What's Going On With Wide Receiver Contracts?

Photo: USA Today Sports

One of the long-time staples of NFL reporting is the "look how big this new contract is" piece. In 2015, A.J. Green signed a new extension for $15 million a year. In 2017, Antonio Brown signed for $17 million a year. In 2018, Odell Beckham reached an extension that paid him $18 million a year. In 2019, Michael Thomas earned a deal that netted him $19 million a year. And in each of these instances, the NFL media was quick to write about another "record-setting" contract.

But the NFL salary cap was $143 million in 2015, $167 million in 2017, $177 million in 2018, and $188 million in 2019. Moreover, in addition to a salary cap, the NFL has a salary floor, which means teams must spend at least 89% of the cap at all times. (There's some margin for a team to be under this floor in one year provided they're above it over a longer stretch.) This means every year NFL teams are required to spend more and more money, and since rosters aren't getting meaningfully bigger, they're spending that on the same number of players.

It's not exactly breaking news that salaries keep going up. Kirk Cousins is playing for $35 million this year; the entire salary cap in 1994 was just $34.6m. In other "news", gas used to cost $0.96, the median house had a five-figure price tag, and students could pay for college with the money they earned working a summer job.

On the other hand, if it feels like something fundamentally different is going on right now, you're not wrong. The NFL is undergoing a major sea change in how it values wide receivers, a shift that is without precedent. So today I want to walk through how the market used to work, how it's changing, and what those changes mean going forward.

How the NFL used to value receiver contracts

NFL teams don't judge contracts by their raw value, they judge them by the Average Per Year value (or "APY") relative to the cap. Green's $15m APY was 10.5% of the cap at the time he signed, Brown's $17m APY was 10.2%, Beckham's $18m APY was 10.7%, and Thomas' $19m APY was 10.6%. These guys weren't getting "record-setting" deals, they were just getting the exact same deal adjusted for inflation. The length of the contract, the bonus structure, and the amount and strength of guarantees were all up for negotiation, but if a First-Team All-Pro caliber receiver was nearing the end of his deal in the last decade, he was going to extend for about 10.5% of the salary cap.

And it's not just the top of the market that was slotted. In 2015, Dez Bryant and Demaryius Thomas both signed for $14m APY. In 2017, DeAndre Hopkins received $16.2m APY. The former values were 9.77% of the cap at the time of signing, the latter was 9.70%. The Texans just offered DeAndre Hopkins the "Dez/Demaryius" contact, which was the going rate for 2nd-team All-Pro caliber players.

In 2012, Tampa signed Vincent Jackson for 9.21% of the cap. In 2018, they extended his replacement in Mike Evans for 9.27% of the cap-- the same deal again. Percy Harvin in 2013, T.Y. Hilton in 2015, and Brandin Cooks in 2018 also signed deals for between 9.07% and 9.27% of the cap at the time of signing. This is the range for guys who teams think are (or likely will be) low-end Top 10 receivers.

Heading into 2018, Davante Adams had been playing well (22 touchdowns over the prior two years), but still had never topped 1,000 receiving yards in a season. The same was true of Stefon Diggs. Both players received about 8.1% of the cap. Adam Thielen after 2019 and Robert Woods after 2020 were aging, previously lightly-regarded receivers coming off of back-to-back strong years and both received deals in the same range (8.5% and 8.2%, respectively). This range typically corresponded to young receivers who were playing well and had upside for more or old receivers who were playing very well but didn't have the same perceived upside.

Slot receivers even had their own contract tier. Randall Cobb extended in 2015 for 6.98% of the cap, and Keenan Allen extended in 2016 for 7.25% of the cap. Jordy Nelson extended in 2014 for 7.33% of the cap, a figure that seemed low but came on the heels of a season where he took 47% of his snaps in the slot.

