NFL Contracts Explained: Adjusted Average Annual Value

When gauging a free agent’s value, it can be helpful to compare him to what other players at his position receive in salary. However, it can be misleading to simply look at the average per year (APY) of a contract that was signed in a previous year, when the salary cap was smaller. A more realistic picture of a signed player’s value can be attained by using adjusted APY. This allows those involved in negotiations to identify true financial benchmarks with a common denominator.

Consider the cornerback position. The Dolphins just agreed to terms with Byron Jones on a contract that has an average annual salary of $16.5 million, which is the highest at his position in the NFL. With this year’s salary cap at $198.2 million, his $16.5 million average salary accounts for 8.3 percent of the Dolphins‘ cap space (not including rollovers or adjustments). The adjusted APY of Jones’ contract, then, is 8.3 percent of today’s salary cap, but it needs no adjustment because it was signed this season.

Now consider Cardinals CB Patrick Peterson. Even though the APY ($14.0 million) of the contract he signed in 2014 is less than Howard’s, Peterson’s adjusted APY is higher. In 2014, $14.0 million was 10.5 percent of the $133.0 million salary cap; in 2020, 10.5 percent of $198.2 million equals $20.8 million.

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