a 5-year deal and signs for $51.5M per year in 2025 – so there will be savings on the back-end for the franchise.
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Note: It’s important to keep proper perspective in mind here as well. The rate of growth can change based on a variety of revenue factors so we can’t just assume 8% is going to be the number. But everything will happen in unison so it’s still a pretty safe exercise (QB salary is based on team salary cap and team salary cap is based on revenue so it’s not like Dak will suddenly cost 50% of the salary cap or anything. He’ll take up the same percentage of cap space regardless of growth).
Dak Prescott is betting on himself. He’s betting in 4-years he’ll still be a franchise QB (he’ll be 30) and he can cash in on a second deal that’s adjusted to the current market. It’s good business for him… but it’s also good business for Dallas. That’s because if he falls on his face the Dallas Cowboys can move on quicker. And if he lives up to his deal the Cowboys can re-sign him to a new deal a year early which will save them money on Deal No. 2.
At the end of the day it’s not that big of roadblock. Long-term deals offer the most value when they extend through a player’s entire career (like Tyron Smith‘s deal). But if you know another extension is likely to happen regardless (and yes, a second deal is pretty likely for Dak even on a 5-year deal), then it’s really just splitting hairs because it all equals out in the end:
An extension in 2024: 4-years at $47.5 equals $190M
An extension in 2025: 4-years at $51.5 equals $206M
So while the Dallas Cowboys would pay $12M more in 2024 should he sign just a 4-year deal, they’ll save $16M by locking him in a second deal a year early, ultimately saving them $4 million overall. Yes, this is projecting awfully far into the future but that’s what they’re trying to do anyway by fighting over that extra year.
At the end of the day it would behoove the Dallas Cowboys to comply with Dak Prescott’s wishes and sign him to a 4-year deal. Each day that goes by just adds to his cost and no matter how many back-up QBs Dallas signs it’s not going to swing the leverage in their favor.
What’s one extra year worth on Dak Prescott’s contract? Nothing if Dallas intends on signing him again when he’s 30-31 years old. In fact, it potentially saves them money to do a 4-year deal now. So let’s put this negotiation to bed and start working on building the most dominant offensive attack in the NFL, shall we?
- Published on 05/04/2020 at 12:01 PM
- Last updated at 05/04/2020 at 15:42 PM