There were a few certainly exceptions to this standard practice, but they generally proved the rule. In 2020, DeAndre Hopkins was traded to the Cardinals where he signed a 2-year, $54.5m contract extension. That value was an astronomical 13.7% of the cap at the time of signing, a figure that dwarfed any other deal over the past decade by more than 2%. But that extension was unusual because Hopkins still had three years left on his old deal, and those three years were left untouched. (Teams virtually never extend players with more than one year left on their contract.)

From the Cardinals' perspective, they weren't getting two years of Hopkins for $54.5m. They were getting FIVE years of Hopkins for $94.5m (the value of the new money, plus the value of the three years left on his old deal, which were artificially deflated because Houston had already covered his signing bonus). Viewed in that manner, Hopkins' deal represented just 9.53% of the cap at the time of signing, virtually identical to his previous extension and right in line with what the market predicted.

Similarly, Mike Wallace signed in free agency with the Dolphins in 2013 for $12m APY, a value that was considered a large overpay at the time. It was a large overpay, but that contract represented 9.76% of the cap at the time of signing, virtually identical to the 9.77% that Bryant and Thomas would receive two years later. Miami bumped Wallace up a contract tier from the "#1 receiver / solid pro-bowler" range to the "projected 2nd-team All-Pro" range. The Dolphins didn't "break" the slotting system, they just bumped Wallace up a tier within the slotting system. (Unsurprisingly, free agents often find themselves slightly overpaid relative to their peers who sign extensions to stay with their current team. Another example would be the 2018 Kansas City Chiefs giving Sammy Watkins a contract slotted in the "solid pro-bowler" range.)

Just as telling as the areas where contracts cluster is the areas where contracts don't. I've collected data since 2012, which was the NFL's first offseason spent entirely under its newest collective bargaining agreement. From 2012 to 2019, there were sixteen contracts where a receiver earned at least 8.99% of the cap at time of signing. Six contracts were worth 8.99-9.27% of the cap, four were worth 9.70-9.77%, and four were worth between 10.18% and 10.67% of the cap. That's 14 out of 16 contracts that fell within those three relatively narrow bands. (Exactly 50% of the space between 8.99% and 10.67% falls in those three bands, but 90% of the contracts fell there.)

Even the two exceptions are illustrative as both belonged to the same receiver. Julio Jones' extension prior to the 2015 season averaged 9.95% of the cap at time of signing, while his extension in 2019 averaged 11.69% (more than a full percent more than any other contract in the sample).

Essentially, Julio Jones' play on the field was commensurate with the First-Team All-Pro tier (around 10.5% of the cap). But at the time he signed in 2015 he had serious health concerns, having broken his foot twice and had surgical pins installed. This bumped his initial contract down between the First-Team and Second-Team All-Pro tiers. And then after playing in 62 out of 64 possible games from 2015-2018 and averaging 1600 yards per year, the Falcons rewarded Julio with an over-market contract. A weighted average of the two contracts together would put Jones around 10.6-10.7% of the cap, right on the First-Team All-Pro expectation and right in line with the extensions by Odell Beckham and Michael Thomas.

In other words, from 2012-2019, either a receiver earned first-team All-Pro money (around 10.5%), or else he earned second-team All-Pro money (right around 9.7%), or else he earned solid pro-bowler money (9.0-9.2%). Knowing this pattern provided a huge advantage in fantasy football because it let us see receivers the way the NFL did.

When DeAndre Hopkins signed his extension before the 2017 season, he was coming off of a down year-- 954 yards and 4 touchdowns in sixteen games of atrocious quarterback play. Hopkins' strong contract indicated that the Texans' faith in their receiver had never wavered and they expected him to be contending for All-Pros going forward. Similarly, Stefon Diggs' and Davante Adams' strong extensions before they ever had a thousand-yard season heralded things to come, while Victor Cruz's weak extension in 2013 (a paltry 6.22% despite 2600 yards and 19 touchdowns over the previous two seasons) was a strong indicator that the Giants weren't as high on him as the rest of us.

