Forecasting Salary Cap Growth Amid Miami Dolphins QB Contract Extension Talks
The Miami Dolphins are set to make a big investment into quarterback Tua Tagovailoa. Anticipating the salary cap growth could go a long way in finding the right cash flow and cap distribution.
The Miami Dolphins have had quite the week already as it pertains to the contract saga of quarterback Tua Tagovailoa. Last Friday, it was reported that Tagovailoa missed “the majority” of voluntary workouts. On Sunday, it was reported that Tagovailoa had received his first contract offer from the Dolphins — which was not accepted. Monday came and with it came a fresh batch of photos of Tagovailoa throwing with the team during their first OTA of the offseason. But today, Tagovailoa was not present with the team, although it was for a charity appearance for his college coach Nick Saban and Mike McDaniel acknowledged that the team was aware of the commitment well in advance.
Is this the NFL offseason or ‘As The World Turns’?
NFL contract negotiations can be swift or, alternatively, they can be extensively tedious. Tagovailoa’s journey to this point seems to be pushing Miami’s negotiations towards the latter. All of the insider buzz indicates expectations that a deal will still be in place before training camp; as has been separately stated in the past 48 hours by NFL super agent Drew Rosenhaus and NFL Network’s Cam Wolfe. But as we wait for a deal to come together, we can use the time to consider all of the factors the Dolphins are likely weighing in how they structure their offers.
The salary cap is a big piece of the puzzle. First and foremost, it is growing. Quickly. We covered as much on Locked On Dolphins this week — including a look at the average salary cap commitment to the starting quarterback of each of the 30 Super Bowl champions of the NFL’s salary cap era.
I highly encourage you to watch the episode in full. But if you promise to open the link and let it run, I’ll give you the Sparknotes version here — 23 of the 30 salary cap-era Super Bowl champions fielded a quarterback who was not on a rookie contract and the average salary cap investment for the starter for the teams who won the championship was 8.79% of that year’s cap.
This is a far cry from the life hack that is the “rookie quarterback contract window” we hear so much about. And I’ve perpetuated the talking point myself. The numbers, however, don’t lie. Of the seven rookie contracts to win Super Bowls, three of them were all-time steals:
Kurt Warner, who didn’t get drafted and came to St. Louis as a former Arena quarterback
Tom Brady, notoriously the 199th overall pick playing on his rookie deal when the Patriots won the Super Bowl in 2001
Russell Wilson, the 3rd-round draft choice of the Seahawks who helped Seattle to a title in 2013 (his second season)
Two others came from teams who traded up through approximately half of the 1st-round for a quarterback:
Kansas City moved up 17 spots to No. 10 overall to draft Patrick Mahomes in 2017
Philadelphia moved up 11 spots to No. 2 overall to draft Carson Wentz in 2016 (although Wentz was injured late in the 2017 season and did not play in the Super Bowl)
Only Pittsburgh’s Ben Roethlisberger (No. 11 overall in 2004) has won a Super Bowl on a rookie contract while being organically drafted in his team’s original spot in the 1st-round of the NFL Draft. Eli Manning, technically the No. 1 overall pick in 2004, also won a Super Bowl on his rookie contract as a 1st-round pick but he was traded from the San Diego Chargers to the New York Giants upon his name being selected in the 2004 Draft.
The other 23 Super Bowl champions of the salary cap era? They’ve had veteran quarterbacks at the help who had played their way into multiple contracts. That’s the world the Dolphins are about to live in.
Their ability to thread the needle will be predicated, in part, on how they anticipate the salary cap growth year over year.
Unofficial Numbers
Forecasting salary cap growth can be done in a number of ways. The method I chose to implement on the podcast was to take the year over year average of the entire salary cap era and used that figure to forecast the salary cap growth over the next 5 seasons.
Last week on ‘Touchdown, Miami!’ I laid out a contract proposal to Tua Tagovailoa that I felt would be a competitive offer for his services long-term. In the time that has passed since, Detroit has struck an extension with Jared Goff — which I do believe marginally pushes Tagovailoa’s contract numbers up.
