Possible Contracts for DeAndre Hopkins Extension

This morning Aaron Wilson reported that Hopkins’ agent & the Houston Texans met to discuss the player’s future and how well he has performed given the quarterback position the past two seasons.  This is probably the first step of many for the two sides to work towards a contract extension.  This was likely a very informal conversation and likely did not include any contract discussion.  The Texans have a long standing rule of no contract negotiations during the season.

Hopkins will be entering year 4 of his rookie contract for the 2016 season.  Hopkins is slated to earn a $1.0 million dollar salary along with a $445,005 roster bonus on the fifth day of training camp in July for 2016.  The Texans do have an option to activate a fifth year on Hopkins’ contract; an option that is on all first round draft pick contracts.  The value of the fifth year will equal the average salary of players salary at his position, ranking #3 – #32.  For 2015 the amount for a wide receiver on a fifth year option was $7.32 million per Joel Corry.  With a big increase expected in the 2016 salary cap the fifth year option likely will be over $8 million.  The fifth year option will need to be decided in the upcoming offseason by the Texans.  If the team is unable to gain ground in an extension they can use the option to continue discussions beyond the 2016 season.  This past offseason the Texans did not use the option on Whitney Mercilus since they were able to reach an agreement early in the process.

The Texans should be able to sign Hopkins to a contract extension, despite him having two years left on his contract.  The Texans organization work very hard to keep their core group of players under contract and to get their extensions completed as early as possible.  Hopkins could wait it out and try to make it to free agency in 2018 to score a top tier contract.  But as we see every year the NFL is a tough sport that could bring a major injury to any player at any time.  A major injury over the next two years would dramatically lower Hopkins market value.  The Texans could apply the franchise tag in 2018 as well if it went that far.

Hopkins is arguably a Top 7 wide receiver in the NFL at this time.  I have reviewed 4 player contracts from the past year that should give a solid baseline for what a extension for Hopkins could look like.  The metrics used for comparison will be initial guarantee amount, total possible guarantee amount, and 3 year average amount.  I will also provide 3 different contract structures:  hybrid model (most likely to be used), signing bonus model (used in the past by Texans), and a cash model (used by Tampa Bay).  Hopkins’ current 2016 contract numbers will be included in these numbers.  If Hopkins were to sign this upcoming offseason he should receive a contract inline with these players.  If Hopkins were to wait two years he would potentially land a much larger contract.

 

The player contract information below is provided by OverTheCap.com

Julio Jones

Dez Bryant

A.J. Green

Demaryius Thomas

These contracts are 4-5 year extensions.  Initial guarantees ranging from $26.75 million to $35.5 million.  Total guarantees ranging from $32.75 to $47.5 million.  3 year average is right about $15.5 million for all 4 players.  We will present three contract options that should fit inline for these contracts.  Each model will incorporate a $2.5 million roster bonus structure, which the Texans routinely use.  This has a $500,000 bonus per season paid out on an active game basis.

Hybrid Model

The hybrid model has been employed by the Houston Texans the last two years.  This model uses a small to mid level signing bonus, one or two guaranteed years of salary, and (if needed) one time roster bonuses in the first and/or second year.  I prefer this model as it benefits the team and the player equally; while leaving a small amount of dead money in the last 2 years of the contract.  This model does not provide as much cash up front as the signing bonus model.

This contract will include a $12 million signing bonus, fully guaranteed salaries in 2016 & 2017, the 2018 salary is guaranteed for injury only at signing but becomes fully guaranteed on the 5th day of the 2018 league year.  $4 million bonus in 2016 paid 5 days after signing the contract.  $8 million bonus in 2017 paid on the 20th day of the 2017 league year, team will have discretionary option to convert to signing bonus.  $27 million guaranteed at signing, with a total guarantee of $45 million.  3 year average of $15.5 million.  The Texans would have the ability to release in 2018 before the salary becomes guaranteed leaving $7.2 million in dead money.  Converting the 2017 one-time roster bonus would provide a $6 million cap savings if the team should need it.

Salary Pro-Rated SB Roster Bonus One-Time Bonus Cap Charge
2016 $4,000,000 $3,381,673 $945,005 $4,000,000 $12,326,978
2017 $7,000,000 $2,400,000 $500,000 $8,000,000 $17,900,000
2018 $10,000,000 $2,400,000 $500,000 $0 $12,900,000
2019 $12,000,000 $2,400,000 $500,000 $0 $14,900,000
2020 $14,000,000 $2,400,000 $500,000 $0 $16,900,000

Signing Bonus Model

The signing bonus model was employed by the Texans in the 2010-2012 seasons.  This model has a large signing bonus with with one or two years of guaranteed salary as the offset.  This model provides more cash up front for the player, but does leave more dead money on the back end of the contract.  The team could defer some of the bonus payment as well.

This contract will include a $20 million signing bonus, fully guaranteed salaries in 2016 & 2017, 2018 salary would become guaranteed for injury the 5th day of the 2018 league year, and fully guaranteed at the start of 2018 training camp.  The team could release after the 2017 season leaving $12 million in dead money.  The contract has $36 million guaranteed at signing, $46 million in total guarantees, and has a $15.8 million 3 year average.

Salary Pro-Rated SB Roster Bonus One-Time Bonus Cap Charge
2016 $7,000,000 $4,981,673 $945,005 $0 $12,926,678
2017 $9,000,000 $4,000,000 $500,000 $0 $13,500,000
2018 $10,000,000 $4,000,000 $500,000 $0 $14,500,000
2019 $12,000,000 $4,000,000 $500,000 $0 $16,500,000
2020 $14,000,000 $4,000,000 $500,000 $0 $18,500,000

Cash Model

This model utilizes a small signing bonus and salary guarantees.  This model is not used by the Texans, but figured it would be a good example.  Tampa Bay uses this model.

This contract has a $5 million signing bonus, 2016 & 2017 fully guaranteed salaries.  The 2016 one-time roster bonus is paid 5 days after signing the contract.  The 2017 one-time roster bonus is paid 5 days into the 2017 league year.  The 2018 is guaranteed for injury only at signing.  The contract offers $25.5 million guaranteed at signing, with a total of $41 million in possible guarantees.  It is very unlikely this structure is utilized.

Salary Pro-Rated SB Roster Bonus One-Time Bonus Cap Charge
2016 $9,000,000 $1,981,673 $945,005 $1,500,000 $13,426,678
2017 $10,000,000 $1,000,000 $500,000 $2,500,000 $14,000,000
2018 $13,000,000 $1,000,000 $500,000 $0 $14,500,000
2019 $14,000,000 $1,000,000 $500,000 $0 $15,500,000
2020 $16,000,000 $1,000,000 $500,000 $0 $17,500,000

 

These numbers are probably the baseline for what Hopkins will get, I would not be surprised to see his contract exceed these figures.  I am confident that the Texans will have a final top dollar that they are willing to pay; but the Texans need to ensure they keep Hopkins on the roster for the future.  I believe the Texans will continue to use the hybrid model on a Hopkins’ extension.  I believe Hopkins will likely get $35-38 million in fully guaranteed money upfront with total guarantees keeping close to $50 million.  Let’s hope Chris Olsen & Rick Smith can get it completed this coming offseason to keep their biggest playmaker under contract for the foreseeable future.

How much do you think Hopkins is worth?  Leave your comment below on what kind of money you think Hopkins will land on a extension?

Troy

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