Let me preface this article by saying Yes, Patriots tight end Rob Gronkowski is paid less than the market value for his services.
Let me also say that was the entire point of his contract extension back in 2012.
MMQB's Peter King has a section on Gronkowski's possible contract dispute, while the Boston Globe's Ben Volin has questioned whether the team should redo his contract (along with wide receiver Julian Edelman).
Let's just say that the 2012 contract still makes a lot of sense in today's NFL.
Gronkowski had just finished his second season in the NFL and set a whole bunch of records- he also suffered an ankle injury prior to the Super Bowl that required surgery. Gronkowski's big issue in the 2010 NFL Draft was his injury history, so it would make sense that another injury would spur both Gronkowski's camp and the Patriots towards another deal.
The contract was a 6-year, $54 million extension back in the summer of 2012, which was absolutely bananas for tight ends. Cowboys tight end Jason Witten, the 2010 First Team All Pro, was under contract for $7.4 million per season. 49ers tight end Vernon Davis earned $7.35 million per year. Chargers tight end Antonio Gates, the 2010 Second Team All Pro, was inked for $7.25 million per season. Those were the top three contracts prior to Gronk's new deal.
Gronkowski signed a deal that beat Witten by $1.6 million per year after just one season of top tier production. The Patriots gave Gronkowski far more than the top deal on the market.
Seahawks (then-Saints) tight end Jimmy Graham rightly joined Gronkowski in the $9 million+ club with a $10 million per season deal in 2014. Gronkowski was coming off massive surgeries in 2013, including multiple back, arm, and ACL procedures and the sentiment around his contract was more about how the Patriots could get out of the deal.
Of course Gronkowski rebounded in both 2014 and 2015 and now his contract looks like a steal again.
But the original deal was made to guarantee Gronkowski's financial well-being back in 2012. Had Gronk finished his rookie contract, he would have made $1.23 million across 2012 and 2013. Instead, the Patriots guaranteed more than 10x the amount with $12.9 million guaranteed baked into the extension.
Gronkowski gave up some financial upside in exchange for financial certainty. Both parties understand this.
The entire Is Gronkowski Upset? storyline seems to link back to this one tweet from Gronk in March:
If ya think about it that Option pick up basically equals pay cut the next 4 seasons... I don't work hard for those reasons. Haha— Rob Gronkowski (@RobGronkowski) March 8, 2016
We explained this tweet at the time as Gronkowski noting his cash flow in 2015 of $15 million would be greater than in each of the next four seasons. It would also seem that Gronkowski is saying that he doesn't work hard for the money.
A far more pessimistic interpretation would be that Gronkowski is saying he doesn't work hard to receive a pay cut, but that goes against everything Gronkowski wants to stand for.
Sure, Gronkowski probably has to question why he's the 5th highest paid tight end in the league from a salary cap perspective, but there's also an important distinction between salary cap and cash flow. While signing bonuses only count against the salary cap over the first five years of a contract, an $8 million signing bonus over an 8-year deal is an easy $1 million per season.
If you remove the cap math and just average the bonus money received over the rest of the contract, it's not hard to project Gronkowski as the highest paid tight end in the NFL:
|Year||Base||2012 Signing||Roster||2016 Option||Workout|
And beyond the contract semantics, it's important to realize that the Patriots still want to be protected in case of injury to Gronkowski. Remember that Gronkowski has not had a fully healthy season from wire-to-wire since his rookie year.
He required surgery on his ankle injury suffered prior to the 2011 Super Bowl. He required surgery on his forearm that he injured twice in 2012. He underwent multiple back and arm surgeries prior to the 2013 season, and then suffered a torn ACL late in the year. He was still limited by the ACL injury for the first four games of the 2014 season and wasn't fully himself until week 7. Gronk also suffered his knee injury against the Broncos in 2015.
Yes, Gronkowski has played in 35 of a possible 37 games over the past two seasons at an All Pro level. He's also under contract for essetially top dollar for the next four seasons.
There's a chance the Patriots reassess the contract prior to 2018 to tack more years on at the end of the deal and lower his cap hit. That's when Gronkowski would see a nice signing bonus and would likely see his average annual value go back to the top of the league.
But think back to the Tom Brady contract and all of his restructures that warp his true contract values. From a cash flow perspective, 2015 has been the only year that Brady played for the Patriots on a seriously below-value deal, and now Brady has a new contract equivalent to $18 million per year over the next four seasons with nearly 60% of it guaranteed.
Brady is still not the highest paid quarterback (so, like Gronk, less than market value), but he's right around the top 10. His $18 million per year is the same he's received since 2010, when it was considered the market-setting contract. Since the cap has increased over time, Brady's willingness to play for the same price is effectively a small paycut to help flesh out the rest of the roster, but he's still not playing for half of his value like he was in 2015. He's just playing for the same price he has been for the past five years.
Gronk is in the same boat. He's really only going to be "under market value" for 2016 before the Patriots restructure his contract in 2017 to account for his $8 million base salary in 2018 and $9 million base salary in 2019. It's an inevitability.
The Dolphins Jordan Cameron and the Patriots Martellus Bennett are the only top tier tight ends expected to hit the market in the next season, although Seahawks tight end Jimmy Graham could work in a restructure, so there's a serious chance that $10 million per season will remain the ceiling when Gronkowski is ready to restructure. You can be certain that the Patriots will top that in time for 2018.
Until then, Gronkowski won't be upset and the Patriots won't restructure in 2016. The deal Gronkowski signed in 2012 still makes a lot of sense as a top-of-the-market contract and he'll be seeing a nice pay day just around the corner.