During the build-up to the NFL Draft, the flexibility that the fifth-year option affords to teams is a much-discussed topic. In the past, we have seen teams moving back up into the first round to draft players simply for the value provided to the team from the ability to use this option. Many players have criticized the fifth-year option for a number of reasons, and the difference that Patrick Mahomes and Deshaun Watson could earn on their newly exercised options is just one of them.
The two main issues arising from the 2011 collective bargaining agreement are the differences in value depending on the player’s draft slot, and that the fifth-year money is only guaranteed for injury. The signing of the new CBA in the 2020 offseason will change both of those issues going forward. However, the CBA was signed too late in the offseason for the changes to take effect on the 2017 NFL Draft class. Let’s take a look at why being drafted just two spots higher in that 2017 Draft could mean a good amount more money for Mahomes than Watson if they both play on their fifth-year option salaries.
The financial differences of fifth-year options
The 2011 CBA changed everything when it came to rookie contracts. Instead of teams having to negotiate a salary with their draft picks, every single pick was assigned a set amount of salary based on where they were selected. The only negotiation is in how much of that money is paid as a weekly salary and how much is paid as a signing bonus. However, perhaps as significant as the rookie wage scale are the fifth-year options, which give teams the power to keep their first-round draft picks under contract for an extra year.
The fifth-year options do not come cheap. 2017 first overall pick Myles Garrett will have earned $30 million in his first four seasons, while his option year will cost the Browns over $15 million for that season alone. However, the value of a fifth-year option was dependent on two things — a player’s designated position and their draft slot. The positional element has caused debate previously, especially with Jadeveon Clowney who claimed he should have been classed as a defensive end while the Houston Texans claimed he should be viewed as a linebacker. This caused issues both when his fifth-year option was exercised and when signing his franchise tag. The difference when it came to the fifth-year option in that situation was around $1.5 million.
However, this year the conversation has revolved around the draft slot element. When it comes to the fifth-year option of the 2017 class, being selected in the top-10 means that your salary is calculated differently to anyone selected between picks 11 and 32. Often, the difference between these two situations is not a big issue. However, in 2020 we have two quarterbacks selected two picks apart that will have very different outcomes.
Patrick Mahomes fifth-year option salary
As the 10th overall pick, Mahomes’ fifth-year option salary is calculated using the same formula as the transition tag. That means that Mahomes will get the average of the top-10 highest-paid players at the position, which currently stands at $24.8 million. Now compared to what Mahomes would earn as a free-agent that a relatively small salary. However, given that Mahomes’ salary through his first-four years was $16 million, $24 million for one year is a relatively big payday.
Deshaun Watson’s fifth-year option salary
In contrast, Watson, who was the 12th overall pick in 2017, will have his fifth-year option salary calculated very differently. The salary for players selected outside of the top-10 has their salary calculated as the average salary of the third through 25th highest-paid players at their position. That number is expected to be $17.54 million, over $7 million less than Mahomes.
Assuming that both players play on their fifth-year option salary, which is highly unlikely, there would be a big discrepancy in first-five year earnings for the two quarterbacks. Add that $7 million to the $3 million difference in salary across the first four years of their rookie deals, and Watson will have earned a total of $10 million less than Mahomes. That is a big difference for two players who were picked just two spots apart back in 2017.
The added element to those fifth-year option salary is the added leverage that Mahomes has in his contract negotiations. Mahomes now has a floor price of $24 million set for his contract, compared to $17 million for Watson. While neither quarterback will likely be anywhere near that low in terms of average salary per year on a contract extension, the difference in leverage should ensure that Mahomes finds himself earning a higher APY than Watson when both sign their respective extensions.
How will this situation change going forward?
Firstly, before we discuss the changes in how salaries are calculated, it is worth mentioning that in the new CBA, all fifth-year salaries will be guaranteed from the time they are exercised. Currently, teams can still cut a player who they have exercised an option on before the start of the new league year in order to save themselves having to pay the player. There have been some high-profile cases of this in the past, including Robert Griffin being cut by the Washington Redskins prior to his option becoming fully-guaranteed at the start of the new league year.
The new CBA language contains an interesting clause when it comes to fifth-year option salaries. If a player was selected to the Pro Bowl twice in the first three years of their deal, they would receive a salary equivalent to the salary paid to players receiving the franchise tag at their position. For both Watson and Mahomes, that would mean they would have been set to receive $26.8 million in 2021, all fully guaranteed. While that is a relatively small increase for Mahomes, that would be a jump of over $9 million for Watson. To put that in context, $9 million is roughly 70% of the money Watson will have earned through the first four years of his career, with the $26 million for a single year being close to double his career earnings to that point.
What is not completely clear is how the salary will be calculated for those players who do not hit that mark of two Pro Bowl appearances in the first three seasons. However, with the language of the CBA stating that it will no longer be determined based on draft slot, it would appear likely that all fifth-year options will be paid to the equivalent level of the transition tag price for that position. That means that 32nd overall pick in 2018 Lamar Jackson would be paid around $25 million, rising to closer to $30 million if he makes the Pro Bowl for the second time in 2020. What a difference a year could have made for Deshaun Watson, who sacrificed a year of NCAA eligibility in order to enter the draft in 2017.
Ben Rolfe is an editor and writer at Pro Football Network. You can find him on twitter @benrolfe15.