Over the past couple of seasons, TY Hilton has emerged into a star. With over 2,400 receiving yards over the past two seasons, Hilton has become the #1 target on the Colts and the go to guy for Andrew Luck. On top of that, he has been able to catch 164 passes over that same span. Hilton is slowly becoming one of the elite receivers in the NFL, but before he can reach that point, he will need to be re-sign and/or be given a contract extension. With his new contract around the corner, how much is TY worth? How much can he ask for?
As it stands right now, Hilton is entering the final year of his rookie contract. He has a cap hit of $1.6M and will make a $1.5M base salary. During the first three years of his career, Hilton has made just under $2M dollars. With a 10.4% tax rate (from a 7% sales tax and a 3.4% flat state income tax) in Indiana, and probably another 15% in combined agent/manager fees, TY is losing about 25% of his salary.
My point is that Hilton is probably wanting a big payday and he deserves it as his rookie contract wasn't enough for him.
When you look at other receivers like him, you'll see some big contracts. When you are looking at similar contracts, you have to find similar situations to TY's. You need to find a #1 receiver, who's still young (30 years old or younger) and with at least two years of strong production (1,000+ yards and 60+ catches). This gives us a few receivers. DeSean Jackson, Jeremy Maclin and Antonio Brown all fit the bill. Brown signed his contract in 2012 and Maclin was just shy of 1,000 yards one season, but nevertheless, they are good comparisons.
DeSean Jackson signed a 4 year, $24M dollar deal with $16M guaranteed back in 2014 with the Redskins. The actual dollar figure on the total contract was a bit low for him, but he was guaranteed 66% of his contract, which is a very high number. Randall Cobb had only 32% of his contract guaranteed. Jordy Nelson only had 29% of his contract guaranteed. Even Calvin Johnson only had 43% of his contract guaranteed. So 66% is a high number. This is an example of the type of contract TY can sign. He can sign a low overall dollar figure, but get a high guaranteed dollar amount. Nevertheless, Jackson is making on average $6M per year, but has high cap figures and if you wanted to save money by cutting him, that scenario would only be available in his final year of his contract.
Jeremy Maclin signed a 5 year, $55M dollar deal with $22.5M guaranteed this past offseason with the Chiefs. That's an average of $11M per year, but only 41% of his contract is guaranteed, which is about 25% less than Desean Jackson. Maclin may make more than Jackson at the end of the day, but must avoid injury and needs to stay productive as the Chiefs can part ways with him before Year 3 of the contract and save $5M dollars. That savings figure grows every season after that as well, so I'd argue there is more pressure on Maclin to perform in his contract.
Finally, there is Antonio Brown, who signed his contract extension back in 2012, when the salary cap was at $120.6M, or about $23M less than what it is today. For those reasons, we'll adjust for inflation. Brown signed a 5 year, $41.5M dollar deal with $8.5M guaranteed. If you add in inflation and pretend he was signed this season, that contract would be 5 years, $49.3M with $10.1M guaranteed. In hindsight, the contract was great for Pittsburgh as Brown has gone on to become one of the top receivers in football, but at the time, Brown had only had one strong season in the NFL and was a bit unproven at the time. Taking in the inflated numbers, Brown averages $9.86M per year, but only 20.5% of his contract is guaranteed. This is the more intelligent structure for an unproven receiver. You want to make him earn his money and if he doesn't perform, at least you'll have a backdoor you can use if you want to part ways. A more guaranteed contract does not give you that luxury and should be used with proven receivers with a relatively long history of performing.
As is stands right now, the Colts have about $9.8M in cap space. Keep in mind that the Colts will need to keep some space for the massive Andrew Luck payday. Of course they'll have a lot more cap space after the season, but the Colts will need to play this smart and not just invest the majority of their cap space in two players.
After the season, they'll have around $23M dollars in cap space (but that will obviously change over the course of the season). The good news is Luck's cap hit in 2016 will be $16.155M because of the option the Colts picked up. The Colts will need to keep an extra $10M in storage for the Luck deal, which leaves them with about $13M dollars in cap space. As mentioned before, the Colts cannot break the bank on TY, so they'll need to intelligently structure his contract, and that means his contract will most likely have to be a back loaded contract.
Taking into account his potential, his production, his value to the team and market value, I project TY Hilton's contract to be:
5 years -- $57,500,000 w/ $23,000,000 Guaranteed
Why these figures? Other receivers' recent contracts make a big difference. If TY Hilton's agent were intelligent (which I assume he is), he'd look to Maclin's overpaid contract and say TY deserves that and a bit more. The difference is this contract isn't too much for TY.
In this deal, Hilton makes on average $11.5M per season, and has 40% of his contract guaranteed. This guaranteed figure puts him in between Jackson's guaranteed percentage (66%) and Brown's guaranteed percentage (20%). TY is not an unproven receiver as his three years in the NFL have been very productive. He was able to produce as the third receiver in his first season, getting close to the 1,000 yard figure. In his second season, he broke that plateau and took on a bigger role. This past season, he took that #1 receiver job and took over. This is someone who is improving, and despite his youth, has been able to prove himself.
Hilton is Luck's #1 target and in order to keep Luck happy and to ensure a bright future in the passing game, locking up TY is crucial and should be done sooner rather than later.