How a Tony Romo Contract Could Work

February 17, 2017

Is this May 2012 all over again?  If you live in the Houston area and turned on the radio, you likely heard the hosts discussing the need for the Houston Texans to sign star quarterback Tony Romo.  The latest media reports list the Houston Texans as a preferred location for Romo, should he be released from his contract in Dallas.  This would now be the second time in 5 years that the Texans were the preferred destination for a veteran top tier quarterback.  If you recall during the 2012 offseason, Peyton Manning reportedly was very interested in playing for Houston.  Ultimately Houston passed on the opportunity and proceed with Matt Schaub; allowing Manning to sign with the Denver Broncos.  Nobody truly knows why Houston passed on the Manning situation…whether due to health concerns or the roster moves needed to make it all work.  2012 and this possible situation with Tony Romo are nearly identical.  The Texans have a high priced veteran quarterback on the roster with the opportunity to sign another veteran quarterback coming off major injury.

Let’s assume that Dallas does release Tony Romo, making him an unrestricted free agent for the 2017 season.  The Texans would have the ability to sign Romo immediately due to his release, versus having to wait until March 9th, 2017.  How would the Texans make a contract work within their limited salary cap availability?

If you have been keeping up with the posts here, the initial plans have already been put in place with the release of certain players; as well as contract extensions with two core veteran players.  These moves will position the Texans to be able to sign Romo to a fair value contract.  Romo is scheduled to earn over $33 million dollars over the next two years, including $14 million in 2017 on his current contract with Dallas.  Obviously Houston cannot match that cash flow over the two year period.  Romo’s camp would need to accept some cash flexibility as well as take an under market salary to be able to play in Houston.

Bear in mind this is a pure guess on cash flow on what Tony Romo might be willing to accept to play for the Texans; making the team an immediate contender for the AFC.

4 year contract worth $53,000,000 and up to $57,000,000 with $9 million guaranteed at signing and an additional $10 million in vesting guarantees.  The $9 million initial guarantee would be made up of $8 million signing bonus and a fully guaranteed $1 million salary for 2017.  A $10 million salary in 2018 would become guaranteed for injury only 5 days after the Super Bowl in 2018.  Each season would include $1 million in roster bonus, which would be paid $62,500 per week when Romo is on the 46 man game day roster, to provide some protection for the team.  The contract would also include $2 million dollars in performance incentives in 2017 & 2018 as follows:  $1 million dollars for reaching the AFC Championship and $1 million dollars for reaching the Super Bowl.

If the Texans were to reach the Super Bowl in the 2017 season, Romo would earn $12 million which comes close to what he was set to earn on his previous contract.  Two year cash flow could reach $25 million and the three year cash flow could reach a total of $38 million.

Contract Cap Table

Year Base Salary Pro-Rated Signing Bonus Roster Bonus Cap Charge
2017 $1,000,000 $2,000,000 $1,000,000 $3,437,500
2018 $10,000,000 $2,000,000 $1,000,000 $13,000,000
2019 $12,000,000 $2,000,000 $1,000,000 $15,000,000
2020 $18,000,000 $2,000,000 $1,000,000 $21,000,000

Cash Flow (with incentives achieved)

Year Cash Received Running Cash Flow
2017 $10,000,000 ($12,000,000) $10,000,000 ($12,000,000)
2018 $11,000,000 ($13,000,000) $21,000,000 ($25,000,000)
2019 $13,000,000 $34,000,000 ($38,000,000)
2020 $19,000,000 $53,000,000 ($57,000,000)

Note if Romo were to play all 16 regular season games in 2017, the cap charge would raise to $4.0 million by the end of the season.  This is due to the LTBE roster bonus initial amount being $437,500.  The roster bonus charge would increase by $62,500 each week after the seventh game of the season.

The Texans would be able to move on from Romo within 5 days after the 2018 Super Bowl with only $6 million in dead money if this roster move does not work out.  The amount of remaining dead money in 2019 & 2020 is minimal as well.

Initial questions would include “How does this affect signing A.J. Bouye?”  Given the previous roster moves listed in previous articles, the team would still be able to resign Bouye at a fair market value.  I do not believe this would preclude the team from using the franchise tag either.  The additional question of “How does this affect Hopkins’ extension?”  Well it doesn’t and no other roster moves would.  Hopkins is already scheduled to count $7.9 million against the 2017 salary cap, and a contract extension would likely lower that cap charge number.

Hopefully we do not have a repeat of the 2012 big miss on the possible availability of Tony Romo playing for the Houston Texans.

Troy

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