Risk vs. Reward: What Stefon Diggs’s Injury Tells Us About NFL Contract Choices
NFL players face difficult decisions when working through a contract renegotiation.
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I want to conduct a thought exercise specific to Stefon Diggs's situation today. This is not a way to assign blame or place blame. This is just an illustration to showcase the critical decisions NFL players face when negotiating new contracts.
Last Sunday, Stefon Diggs was injured during the game against the Indianapolis Colts. Diggs went down, grabbing his lower leg in a non-contact injury. Fans know all too well what a non-contact injury to the lower leg area could mean.
Losing Stefon Diggs for the season was another brutal blow to the Houston Texans’s wide receiver group, already losing Nico Collins for a minimum of four games due to a hamstring injury.
Stefon Diggs was on pace for 6 touchdowns and over 1,110 receiving yards for the 2024 season.
Disclaimer: Below is merely a thought experiment. I am not attempting to claim that incorrect decisions were made by either Stefon Diggs or the Houston Texans. Below is a display of different paths that could have been taken by either party.
Back on April 3, 2024, the Houston Texans and Buffalo Bills completed the trading sending Stefon Diggs (along with a pair of day three draft assets) to the Houston Texans in exchange for a 2025 second-round draft asset.
Houston acquired Diggs’s contract with four years remaining, including the 2024 season. The contract contained $22.015 million in remaining guarantees through guaranteed base salaries in 2024 and partially in 2025. Below is the contract breakdown and associated salary cap charges for the Houston Texans.
Houston was in a tight salary cap situation stemming from strong free-agent spending. The team was in a position to restructure or renegotiate Diggs’s contract to create salary cap dollars for the 2024 league year and push cap dollars into the forward years.
There were two paths to take here:
Basic restructure by way of converting base salary into a signing bonus. The contract did contain automatic conversion rights.
Renegotiation by way of converting base salary and future money through a new contract.
(Houston went with option 2, as Diggs requested (reportedly) the contract adjustment to make himself a free agent in 2025.)
I wanted to take a look at both options to see what the path forward was for both the team and the player. Yes, this is pure hindsight 20/20 vision, but the season-ending injury is the key element to this thought exercise.
Option #1
As noted above, the contract coming from Buffalo contained automatic conversion rights. This means the Houston Texans could convert salary (and roster bonuses if needed) into a signing bonus for salary cap purposes.
Below is how the salary cap charges would be adjusted with a basic maximum restructure of the 2024 base salary in Diggs’s contract.
A basic restructure does not affect the cash flow for the player or the timing of the cash received. This restructure lowers Diggs’s 2024 salary cap charge from $19,005,000 to $6,037,500. The restructure also raises the salary cap charges in 2025 through 2027 by $4,322,500 in each year.
Under this scenario, Diggs would remain under contract for the 2025 season with a sizeable salary cap charge. This scenario also places Diggs under team control, with a small $3.5 million guarantee, which is not a favorable situation for a player. This would not force Houston’s hand, in the event Diggs did not perform well during the 2024 season.
If Houston were to move on from Diggs, before the injury guarantee vesting date, the team would incur a $12,967,500 dead money salary cap charge.
One aspect to consider is Diggs is still set to earn $18.505 million for the 2025 season under this contract. More of this thought later.
Option #2
This is the path that the Houston Texans and Stefon Diggs chose with a revised contract. The contract pushed $3.515 million of 2025 guarantees forward to the 2024 league year and adjusted Stefon Diggs into becoming an unrestricted free agent in 2025.
Below is how the salary cap charges would be adjusted with the revised contract, including the bonus pro-ratio accelerating into the 2025 league year.
Houston has shown a propensity for these types of contracts to push the player toward a maximum performance outcome.
Under this revised contract, Diggs realized an increase in cash flow for the 2024 season with an amount of $22.52 million (compared to $19.005 million). This is the result of pushing $3.515 million, of 2025 injury guarantees forward into 2024.
This revised contract would make Stefon Diggs an unrestricted free agent for the 2025 season and eliminate Diggs from the compensatory free agent equation.
Houston realizes an even larger salary cap savings for 2024 of $13.129 million with this revised contract. However, the team is now scheduled to incur a $16,644,000 dead money salary cap charge for 2025. This is due to the pro-rated money accelerating forward when Diggs’s contract will void in February 2025.
To summarize:
Option 1 created salary cap savings for the team, and kept Diggs under contract for future seasons with larger salary cap charges that would likely need to be addressed. Diggs would have a contract in place with the potential to earn $18.505 million in 2025.
Option 2 created maximum salary savings for the team and provided Diggs with additional cash for 2024, totaling $22.52 million in cash. Diggs would then become an unrestricted free agent for the 2025 season.
The question now becomes this: Will Stefon Diggs’s market be strong enough to provide a contract with a minimum of $18.505 million in cash for the 2025 season?
Injuries can’t be predicted, which can be an indicator.
Betting yourself at the age of 31 as a skilled position player in a position group crowded with young impactful talent, even as rookies, is another indicator.
Factors:
Turns 32 in November 2024.
Coming off an ACL tear mid-way through the 2024 season.
Diggs was on pace for 1,110+ receiving yards and 6+ touchdowns in the 2024 season.
The continued strength of rookie wide receivers built from the world of 7v7 and the use of spread offensive systems in college football.
Answer: ??? I’ll let you be the judge. Let me know in the comments below if you think Stefon Diggs made the correct decision in betting on himself with the revised contract.
Personally, I hope I am wrong, and Stefon Diggs finds a strong market in 2025 to secure another big contract. The situation does place Houston in a favorable position to re-sign Diggs for the future under favorable terms.
Thanks for reading!
-TC