Cap Strategy Spotlight: Retaining or Replacing Stefon Diggs
An experiment on how the Houston Texans could manage the Stefon Diggs contract situation.
Hey everyone, TC here,
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The Houston Texans will face many difficult decisions over the next seven weeks before the new league year starts on March 12th. In this edition of Cap & Trade, I discuss the next difficult decision for the organization…how to manage the Stefon Diggs’s situation.
This newsletter serves as an example of how the Houston Texans could retain Stefon Diggs, and should not be viewed as an endorsement by myself.
History
Let’s back up a year with a refresher on how the Texans arrived here.
April 3rd, 2024: Houston Texans trade with Buffalo to receive veteran wide receiver Stefon Diggs. At the time of the trade, Diggs had 4 years remaining on his contract through the 2027 season with approximately $22 million guaranteed.
This was a favorable contract for Houston. However, the salary cap charge for the 2024 season was higher than General Manager Nick Caserio wanted to work with.
The team had a few paths to choose from in this situation (I’ll leave a link to my newsletter that covered my thoughts at the end of this newsletter).
April 4th, 2024: Houston and Diggs agree to a revised one-year contract which included 4 void years for salary cap purposes. This revision generated $13.1 million in cap savings for 2024 and deferred $16.64 million to the 2025 league-year salary cap. The revision effectively moved all $22 million forward into the 2024 league year.
Fast forward to today, January 23, 2025, and the two sides have until February 17th, 2025 to agree to a new contract. If that does not occur, the 2025-2028 contract years will be void leaving Houston with $16.64 million in dead money.
Contract Renegotiation
By most metrics, Diggs was a solid wide receiver #2 for the Texans in 2024…albeit for only eight games. Diggs tore his anterior cruciate ligament (ACL) in his right knee during Week 9 of the 2024 season.
Before the injury, Diggs’s performance measured by various metrics are listed below (using a minimum of 50 targets amongst wide receivers):
79.0 PFF overall grade ranked 22nd.
1.97 Yards Per Route Run (YPRR) ranked 42nd (for context, Diggs’s average depth of target was lower than receivers ranked higher than him).
53.3 PFF run-blocking grade ranked 67th.
73.4% catch rate ranked 11th.
12.3% first down rate ranked 8th.
74 score per ESPN receiver score ranked 2nd overall.
Based on the metrics and film review, Diggs was a bonified wide receiver #2 for the Houston Texans in 2024. Would Diggs be able to replicate that level of production at age 31 (turning 32 in late November) coming off an ACL recovery?
Contract Proposal
To create a market valuation for Stefon Diggs, I compared against a group of players that were in similar situations, similar in age, and similar in position roles.
Comparables:
Adam Thielen 2023 (3.7% APY value)1
Brandin Cooks 2023 (4.4% APY value)
Tyler Lockett 2024 (5.9% APY value)
Pierre Garcon 2017 (5.7% APY value)
For Stefon Diggs, I would propose a two-year contract worth a base value of $25.0 million, including $11.48 million guaranteed. The contract would include three void years for salary cap purposes. APY value against the (projected) league salary cap is 4.6%. The contract would also include performance incentives (receptions, playing time, receiving yards, and honors) that would push the total value to $29.0 million.
Yes, there are three years of contract with money, but there is a reason I set the structure like this.
With the minimum salary in 2027, this allows the team to complete a “post-June 1” designated release at the start of the 2027 league year to split the dead money (as noted above) between 2027 and 2028. The use of the “post-June 1” designation would be known to Diggs ahead of time.
The contract also has a $3.02 million lump sum roster bonus in 2026, due on the 5th day of the 2026 league year. This would facilitate a “prove-it” situation in 2025 to earn a sizeable early cash bonus for your reward, on top of any earned incentives.
This contract would generate $6.963 million in salary cap savings for the 2025 league year for the Houston Texans. The team is very tight against the salary cap and will need to find ways to free up cap space.
This contract is a big bet, let’s be honest here.
If Diggs is unable to return his expected performance or were to get injured again, Houston would then be saddled with $19.683 million in dead money to manage, likely with the aforementioned “post-June 1” designation a year earlier than planned.
This contract would place Stefon Diggs as the 32nd highest paid wide receiver in terms of Average Per Year (APY).
Closing Thoughts
If you were to ask my opinion on whether Houston will re-sign Stefon Diggs for 2025 and beyond? I honestly haven’t heard yet. I am sure both sides are amenable to the idea, but coming together on the money could be difficult.
Admittedly, the above market valuation is very likely to be under what Diggs is looking for. The question is, how will the other 31 teams value Diggs’s service in terms of APY?
The team will need to make a move for a wide receiver #2 either in free agency or the draft. The potential return for Tank Dell should be counted as a bonus only, and his return could be delayed until 2026.
The veteran street-free agent could be an option for the Texans.
Players such as Cooper Kupp (LAR), Tyler Lockett (SEA), Christian Kirk (JAX), and Jauan Jennings (SF). Street free agents, to be confused with unrestricted free agents, generally are signed at a discount compared to market value.
The unrestricted free agent market is also pretty slim. Potential wide receiver #2 targets could be Chris Godwin, Amari Cooper, Marquise Brown, Demarcus Robinson, Josh Palmer, Nick Westbrook-Ikhine, Tim Patrick, and Elijah Moore.
Do you have a player you would like to see the Houston Texans bring in to replace Diggs? Or are you in favor of re-signing Stefon Diggs for the 2025 season? Let me know in comments below.
As promised here is the previous newsletter on Stefon Diggs and how decisions impacted the team and the player.
Risk vs. Reward: What Stefon Diggs’s Injury Tells Us About NFL Contract Choices
Hey everyone! TC here, and I am back with a new Cap & Trade Newsletter edition. If you are new here, I encourage you to subscribe to the newsletter to ensure you receive every new edition straight to your inbox.
Thanks for reading and your continued support. I expect another fun filled NFL offseason. I will continue to push out written and video format newsletters in the coming weeks.
-TC
APY Value = Contract annual average value divided by the unadjusted NFL league salary cap for the year the contract was signed.
If Jajuan Jennings hits the market, that is the answer rather than re-signing Diggs. Nothing against him, but he's the wrong side of 30, coming off an ACL, playing a position that is highly dependent on quickness. He is the dictionary definition of high-risk, mid-reward.
We need two receivers, I would hope Jennings in FA and the best we can find in the draft. Also need a TE1, so...there's that, too 🤣
If we keep or don’t keep Diggs I would still take a receiver early in the draft. First should be Oline but if the talents not there go receiver. Wr or TE