Who Diggs it?

Yesterday, Bills receiver Stefon Diggs signed a 4-year $104M extension, tacked onto his already existing deal (that has 2 seasons remaining), making him a Buffalo Bill thru 2027.  Diggs is one of the best route runners in the game, an elite wide receiver.  Three of the last 4 years he’s caught over 100 balls… All 4 seasons he’s exceeded 1000 yards.  Like last year, Buffalo remains a strong Super Bowl contender this year.  Diggs is a key member of the Bills “core” players.  So the Bills extended Diggs even though he had 2 seasons left on his deal, rather than waiting till the obligatory final contract season before rewarding an extension.

My recent entries (3/23- How to spend to Receive, 04/04- When to Overpay) have already mentioned the changing receiving market as a result of the recent contracts given to Davante Adams, Tyreek Hill and Christian Kirk.  The Bills decision to commit to Diggs has set precedents for their front office.  Other teams will need to consider this signing and the ramifications not only for the Bills, but for themselves…

The Good:

• Culture: One that rewards success, leadership and on-field production
• Communication: That the organization will reward valued players quickly when market conditions change in their favor
• Loyalty: Establish it with your roster
• Fairness: Deserving players receiving below market compensation will not be locked in as long when a pay increase is warranted.

The Bad:

• Precedent: Other players will use this action to seek early extensions, whether justified or not.
• Reward declining performance: Extending a player contractually into his mid-30’s necessitates a salary commitment after a player’s inevitable decline, carving out cap space for 1 or more seasons recognizing anticipated performance will likely not be commensurate with the income.
• Inappropriateness: Undeserving players receiving perceived below market compensation will not be locked in as long when they deem an unjustified pay increase warranted.
• Commitment: Extending contract negotiation from the last contract year into its penultimate season reduces the player’s commitment window.  Fair negotiation should yield a 2-way contract commitment.

 The Ugly:

• Rookie Over-Value: Drafted players and rookie free agents are locked into initial cost-controlled deals for multiple years.  Teams will place an even heavier emphasis on these initial, cost-controlled contracts.  This will likely over-emphasize rookie value via their non-cost-controlled (veteran) peers. 
• Anxiety: Previously, contract negotiation was typical in a contract’s final year.  A new precedent now extends the negotiation period from 1 to 2 seasons.    While this is good for players where deserved increases can get a timelier reward, it will also increase a period (during negotiation, now 2 years) where the relationship between player and team will likely be “tense.”
• Instability: Rewarding unanticipated in-contract extensions heavily disrupts payroll planning.  Teams will now have the complex obligation to plan for this risk as part of their cap management.  When inevitable planning failures occur, resulting contract changes and the ripple effects across a roster will inevitably lead to more rapid loss of the teams (other) quality players, increasing roster churn and fan discontent.
• Market Impacts: The domino effect on receiver salaries will eventually extend to other positions, vis-à-vis how teams value receivers versus those positions.  
• Labor Conflict: Inevitably, the salary cap will not constrain the demand.  This will lead to more likely labor conflict, where the fans lose.

Eagles Lesson: Two years ago, 13 of the 64 players taken in rounds 1-2 were wideouts.  Last year it was 10.  Although this wide receiver collection may not be quite as good as the prior 2 drafts, based on market forces expect the number of wideouts selected in rounds 1-2 to be between 10 and 13, if not higher.  The Eagles would be wise to use one of their two first round picks on a receiver in this year’s draft to take advantage of the changing market at wideout.  Unless, of course, they see the wide receiver market changes quickly crossing into other positions as well.