After effects of the Larry Fitzgerald deal

Imagine that you are Rick Smith, the GM of the Houston Texans, and you have been in preliminary discussions with Andre Johnson’s camp about negotiating their current player’s contract. Nothing formal has been set in place but sides seem to be coming to an agreement on a form of base salary reduction for Johnson. You have laid out a solid plan to lower the salary cap charge for Johnson; while providing him some guaranteed money up front. It’s looking like Houston will be providing Johnson about $10 million in guaranteed money in return for the reduction in salary. This occurs by lowering the player’s salary while making it “fully guaranteed”. Seems like a win-win situation for both sides right? Out of nowhere you receive word that Arizona and Larry Fitzgerald have reached a new agreement that provides Fitzgerald $22 million in guaranteed money. You now realize that your current plan has just been crushed and will no longer be accepted by Johnson’s camp.

Let’s examine this situation and explain what has just happened. Andre Johnson, the face of your franchise the past 10 years, has a contract with a salary cap charge that has become so high that it could affect your ability to sign other quality free agents. That number is $16.1 million dollars. This is not what Johnson is being paid in 2015; but how much the 2015 portion of his player contract is charged to the team salary cap. Johnson’s salary this coming season is $10.5 million and he is scheduled to receive a $1 million roster bonus for attending the offseason workout program. Johnson’s salary for 2016 is $11 million, and he also is scheduled for the $1 million roster bonus. Essentially Johnson is scheduled to be paid $23.5 million dollars for his services in 2015 & 2016. Johnson is scheduled to become an unrestricted free agent for the 2017 season.

The numbers we will be focusing on for comparison: $23.5 million combined salary, amount of guaranteed money, and the $10.5 million base salary pay for 2015. Johnson and Fitzgerald are similar players based on age, production, contract setup, and that they both have been the leader of their respective franchise.

Back to the Fitzgerald news and the reported $22 million dollars in guaranteed money. Fitzgerald was scheduled to have a $23.6 salary cap charge in 2015 for the Arizona Cardinals. That is a huge number, and should never be that high unless you are an MVP caliber player. The Cardinals needed to lower this amount by lowering Fitzgerald’s base salary pay. Exactly what you, as Rick Smith, wanted to do with Andre Johnson’s contract.

Why can’t Houston do this now just like Arizona did?

Here’s why…

Fitzgerald’s salary and bonus money for 2015 & 2016 will total $22 million and it will be guaranteed. That is the true barometer of the player contract; in how much money is the player guaranteed. Andre Johnson currently is scheduled to receive $23.5 million in NON-guaranteed pay for 2015 & 2016.

If you recall the scenario at the beginning you, as Rick Smith, had set a plan in place to reduce Johnson’s base salary pay while providing him with $10 million guaranteed money. Now a player in almost a similar position just received more than double the guaranteed money than what you had planned to offer Johnson. The realization now is that there is no way Johnson’s camp will agree to this new offer.

At this point some would have to assume that Johnson would rather play out his existing contract to receive the $23.5 million. The money is not guaranteed but Johnson knows that he can go to the open market and get something slightly less than what Fitzgerald just received; and likely be able to go to a playoff team. Johnson’s leverage just skyrocketed. Now Houston has to be prepared to outright release Johnson if they go to him with a below market pay reduction and Johnson says “no thanks”. It is not a good practice to make this move with an empty threat. Houston is not prepared to go into the 2015 without Johnson, signs appear to point that nothing will be changed regarding the contract.

It is hard to see Houston making any moves on Johnson’s contract for the 2015 season, and re-evaluate the situation during the offseason this time next year. Johnson’s production during the 2015 season will dictate if he is retained on the roster for the 2016 season. Houston can gain $12 million in salary cap space if Johnson is released this time next year prior to the 2016 season.

 

Troy