Has the QB pay bubble burst?

[csirl]

Has the QB pay bubble burst?

In recent years, we’ve seen quarterback contracts rise and rise. Even starters with average skills or injury histories have been able to command large guaranteed contracts. The language being used by most commentators has been along the lines of:

“if you don’t get your QB now, you may be left with no QB”

“it’s ok to pay over the odds now, because the market is rising and the contract will seem like a bargain in a couple of years”.

“there aren’t enough QBs to go around…”

“it doesn’t matter if the QB isn’t perfect as its difficult to find better in the current market”.

Does this language remind you of anything? Substitute the word “house” for “QB” and to me it sounds exactly like the language and behaviours seen in a property bubble that is about to burst.

Signs are the bubble is now bursting for the following reasons:

1. Supply and Demand.

Lack of supply often underpins a bubble. Up to quite recently, the supply of NFL starting QBs was limited for some reason – there weren’t enough coming out of college and those that did were often busts (another day’s discussion). It seemed like there were only c.25 starting quality QBs to go around. Looking around the league, there are now probably c.40 QBs who would be classified as legitimate NFL standard starters. Why is this?

Supply and demand is cyclical. The first reason is that a lot of new younger starters have come into the league or developed over the past 2-3 years. The following found new young starters: NYG, PHIL, WASH, Chi, LAR, ARIZ, BUFF, NYJ, BAL, CLEV, JAX, HOU, DEN, KC. While not all of these will work out long term, they represent a very high percentage of the starting QBs in the league. Any that work out will be around for another 10 plus years. Add the 3 x early first round picks in 2020 and now more than half the QB positions in the league are occupied by young QBs new or relatively new to the ‘market’.

Secondly, the rule changes in recent years have extended careers – less punishment. So the attrition rate with QBs is lower and many older QBs are staying around longer – even changing teams late in their careers to keep playing. We are now seeing some teams with 2 x experienced QBs on their books and a number of experienced starters sign for modest salaries or as backups.

The net result – there supply shortage has been eliminated.


2. Available finance.

Like the property market, the availability of money has a big impact on price. The current unexpected crisis is going to cause a recession. It will also cause disruption to income in pro sports. For the first time ever, the NFL salary cap will probably drop over the next 2-3 years. Even if for some reason it does not, fear of a drop will change behaviours.

Teams that have recently signed or extended QBs are going to by like the guy who bought property at the top of the market and is now hamstrung by negative equity and crippling repayments in a falling market.


This brings us to the curious case of the New England Patriots. Have they already figured this out? Not bothering signing a starting QB now as they know a crash is coming and they’ll get one cheap in the near future? There’s a good chance the football season will be disrupted this year, so they know they don’t need to sign one until spring 2021 – when the market likely crashes?

 

[InTheZone]

If so its about time. Been saying teams need to reel it back for the last 5+ years.

 

[ghst187]

If you don’t have a top flight QB you darned well better have top shelf coaching staff and defense...
Those are your only two options to winning these days.

 

[JD_KaPow]

There are no "signs the bubble is now bursting." You list speculative reasons why you think that might be the case, but there's no evidence for it.

Starting with your second point, the size of the cap is irrelevant. The question is, what percentage of the cap do QBs demand? If the whole pie is shrinking, sure, QB pay will decrease, but so will everyone else's: that's not at all the same as a QB bubble collapsing.

The value of a QB isn't arbitrary; it's tied to the importance of the position for winning games. There's no evidence that the QB position is becoming less important than it used to be: to the contrary, the passing game is becoming more important, and players like Lamar Jackson are more of a one-man show. The question, then, is do teams agree with you that the supply of good-enough QBs is increasing, and the gap between top QBs and others is shrinking, so as to drop the price they command. Considering that in the last four drafts, QBs made up 11 of the 40 top-ten picks, I don't see the league changing on that front either. Look at the RB market collapse: a pretty good indicator was that teams stopped taking RBs so high in the draft. QBs make up over 25% of the top of the draft but only account for 9% of salary cap league-wide (with top QBs accounting for about 15% of their teams' caps). I don't see why that number would go down.

 

[Kevinicus]

I think the contracts QBs have received this offseason are far below what people claimed the market to be.

 

[Flamma]

This brings us to the curious case of the New England Patriots. Have they already figured this out? Not bothering signing a starting QB now as they know a crash is coming and they’ll get one cheap in the near future? There’s a good chance the football season will be disrupted this year, so they know they don’t need to sign one until spring 2021 – when the market likely crashes?

I think they Patriots not even bothering to find a QB was deliberate. Belichick is pretty much the acting GM and they'll have around 100M in cap space next year. They'll be in perfect position to absorb that 30-70 mil cap reduction they were predicting. The Patriots are waiting it out.

 

[Ghost12]

I think they Patriots not even bothering to find a QB was deliberate. Belichick is pretty much the acting GM and they'll have around 100M in cap space next year. They'll be in perfect position to absorb that 30-70 mil cap reduction they were predicting. The Patriots are waiting it out.

I don’t think the cap hit will be that much next year. I think the League will structure things so that teams borrow against future cap money. So instead of, say, reducing the cap by $50 million next year, they’ll reduce it by $10 million a year for the next 5 years or something like that.