So I’ve slightly adjusted the guaranteed and total cash of that offer. We’ll be using these figures to explore salary cap % investment into a new Tagovailoa contract below:
Green: Fully Guaranteed Money; $154.5M total (2024, 2025 & 2026 base salary, signing bonus and 2025 & 2026 option bonuses)
Yellow: Incentives and Future Guarantees; $37.5M total (2027 base salary, 2027 option bonus and 2025-2029 Per Game Active bonuses)
Red: Non-Guaranteed Money; $100M total (2028 & 2029 base salary, 2028 option bonus)
This contract is, in total, a 6-year contract valued at $292M; with 5 (new) years and $268.8M in new cash. With $154.5M guaranteed at signing, Tagovailoa is positioned to be well compensated and the new money average of $53.76M would put him at No. 2 in the NFL, approximately $760K annually in front of Jared Goff.
‘Scheduled Cap Commitment’ will be the figures we use for the salary cap growth models below, as that is the accounting figure Miami must be ready to hold serve with in order to fit this kind of contract among their ranks.
The Salary Cap Era Forecast
The full 30-year growth rate of the NFL’s salary cap is equal to approximately 7.13% annually. Here is what the cap growth rate would mean for the future years of a Tagovailoa contract extension — and what percentage of the cap his hypothetical cap figures would take up:
Quarterbacks not named Mahomes have ever son a Super Bowl with their salary cap commitment exceeding 13.08% — which ironically enough was achieved by Steve Young in the first year of the salary cap era of the NFL. With the most conservative salary cap growth model (30-year growth rate of 7.13% annually), Tagovailoa’s proposed contract would give Miami the next three seasons with a figure under that mark:
2024: 4.50%
2025: 8.59%
2026: 11.43%
And, as a matter of fact, the first two such seasons fall under the average salary cap commitment of a Super Bowl-winning starting quarterback in the salary cap era. By the fourth year of this forecast, Tagovailoa would have a $12.5M salary that could be worked in one way (restructure) or another (trade/cut) depending on how this are going if Miami wanted to avoid taking up too much cap space.
The Latest CBA Forecast
The latest collective bargaining agreement went into place in March of 2020. It added a 17th game to the NFL’s regular season effective in 2021 and prompted the latest surge in cap growth; as aided by an additional regular season game and the plethora of new television contracts. The addition of gambling revenue has also aided in the surge. When you calculate the average cap growth since the ratification of the new CBA, you get an average of 6.61% annually, but that includes one of the few instances of the salary cap going down thanks to the COVID-19 pandemic.
We’d all like to think another global health saga isn’t awaiting us any time soon; so we’re instead omitting that year from the average. The 4-year sample size of salary cap growth without the COVID-19 impact is equal to 10.24% annually.
You can see below what the compounding growth of 10.24% does to Tagovailoa’s projected cap charges and their share of the projected annual cap.
The projected 2025 share is hardly changed; a difference of .24% of the cap. But by 2028 and 2029, the share of the cap space drops 2-3 full percent. And Miami will still have late-contract wiggle room in this type of structure to redistribute the finances further so long as Tagovailoa continues to play at a level the team is comfortable with.
The 10-Year Forecast
Truthfully, I think the most likely outcome falls in the middle. The 30-year sample size has a lot of years that don’t offer the kind of revenue growth you’re seeing from the league right now. And the 5-year sample size likely accounts for too much new money. So how about the last 10 years? That’s a healthy portion of each of the last two collective bargaining agreements and far enough away from the uncapped year of 2010 that came as a result of the NFL owners opting out of that current CBA.
A 10-year sample size (again omitting the pandemic) is equal to 8.55% of the cap. That’s nearly 2% short of the most aggressive model but also nearly 1.5% higher than the salary cap era projection.
The numbers?
They do indeed still give Miami three seasons of salary cap charges under the Steve Young mark of 13.08% and the flexibility starting in 2027 to manipulate and drop that number further if Tagovailoa continues to play well thanks to the $12.5M base salary of this proposed contract.
It’s no sure thing — but the suggestion that Miami’s winning window is closing now that they’re on the cusp of paying Tagovailoa is off the mark. The Dolphins will instead have at least three more competitive years based on the history of Super Bowl winning QB cap hits. What they, and Tagovailoa, ultimately do with them is going to be fascinating to see unfold.
I have never seen an article that lays this out. I also have always thought it was a huge advantage to have a QB on rookie contract. Now I know better. Thanks for the hard work and another well written informative and entertaining article.