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?