So, the Pittsburgh Steelers have yet to sign outside linebacker T.J. Watt to a long-term contract extension as of Monday evening and the former first-round draft pick out of Wisconsin is still not practicing fully. Most expected a deal to be consummated by now, and most definitely by the time the team leaves for Buffalo on Saturday. So, why haven’t the two sides reached an agreement yet? I can almost guarantee you that it is related to guarantees and not new money average, the salary cap, or cash flow.
The Steelers are certainly well aware that Watt more than deserves to be the NFL’s new highest-paid defensive player. They also know good and well what the cash flow by year should look like for such a deal. History shows that the Steelers are more than fair when it comes to new money averages related to positional market value as well as cash flow for such deals. If you read that and dispute it, you just don’t know what you are talking about.
There is also no problem from a salary cap perspective in getting Watt locked up to a deal that will make him the new highest-paid defensive player in the league. How do we know that? Well, even if they were to give Watt an unprecedented signing bonus of $60 million as part of a four-year extension, his new cap charge for 2021 would be just $12.901 million if also given the minimum salary for his accrued seasons, which is $990,000. Such a $12.901 million cap charge would be just $2.901 million more than it is right now, which is $10.089 million.
So, what about this guaranteed money discrepancy I keep talking about?
Well, if you look at the last edge-rusher that just got paid, Joey Bosa of the Los Angeles Chargers, the five-year, $135 million contract extension that he signed well over a year ago included $78 million fully guaranteed. That $78 million fully guaranteed came via a $35 million signing bonus, a $7 million first-year roster bonus, a $1 million first year base salary and salaries in 2021 and 2022 of $13.75 million and $21.25 million, respectively. You can see the original layout of Bosa’s deal below and the red numbers are the fully guaranteed amounts.
Once again, the Steelers have a longstanding policy of not fully guaranteeing anything outside of the first year of a new contract for non-quarterbacks. The team, however, does have a long history of paying out very high percentages of their long-term, super-lucrative deals. In short, the Steelers try to sell the fact that at least the first three years of their super lucrative deals are virtually guaranteed. Those first three years usually include injury/skill guarantees of some sort, but even so, virtually guaranteed is still not fully guaranteed.
The fact that the Steelers would not budge on their guaranteed money principles is what led to former running back Le’Veon Bell never signing a big deal with the team after being franchise tagged. The team was set to more than fairly compensate Bell from a new money average and cash flow standpoint, but the fact that they wouldn’t fully guarantee more than the first year money wound up being the deal breaker.
Undoubtedly, Watt and his representation are trying to get the Steelers to finally budge on guaranteed monies past the signing bonus. The Steelers, however, are trying to hold their ground and not let Watt be the one to break precedent. This deal with Watt could likely get done tonight if he were to be given say a $45 million signing bonus, a fully guaranteed base salary in 2021 of $1.089 million along with fully guaranteed base salaries in 2022 and 2023 that both satisfy cash flow standards. In fact, such a deal would pay Watt $46.089 million in 2021 and his cap charge would even remain unchanged at $10.089 million. The Steelers are probably fine with giving Watt such a structured deal but only with the base salaries beyond 2021 not being fully guaranteed.
So, what kind of leverage does each side have right now? Well, the Steelers will contend that they can use back-to-back franchise tags on Watt in 2022 and 2023 and those, along with the $10.089 million he is set to earn in 2021, essentially could set a cap for what the outside linebacker can earn these next three years. Basically, around $50 or so million in total. As for Watt, his leverage revolves around his services being withheld.
Personally, I see both sides of this statement and it’s really my job to do so. In no way do I think that Watt should be expected to play for $10.089 million in 2021. It’s an insult to ask him to, in my honest opinion. On the flipside, it’s well within the Steelers’ rights to use the fifth-year option and back-to-back franchise tags against Watt as ammunition against him.
So where is the happy medium here? Well, probably the deal that the Steelers have on the table for Watt right now, which is one that likely has a new money average of $30 million and includes just $45-$50 million fully guaranteed in the form of a signing bonus. Such a deal would obviously include a hefty March roster bonus that the Steelers would have the luxury of restructuring along with a sizable chunk of Watt’s 2022 base salary. Basically, Watt waits until March to get a huge chunk of the rest of the money he and his agent probably want fully guaranteed now. As long as he avoids serious injury in 2021 and doesn’t get arrested, he’s virtually guaranteed to see at least the first three years of the new deal, which could be around $100 million in total.
Once again, the right deal for Watt probably isn’t in question from a straight length and total numbers aspect. In short, a five-year extension with a new money average of $30 million that totals out at $160.089 million because of the old $10.089 million he’s owed. The cash flow for such a deal also isn’t the issue here. The main issue is how much of the deal is fully guaranteed once he signs it.
Deadlines usually spur action. The Steelers don’t negotiate contracts once the regular season gets underway, so this year’s deadline to get Watt done is now less than a week away. Personally, I still think a deal gets done, but it might take a little give from both sides when it comes to the guaranteed amounts. Personally, I find this all fun to watch play out but I bet most of you reading this post don’t find it fun at all.