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Some thoughts on Andrew Luck’s contract extension with the Colts

NFL: Indianapolis Colts at Carolina Panthers Jeremy Brevard-USA TODAY Sports

Last week, the Indianapolis Colts and quarterback Andrew Luck agreed to a six-year contract extension worth $140 million, marking the largest deal in NFL history. Luck’s guaranteed money, at $87 million, is also the largest number in NFL history.

Ben did a great job of covering the news right away as it happened, and Matt had a terrific look the next day at the realistic expectations for Luck moving forward with his new deal. I’m very appreciative of them to allow me to get away and take a much-needed break, but nonetheless I still wanted to take a break from my vacation and travel today to share a few of my thoughts on the contract - one that I think was good for both sides.

It’s exactly as expected.

There should be nobody surprised at the numbers of Luck’s extension. Entering the summer, it seemed like most expected a five-or-six year deal for Luck worth between $23-25 million per season, making him the highest-paid player in the NFL. The expectation was also that the important guaranteed money would be a very large number, perhaps approaching $100 million. The actual numbers are pretty close to what those expectations were, then: Luck got a six-year deal worth $23.3 million per year with $87 million guaranteed overall. Anybody surprised at the numbers simply wasn’t paying attention to the expectations. With that said, however...

It could have been much bigger.

Let’s put this out there right now: Andrew Luck isn’t hurting for money with his new contract, but he also could have pushed the Colts much further. Luck had absolutely all of the leverage in this deal, as the Colts weren’t going to let him walk. On the open market Luck would have set staggering, unprecedented records with his new contract, but the Colts were never going to let him get there - even if it meant multiple exclusive franchise tags. The Colts aren’t winning without Luck, so they absolutely needed to bring him back no matter the cost. On the flip side, Luck is viewed by most as a once-in-a-generation talent who can do everything you want at the quarterback position, who is just 26 years old, and (likely) has his best years still ahead of him. If Luck had truly pushed for it, his contract could easily have been averaging more than $25 million a year instead of $23.3 (more on that in a minute), but more importantly, he could have pushed his guaranteed money much higher than it was.

Though $87M guaranteed is a huge number, it’s still only 62.1% of his total contract guaranteed. By comparison, though Eli Manning, Phillip Rivers, and Russell Wilson all got less overall guaranteed money on their deals, they all also got higher percentages of their contracts guaranteed (all three had over 70% of their deals guaranteed). It was thought that Luck would be the one to truly push the boundaries of guaranteed money as a trend-setter. There’s really no foreseeable scenario in which the Colts would move on from Luck before the end of this deal, so it wouldn’t have been as big of a gamble for them. On the flip side, Luck could have set a precedent moving forward with a large portion of his deal guaranteed. It likely doesn’t matter as much for Luck since he’ll play out the deal, but his contract didn’t exactly set the precedent many thought it could.

It’s a true win-win.

A month ago at the Colts’ mandatory mini-camp, owner Jim Irsay talked about the importance of paying Luck while still keeping it a team-friendly deal. That’s not easy to do, but it’s something the Colts and Luck did with the recent extension. The base salaries for Luck in each of the next six years (per Spotrac)? $12M, $7M, $12M, $9.125M, $11M, and $11M. The cap hit for Luck in each of the next six years? $18.4M, $19.4M, $24.4M, $27.525M, $28.4M, and $21M. Obviously in 2018, 2019, and 2020 the cap hit is a very significant number, but the Colts also have a few years to prepare for that and also have a rising salary cap to help them out as well. That’s very do-able, and it won’t handcuff the Colts when it comes to future negotiations. Take, for example, 2017. Even with Luck, Anthony Castonzo, T.Y. Hilton, Vontae Davis, and Dwayne Allen all under contract the Colts still have over $40 million in projected cap space next year, according to Over the Cap. The Colts have spent the last couple of years re-signing their key players to deals and Luck was the last one of them to come, so they have a good idea now of their cap situation (and it’s looking promising). There aren’t any major extensions looming on the horizon for 2017, yet they have plenty of room. Luck’s contract doesn’t cripple the Colts’ salary cap whatsoever. Another way of saying it? Luck was willing to compromise to help the Colts out, which shouldn’t go unnoticed.

First year should be viewed differently.

We’ve looked a lot already at Luck’s deal overall, but I think it’s interesting to look at it from a different perspective than simply the six-year, $140 million extension that Jim Irsay announced. That’s certainly true of the technical details, but the first year essentially replaces Luck’s fifth-year rookie option he was scheduled to play under in 2016. That option was going to pay him just over $16 million this year, but the new deal pushes his cap hit up to $18.4 million for 2016 (with a $12 million base salary). The new contract is essentially a $2M raise in the first year and then a new five-year contract after. When viewed in those terms, Luck’s average salary over the final five years of his deal will pay him around $24.32 million per year on average. So while it’s true that Luck could (or should) have gotten more, it’s mainly when looking at guaranteed money because his average per year in the five new years is pretty close to that $25M mark.

Don’t hold your breath with remaining cap room.

While the Colts have a significant amount of money available next year, they also have a notable amount still available this year. According to Over the Cap, Indy has $13,643,466 remaining in salary cap room this year after Luck’s extension, which is more than enough to still bring in a couple of veterans. Maybe they will do so, as for much of the offseason the Colts were holding money back for Luck’s looming extension. His cap number only jumped a couple of million dollars for this year, however, leaving the team with plenty of room remaining to work with. So perhaps we could see a notable free agent signing still to come, but more likely is that the Colts will roll the money over to next year. They’ll continue to evaluate players on the market, but this late in the offseason (with offseason workouts and mini-camp already past) it has to be a player they really like. So while it’s still possible, don’t hold your breath for the Colts to bring in another veteran free agent or two with the remaining room. Instead, it’s more likely that they’ll roll the money over to next year.

Setting the expectations straight.

Perhaps the most important thing when a quarterback like Andrew Luck signs a massive extension is to set the expectations straight. There are some who ascribe to the #ringz narrative and will view the contract as a failure without a ring, much like there are still some who view the team’s record 115 wins in a decade, eleven playoff appearances, and four MVP awards a failure for Peyton Manning with the Colts because he won “only” one ring. In short, there are always going to be some who look only at rings, but the expectations for a quarterback should be modified from that. I can’t say it any better than Matt Grecco already did, however, so I’ll just share his words:

A Super Bowl victory is never a sure thing, even as touchdown favorites in the game (ask the Panthers), so expecting a Super Bowl win by the Colts and led by Andrew Luck should not be an expectation over the next six years, but the correct expectation should be they're in position to win one each and every year, which means making the Playoffs, hosting games in late January, and having a puncher's chance, something they did in each of Luck's first three seasons. A whole myriad of things can happen to deny a Super Bowl season (remember, only one teams wins each year), so this contract won't be a failure if the Colts don't win a Championship. It'll be a failure, however, if they aren't in contention each and every year.

Luck is locked up through 2021

This is the most important takeaway from the entire situation: Andrew Luck will be a Colt through 2021. I know there’s always at least some uncertainty with contracts of this length, but it’s hard to even come up with a scenario in which the Colts move on from Luck before this deal is over. And while there never was any doubt that the two sides would reach a long-term agreement, it’s now official and it’s now done: Andrew Luck will be a Colt for years to come. We can talk money all we want, but the biggest thing to remember is that the Colts have their franchise quarterback under contract for the long haul. When you take a look around the NFL at teams still searching for their franchise player at the game’s most important position, it makes the big money the Colts payed Andrew Luck look much more worth it. The Colts may have many problems, but they have their franchise quarterback under contract through at least 2021.