 

[Flamma]

I don’t think the cap hit will be that much next year. I think the League will structure things so that teams borrow against future cap money. So instead of, say, reducing the cap by $50 million next year, they’ll reduce it by $10 million a year for the next 5 years or something like that.

That's possible. But those aren't the rules. That has to be agreed upon by the owners. Usually when they vote it has to be 75% of owners. Why would teams that don't have a problem want to adjust anything?

 

[Ghost12]

That's possible. But those aren't the rules. That has to be agreed upon by the owners. Usually when they vote it has to be 75% of owners. Why would teams that don't have a problem want to adjust anything?

Aside from most owners wanting to act in the best interests of the league, I think the vast majority of teams will have a serious problem if the 2021 cap is $50 million less than what has generally been projected. According to OTC, 17 teams would be over the cap already if it dropped $50 million, with another 9 teams having less than $20 million of space. And for most of those 26 teams, they would be over the cap (or close to it) without even having a full roster.

 

[Flamma]

Aside from most owners wanting to act in the best interests of the league, I think the vast majority of teams will have a serious problem if the 2021 cap is $50 million less than what has generally been projected. According to OTC, 17 teams would be over the cap already if it dropped $50 million, with another 9 teams having less than $20 million of space. And for most of those 26 teams, they would be over the cap (or close to it) without even having a full roster.

I'm not sure they won't do a majority vote om this. I'm just going by what they usually do, which is 75%. We're also not sure it will be 50 million less. Could be 30 million less. It would only take 9 owners to vote no under the 75% scenario.

If I'm an owner I would act in the best interest of my team. Not help other teams keep their high payed players without penalty. I'd vote no if it wasn't affecting my team much. That would be the smart thing to do.

 

[Ghost12]

I'm not sure they won't do a majority vote om this. I'm just going by what they usually do, which is 75%. We're also not sure it will be 50 million less. Could be 30 million less. It would only take 9 owners to vote no under the 75% scenario.

If I'm an owner I would act in the best interest of my team. Not help other teams keep their high payed players without penalty. I'd vote no if it wasn't affecting my team much. That would be the smart thing to do.

Being that it would amend the CBA, I’m sure it would require a 75% vote. But even if owners were being 100% selfish (which isn’t a given since, as much as we fans hate to hear this, an awful lot of them care more about $’s than W’s), 26 of them (81.25%) are already over or right against the cap if it goes down $50 million, so it would be in their best interest to spread that cap hit out.

 

[Flamma]

Being that it would amend the CBA, I’m sure it would require a 75% vote. But even if owners were being 100% selfish (which isn’t a given since, as much as we fans hate to hear this, an awful lot of them care more about $’s than W’s), 26 of them (81.25%) are already over or right against the cap if it goes down $50 million, so it would be in their best interest to spread that cap hit out.

I'm not saying they'll get 9. Especially if it's 50M plus. But if it's lower, 10-30 mil less? Yes they care about money. But wins often translates into dollars. The more fans the more money. You know Bill will be a hard no. Err, Kraft.

 

[DFWJC]

It will
But not yet.

 

[Ghost12]

I'm not saying they'll get 9. Especially if it's 50M plus. But if it's lower, 10-30 mil less? Yes they care about money. But wins often translates into dollars. The more fans the more money. You know Bill will be a hard no. Err, Kraft.

I think if it stays low - say, no higher than $15 to $20 million - they can eat it all in one season. Anything more than that, and most of the League will want to spread it out.

 

[LACowboysFan1]

If for no other reasons than the quarterback runs the offense, handles the ball nearly every play and it isn't easy to make some of the throws so that it requires a skilled quarterback, the market as a percentage of the cap will continue to go up.

Teams have tried the Wildcat and other things to try and reduce the quarterback's importance to the current game, but none of them have worked, don't see that changing, but you never know!!!

 

[John813]

Just wait until Watson and Mahomes need new contracts. 2022 cap blow up is right around the corner. Every position will spike again.

 

[MarcusRock]

Two words: Ryan Tannehill

More hope posting. Dak is going to get paid. Prepare now.

 

[LACowboysFan1]

Oh Dak will get paid, everything I've read and heard is that it's not a question of the $ per year, it's the length of the contract that's the sticking point.

Which probably (not for certain of course) means he's going to be the highest paid quarterback, assuming Dak had asked for that, again that's the rumor.

Those who don't want Dak to be the highest paid per year quarterback are going to be sorely disappointed in all likelihood...

 

[kskboys]

I think the contracts QBs have received this offseason are far below what people claimed the market to be.

That's what I've observed.

 

[ABQCOWBOY]

That's possible. But those aren't the rules. That has to be agreed upon by the owners. Usually when they vote it has to be 75% of owners. Why would teams that don't have a problem want to adjust anything?

I'm not so sure about this. I feel like this has already been voted on through the CBA. Cap is based on revenue percentage. If the revenue goes down, then the cap goes down. So I believe that it's kinda baked in.

Perhaps I'm misunderstanding what's being discussed here, IDK.