Every year as the NFL trade deadline nears, we speculate about player trades. And every year, the trade deadline comes and goes with almost no action.
To many, it seems odd that the NFL has not embraced trades the way other leagues have. Bad teams in other sports become sellers, and the trade deadline presents an option for teams to get out of bad contracts or receive something in return for players who may not be in their future plans.
The NFL trade deadline, which this year is Tuesday at 4 p.m. ET, would seem to be a perfect opportunity for teams to acquire draft picks. But there are certain reasons why the NFL finds it difficult to trade players.
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The standard NFL contract in general is not conducive to trading in the salary cap world of football. Most teams follow a standard protocol when it comes to negotiating a contract structure. A player often receive a signing bonus when he agrees to a contract. The signing bonus is a large payment, often a percentage of the total contract value. For accounting purposes, the maximum amount that counts on the cap in a given season is one-fifth of the bonus, so it allows teams to prorate the costs and lessen the salary cap impact of a contract. These bonuses can be as large as $30 million for a superstar quarterback and around $10 million for a decent starter at other positions.
In terms of salary cap impact, a trade is essentially the same as releasing a player. If a player is traded at the deadline, all future prorated money will accelerate into the next season. For some teams, that takes certain players off the table if their signing bonuses and other prorated bonuses were large. In general, if a player’s dead money charge in a given year will prevent them from being released the following year, it will also prevent them from being traded during the given season.
The signing bonus also presents a major psychological barrier to trading. The “sunk cost trap” is something we all fall into in our daily lives. If you feel you already paid a large amount of money for something that no longer does the job you expected, you still try to fix it and make it work because you paid so much. Imagine paying somebody $20 million in a given year for a five-year contract and by the next year sending the balance of that contract to another team. In essence, you are handing that team $16 million of your money in return for a third-round pick. A general manager looks bad in that scenario.
The team trading for a player also needs cap room to execute a trade. For example, many thought the Vikings last season needed to trade for an offensive lineman despite them having a little more than $1 million in cap space. In order for the NFL to allow a trade for a player like a Joe Thomas, who would have cost around $4.5 million for the remainder of the season, the Vikings would have had to to create an additional $3.5 million in space. That would have required restructuring other contracts, which might have compromised the Vikings in the future.
There is also difficulty in negotiating compensation in a trade. Rarely are trades in the NFL going to be player-for-player like they are in other sports. The compensation is almost always going to involve future draft selections, and negotiating that can be difficult, especially if the player who’s being traded will be a free agent the following year.
The NFL awards 32 extra draft picks each year starting at the end of the third round. In order to qualify for a pick, a team must lose more free agents than it signs, and the round in which it is awarded a draft pick is based primarily on the salary the player receives in free agency. So if a team has a player who is expected to earn a high salary, there is no need to trade him unless the team can receive at least a third-round pick. Last season, when the Patriots traded Jamie Collins, a 2017 free agent expected to earn around $10 million a year, this was likely a consideration. Their deal with the Browns resulted in a third-round pick being the agreed-upon compensation.
The final reasons trades are difficult in the NFL are spending requirements. The NFL and NFLPA have negotiated spending minimums each team must meet over a four-year period. For teams that are tight when it comes to reaching those thresholds, it becomes necessary to keep certain players at the trade deadline. If a player makes $8 million in cash and is traded away at midseason, each team will pick up approximately 50 percent of the salary. If a team needs that $4 million to meet its requirement, it likely will keep the player.
There are ways around some of these problems, and we are seeing teams address that in their contracts and decisions. Teams like the Raiders and Buccaneers have stopped using signing bonuses in their free-agent contracts. Teams like the Cardinals have prepaid salaries to help with cap and/or cash situations. More teams negotiate compensation based on a player re-signing with the team to which he is traded.
So in the future expect to see more trades, but it will be a slow process that evolves over the next few years.
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As for this season, more teams should explore the type of trade that recently sent Marcell Dareus from the Bills to the Jaguars.
Dareus, who had been a disappointment for the Bills since he signed a massive contract in 2015, was going to be cut in 2018 despite the Bills owing him more than $7 million in cash. Most teams would have looked at the sunk cost of Dareus and ridden it out until next year. Instead, the Bills were aggressive in finding a team with a need to take on the balance of Dareus’ contract in 2017 and ’18.
It’s the type of trade that could only happen in-season, after a team like the Jaguars is able to identify a specific need. The Bills saved millions, and the Jaguars got a chance at an upgrade in what could be a playoff season. More teams in the future should think outside the box and make moves like this, but it will take a while for others to follow suit, even though such a trade makes sense for both sides.