How That All Changed Overnight

It's hard to tell exactly when and why this contract paradigm has changed, but there's no denying that it has. Perhaps Kenny Golladay's 2021 contract with the Giants was the canary in the coal mine; his 9.86% of the cap at the time of signing was much higher than we'd have expected on the merits. But Golladay had two extenuating factors-- he was a free agent and free agents often get bumped up a tier, and thanks to a global pandemic that left teams playing in front of empty stadiums the year before, 2021 was the only time in the history of the salary cap that it decreased year over year. The league was projected strong catch-up growth, and if you compared Golladay's deal to the 2020 cap ($198m), it came out at a much more reasonable 9.08%, virtually identical to what Sammy Watkins got from the Chiefs three years prior.

Golladay was the only notable long-term receiver contract signed last year, so it's hard to know exactly what was going on. But we've already seen eight significant deals so far this offseason and it's clear that the old way of doing business is in shambles.

A note: when talking about contracts signed this offseason, I'll discuss them as I believe the NFL views them. For instance, Tyreek Hill supposedly signed a 4-year, $120 million contract extension (on top of the one year remaining on his previous year, so five years total). But here are the yearly cash flows on that deal: $27m, $26m, $20m, $23m, and $45m. Further, the team can cut Hill with very little dead money after four years. Viewed this way, it's obvious that the Dolphins view this as a four-year, $96m contract with a dummy year thrown at the end for PR purposes, so Hill can claim that he's the first "$30 million receiver" in history.

Many will point to Christian Kirk as the canary in the coal mine. At $18m per year, Kirk is averaging 8.65% of the salary cap. That's a big number for a player with Kirk's history-- for context, remember, Davante Adams and Stefon Diggs signed for about 8.1% of the cap back when they were rising receivers who had yet to top 1,000 yards. But it's also important to remember that Kirk was a true free agent and free agents have a long history of getting paid a tier or more above what they "earned". See, once again, Mike Wallace in Miami or Sammy Watkins in Kansas City.

The real start of the run, however, happened a few weeks before when the Chargers sign Mike Williams for $20m a year. Williams was on the Franchise tag, which means the Chargers could have controlled his contract for another year or two if they chose; we wouldn't expect him to get the "free agency" premium. But that contract value works out to 9.62% of the cap, right in line with proven 2nd-team All-Pros like Dez Bryant, Demaryius Thomas, and DeAndre Hopkins. That's a very rich haul for a player without a pro bowl who averaged 900 yards and 6.5 touchdowns per year over the last four years.

It continued when D.J. Moore signed for 9.92% of the cap, slotting between the Second-Team and First-Team All-Pro tiers despite never having made a pro bowl, and then it culminated in Davante Adams, Tyreek Hill, Stefon Diggs, and Cooper Kupp all signing for previous market-shattering deals. Adams has a likely "fake" year on the end like Hill does, but even adjusting, those four receivers signed for 10.82%, 11.44%, 11.54%, and 11.73% of the cap, well above the previous "best receiver in the NFL" tier of around 10.5%.

A.J. Brown and Terry McLaurin rounded out the bonanza. Brown's last year is a bit out of line with the rest of the contract, but not to the same degree as Hill's; his deal ranges from 11.2% to 12.0% depending on how "real" you think that final year is. And McLaurin just got a deal worth 11.20% of the cap-- essentially the exact same deal as Brown if the final year of Brown's deal is fake.

That gives us nine significant deals, every one of which is well out of line with historical norms. Additionally, there have been an extraordinary number of wide receiver trades (Adams, Hill, and Brown more than double the number of significant trade-and-immediately-extend receiver deals in the sample, joining Hopkins to the Cardinals and Cooks to the Rams.) To me, this suggests that half of the league is in favor of this new receiver pay scale while the other half still adheres to the old pay scale. Kansas City, Green Bay, and Tennessee were old-guard teams and they traded their star receiver rather than (from their perspective) overpay him.

