NFL Free Agency Value
Look at how free agency spending can be measured and valued
Welcome to the offseason!! With this week’s Cap & Trade Newsletter I wanted to take a high level look at free agent value and spending. Spoiler alert...it is difficult to get proper value (or return on value) in free agent spending.
We will examine the amount of free agent dollars spent per team, and the value returned on those signings using the OverTheCap.com Valuation Tool. Essentially comparing the APY of the player contract versus the APY Valuation Tool. From that we generate a value surplus or deficit.
Disclaimers: The numbers in this newsletter are for 2021 only. I examined contracts valued at $2.5m APY and above. Included Unrestricted Free Agent (UFA), Street Free Agent (SFA), Renegotiations (Other), and 1st Round Restricted Free Agent Tenders (RFA). Contracts examined were signed in 2021. Contract extensions were removed from the data.
Methodology into the OverTheCap Valuation tool can be found here: https://overthecap.com/valuation/
On February 14, 2022 the NFL offseason officially began with the waiver period opening. On February 22, 2022 the window for franchise and transition tag opens with the window closing on March 8, 2022. March 14 through March 16 is known as the “legal tampering” period for pending unrestricted free agent negotiations. The new league year begins at 4pm EST on March 16, 2022.
The NFL Scouting Combine is March 1 through March 7. Let’s not beat around the bush on this. A ton of league business and negotiations (legal and illegal) take place during the Combine. Post combine is when the rumor mill will be in full motion.
Nick Korte (@nickkorte) was gracious enough to pull the data from OverTheCap’s database and supply to me. As noted above, I compared to the player’s contract APY value against the OTC Valuation APY Tool for 2021. The tool generates a player’s value into a dollar figure based on a proprietary formula that incorporates Pro Football Focus data. The tool was established prior to the 2019 season, and has been improved upon each subsequent season.
After filtering down the data based on contract type and APY minimum value, I ended up with 223 contract worth of data.
The NFL free agency period is nothing less than a frenzy that dominates news outlets, blogs, online publications, and social media. Fans are hoping and expecting their team to make that free agency splash to renew hope in their future fandom.
The fact of the matter is free agency is extremely difficult to find value in return for money spent. Teams are spending 100% value on a free agent in hopes of return of said 100%. On a player that the team will have had very little if any verbal discussion with.
The team will have leaned heavily on their pro personnel staff to grade prospective free agents and generate contract value for each player, all before any negotiations with an agent will occur.
Up until a few years ago, the mantra for most teams was to build through the draft and supplement with free agency. A few times have learned how to manage their roster with free agency and big veteran trades in lieu of cost controlled draft picks like Los Angeles Rams.
Many free agent signings have a short life span with the team. Most 1 or 2 years with the rare few making it beyond that. The ultra rare example with Johnathan Joseph with the Houston Texans, signed in 2011 and remained with the team through 2019.
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New England Patriots led the league in free agent contracts signed, with 15 contracts. On the opposite end of the spectrum, Detroit Lions signed 3 contracts.
Of the 32 teams, only 4 teams finished the regular season with a surplus of value with their respective free agent signings: Pittsburgh, Los Angeles Rams, New Orleans, and Las Vegas. Cincinnati was 5th among all teams in overall value.
Las Vegas making the Top 5 was a result of the best contract value signing with Casey Hayward. Hayward signed a 1 year $2.5 million contract yielding a OTC value of $12.794 million value.
Tennessee Titans had the worst return on contract value with edge rusher Bud Dupree. Dupree signed a 5 year contract with $16.5 million APY with only returning $1.45 million in OTC value.
I did not include any injury adjusted value. To be fair Dupre only paid 11 games in 2021. But at the end of the day, the value on that contract was not there.
From this screen snip from Excel, here were see the net value return on free agent contracts along with team regular season wins. Pretty amazing that the Top 6 teams had 9 wins or more, and 2 of the Top 5 were in the Super Bowl this year.
Tennessee and Tampa Bay were able to overcome large value deficits from their free agent signings. That is another reason why Mike Vrabel was voted Head Coach of the Year for 2021.
Below is a scatter plot of the Free Agent Value vs. Team Wins with a R2 value of 0.2. Maybe there is something to be said about spending in free agency. The upward trend line also provides evidence of some correlation on value and team wins.
Does the act of spending in free agency lead to more wins? Yes and No. If the team is able to sign the right players to fit their culture and scheme, and are coached up properly then yes that should translate into wins.
But if you are swinging for the fences like Houston did with Brock Osweiler in 2016, or Kenny Golladay with New York Giants in 2021. That will likely lead to losses and/or put the franchise behind the salary cap eight ball in the future.
Contract structure plays a huge role in free agency acquisition. If you read our previous letter on team structure you are ahead of the game. Teams who can avoid large guarantees at signing are able to maneuver out of the bad free agency signings and essentially reload on talent year over year.
Don’t forget to subscribe to the Cap & Trade with TC podcast. Available on Spotify, Apple Podcasts, and Google Podcasts. Our next show is scheduled for February 22, 2022 where we will examine the Houston Texans 2022 roster and future needs.