The business of the NFL continues to boom, with an NBA sale boding well for every NFL owner as well. Below, I’ll also explain some of the nuances (and misreporting) of contract values while discussing some notable spending by the Cincinnati Bengals.
Settle in …
The Boston Celtics were just sold for the staggering amount of $6.1 billion, far beyond the NBA’s previous record franchise sale price of $4 billion, paid for the Phoenix Suns in 2023. On a larger scale, the price edges out the $6.05 billion paid by Josh Harris and his group for the Washington Commanders. Just like a player wanting to “beat” the average contract of another player, it now appears that the outgoing Celtics ownership wanted to “beat” the highest price ever for an American sports franchise. And they did.
And here’s the kicker: The sale does not include the arena in which the Celtics play. That makes the $6.1 billion number—20 times what the owners paid for the team in 2002—even more astounding.
Bringing this around to the NFL, there have to be ear-to-ear smiles for all NFL owners with this news. Even though the Celtics are a marquee NBA franchise, they are in a league with roughly $12 billion in annual revenues, far below the NFL’s roughly $23 billion in annual revenues. The NBA just completed its new media contracts for a lucrative combined $75 billion; the NFL says, “hold my beer” as it’s still a couple of years into contracts totaling $110 billion. In other words, the Commanders’ price will not be seen as an outlier; and an NBA team has surpassed it. And with private equity money now helping to fund NFL team purchases and ownership—private equity money is part of both the Celtics’ and Commanders’ ownership—there appears no limit on where these prices are heading.
I always shake my head when people lament the growth of player salaries. That growth is not even in the same ballpark as the skyrocketing growth of franchise values.
Speaking of player salaries …
When reading the numbers on the flurry of signings in recent weeks, it is important to separate fact from fiction on the value of these contracts. To paraphrase the writing on your car’s side-view mirror: Objects are not what they appear to be.
The vast majority of information about contracts that is reported is coming from players’ agents, who are 1) happy to be the “league source” to media, much more so than a team executive would be, and 2) determined to present the contract in the most favorable light for the player and themself, even if not the most accurate.
When I negotiated contracts for the Green Bay Packers, I would have agents say to me at the end of the negotiation something like, “Andrew, can I tell ESPN [or NFL Network] that the contract is worth X?” Of course the number would be inflated, but the way I looked at it was that if it helped close the deal I had been working on for days, weeks or even months, I was all for it. I would say, “Sure, have at it!”
Also, it is important to understand that when it comes to contract extensions for players re-signing with their existing teams, that is a different financial picture than free-agent contracts for players signing with new teams. What is commonly reported is the total value and annual average for the extension years only. That is not the same as the total value and annual average for the entire new contract. Extension year values are not just added to existing years; they are folded into them.
For example, it was reported that Myles Garrett signed a contract worth $40 million per year. Well, that is an accurate number, but only for the four extension years, in which he will make $160 million. But he had two years remaining at roughly $20 million per year. Folding those two years into the added value, Garrett will make roughly $200 million over six years—not $160 million over four years—for an average of roughly $33 million. Not that there’s anything wrong with $33 million per year, but it’s not $40 million per year.
On extensions, the “true average” is never the reported average of extension years only; it is always lower.
Most contracts are reported, get their media bump and stay in the ecosystem in the inflated way they were reported. But now you know some of the things no one tells you in reading these reports of contract values.
When I was an agent, I seemed to have a disproportionate number of players on the Bengals. And those negotiations were always a bear: Bengals owner and general manager Mike Brown—and later his daughter, Katie—were tough negotiators protecting the team’s finances. Later, when I was a colleague of theirs with the Packers, I noticed their same passion in protecting their ways. At league meetings over the years, I watched with keen interest as Brown would spar with Jerry Jones over league policies and issues that they saw completely differently. Many scoffed at the Bengals; I actually liked them and respected their conviction on certain measures.
With their history of reluctance to overspend, it was surprising to me that they signed not one but both of their star receivers, with a reported $40 million average (extension average, see above) to Ja’Marr Chase and over $28 million per year to Tee Higgins. As for Chase, the team was on record that it was going to make him the highest-paid nonquarterback in the NFL, and—with the “extension caveat”—the Bengals did. The Higgins deal surprised me more, as I thought (and wrote here) they would “date” Higgins another year on the franchise tag rather than “marry” him with a long-term deal.
I am somewhat glad these deals happened, though. Perhaps they will help debunk a myth that is one of my pet peeves. It is the notion that teams paying top-of-market QBs—in this case, Joe Burrow—cannot afford a Super Bowl–contending roster due to that large allocation at quarterback. Nonsense.
NFL teams have roughly 60% to 65% of their cap allocated to cheap and fixed rookie contracts (with no chance of renegotiation for three years). If those 35 to 40 players count for, say, $50 million on a $279 million cap, it should not be hard to reward the other 20 players on the roster with $230 million of cap space. And virtually all teams have more than that, with cap carryover from previous years allowed, and some teams have adjusted caps of over $300 million.
Indeed, it has never been easier to manage a cap. Let’s lose that narrative.