Making sense of those changes

With the settled consensus in flux, it'll take several years to fully make sense of everything that's going on in the receiver market right now, but as a rough rule of thumb, it looks as if all nine of those receivers saw their salaries jump by about 1% of the cap across the board. Or put differently, they all got about $2m APY more than would have been predicted by historical norms.

With that frame, we're still able to draw conclusions about the receivers based on their money.

Christian Kirk ($18m APY, 8.65% of cap)

Ordinarily, I'd be extremely excited about the long-term prospects of a receiver making this much of the cap, but if you factor in both the free-agent premium and the general inflation, this deal is probably more in line with historical deals for Randall Cobb, Pierre Garcon, Emmanuel Sanders, Keenan Allen, Jordy Nelson, and Jeremy Maclin. A lot of those players were slot specialists. A few took a step forward after their deals, a few took a step backward. In all, this is a mildly positive sign for Kirk compared to his past production, but not the amazing indicator it first seemed.

Mike Williams ($20m APY, 9.62% of Cap)

I thought this deal was crazy when Williams signed it, but it's looking much more reasonable in hindsight. Essentially Williams got the same deal as Demaryius Thomas after he averaged 1500/12 the previous two years or Dez Bryant after he averaged 1275/15 the previous two years. But adjusting for inflation, it's more in line with the going rate for physically gifted receivers who could be in line for a bigger role in the coming seasons (somewhere between Adam Thielen on the low end and Vincent Jackson / Mike Evans on the high end).

D.J. Moore ($20.6m APY, 9.92% of cap)

Moore has been more consistent and more productive than Williams to this point, so it only makes sense that he received a bit more. Adjusting for inflation, Moore's contract "peers" are similar to Williams except it removes Adam Thielen / Robert Woods from the low-end range of comps. This is a strong deal that indicates the Panthers are quite comfortable with Moore as their WR1.

Terry McLaurin ($23m APY, 11.2% of cap)
A.J. Brown ($23m APY, 11.2% of cap *OR* $25m APY, 12.0% of cap)

Both of these deals are extremely similar through three years, with Brown having an additional year at around $30m after (which may or may not be earned). These are phenomenal contracts that indicate both teams view these guys as bona fide stars, at a minimum in the Dez Bryant/Demaryius Thomas tier and possibly in the Julio Jones/Antonio Brown/A.J. Green band. Especially for McLaurin, this should be viewed as a strong vote of confidence that any lack of production is attributable to the receiver's context and not his own performance, akin to when the Texans extended DeAndre Hopkins off of a down year.

Davante Adams ($22.5m APY, 10.82% of cap)
Cooper Kupp ($23.3m APY, 11.2% of cap)
Tyreek Hill ($23.8m APY, 11.44% of cap)
Stefon Diggs ($24m APY, 11.54% of cap)

I'm addressing these four together because they're quite similar (once you strip away the marketing fluff at the end of the contract). If you polled people asking who the best receiver in the NFL was, these would almost certainly be the four highest vote-getters, so this is fitting. Remember that this is just my best guess of what each receiver will actually earn before they're cut or restructured and Kupp's contract in particular could easily be interpreted in different ways. It's notable both how much Davante Adams is below the other three here (the perils of signing first, I suppose), but also how close Brown and McLaurin are to the rest of this bunch. In fact, it wouldn't shock me if Kupp, McLaurin, and Brown all wound up earning $70 million over the next three years before signing a new contract.

It remains to be seen whether this new contract structure sticks around or is abandoned in the coming years. (Top receivers had already been underperforming the market recently, with Jones, Thomas, and Beckham all disappointing relative to their cost, so an increased market could be a curse for teams extending receivers this offseason.)

But hopefully, now it's a bit clearer what is going on, why it's happening, and what it means for the receivers involved.