The Carolina Panthers agreed to a contract extension with their star quarterback, Cam Newton, today which will pay him $67 million guaranteed and potentially up to $103.8 million over the life of the contract based on incentives being met. The guaranteed sum over the first three years of the deal is a NFL record, and averages out to around $22 million per season.

 

The NFL world is very much divided on this deal for Newton; some feel that Carolina overpaid and others feel it was a great move to lock in your franchise player through 2020. The debate will rage on in the next few days as well as the next few years, as the Panthers are banking that their star will continue to flourish in the years ahead.

 

The fans of that team will look at this deal three years from now, and depending on what happens in that time, will either celebrate the deal or scrutinize the front office of the team for making it. The undisputed fact here is that regardless of what happens with Newton, this deal impacts the market for quarterbacks in a profound way.

 

Since I am a New York Giants fan, first and foremost, I was interested about the way in which this deal will impact the status of Eli Manning and his next contract. The New York signal caller and two-time Super Bowl MVP is about to embark on the last year of a six year contract he signed, which at the time, made him the NFL’s highest paid player.

 

That contract, six years for $97.5 million with $15.3 million in guaranteed money, is now dwarfed by other contracts signed in the subsequent years. In the world of NFL contracts, for those fans who are unaware, the guaranteed money is the most important figure due to the language of the contracts and the metrics established for reaching the other figures in a given deal.

 

Playing It Out

 

In this case, Manning, who has stated that he feels comfortable playing out the 2015 season and then negotiating an extension, certainly looks like he has played his cards right. The situation is similar to the Joe Flacco contract extension with the Ravens back a few years ago. The Baltimore quarterback decided to play the 2012 season, his last under contract, and then negotiate a new deal in the offseason. It was a risk for both sides, if Flacco had a great season, his negotiating leverage was improved; if he got injured or played poorly, he would be in a position of weakness at the bargaining table.

 

We know now that, in hindsight, Flacco made the right choice because he had a very productive season while leading the Ravens to the Super Bowl championship. He was able to leverage that into a huge contract extension, which to some degree, has hamstrung the ability of the Ravens to add premium free agents in the years that followed.

 

This is a good segue into a similar concern I have for the New York Giants with Eli Manning’s next contract. He is coming off a season where he put up big numbers but he is 34 years old, and his next contract is going to tie up cap space as he enters a period of time where most players begin to decline. Eli has been very durable which is a double edged sword, he certainly has shown his toughness but he has played 11 years and his body could start to break down.

 

The Giants could be faced with a situation where they have a player on the decline who at the same time is tying up a lot of salary cap space. That is not an enviable position to be in. The factor that will offset some of these concerns is that fact that NFL revenues continue to increase and show no signs of reversing anytime soon. This will translate into salary cap increases in the future.

 

The Cam Newton contract puts Eli in a position to potentially leverage the Giants into a very lucrative deal. If Newton got that much guaranteed money without a Super Bowl win on his resume, we could be looking at the very real possibility that Manning could command up to $75 million in guaranteed money over his first three years of his next contract.

 

That will have a negative impact on the Giants salary cap flexibility resulting in a limited number of ways the team can improve the roster during that three year period. I am cautiously optimistic that Eli may not want to put the Giants in that type of situation because he may realize that his window to win another Super Bowl will decrease in each passing year. I also recognize that the Giants front office has a very good business sense and they are very practical and pragmatic in their approach to these contracts.

 

In the end, I hope those attributes prevail so that the Giants have the ability to compete every year for a Super Bowl championship.

(Some background and salary data courtesy of CBSSports.com)