5th year option importance?

[AU-panther]

With the draft about to start I thought might be a good idea to look at some of the math behind the 5th year option.

At times I think we might be overstating its value.

For the sake of this discussion lets look at the 5 yr cost if you we stay put in the draft and select a CB.

According to http://overthecap.com/draft/ our pick is slotted to earn $6.1m over 4 yrs.

The 5th year option for CBs this year is roughly $8m.  Picks 1-10 earn more then 11-32.

http://www.cbssports.com/nfl/eye-on-football/25560358/agents-take-a-team-by-team-guide-to-fifth-year-option-decisions

Total 5yr cost would be: 6.1 + 8 = $14.1m

Lets look at the same player if we move down 10 spots into the second round.

4yr cost of the 41st pick is roughly $4.2m.

Since we drafted this player in the second round there is no 5th year option.  In this scenario this player would be in the first year of their second contract.  To get a number I decided to look at the average annual value of the 5th highest at their position.  in the case of a CB that would be $14m.  http://overthecap.com/position/cornerback/

Total 5yr cost would be:  $4.2m + $14.m = $18.2

As you can see the 5th year option saves the team about 4m over the course of the first 5 yrs.  Not really the financial windfall some would have you believe.  Also by trading down you pick up another pick that could potentially turn into a really cheap starter.  The first pick in the 4th round will earn about $2.4m over 4 yrs.  Needless to say a starter averaging $600k per year for 4 yrs is a pretty good deal for the team.

For a running back the numbers are even worse.

1st round pick is $6.1m for 4 yrs, just like above.

5th year option for RBs is $5.8m

Total 5yr cost for a RB took at pick 31: $6.1m + $5.8m = $11.9m

If that same player is picked at 41 salary is $4.2m for 4 years.

Average annual price of the 5th highest paid RB is $6.4m

Total cost of RB picked in second round: $4.2m + $6.4m= $10.6m

As you can see in this situation the total savings is only $1.3m

This kind of illustrates another reason that RBs don't go in the 1st that often.  RBs tend to earn less then most other positions so therefore there isn't as much value in the fixed prices of the rookie wage scale. 

Either way this is really basic way to look at the two options.  There are plenty of variables to factor in.  For example if the player you draft turns into the best player in the league at his position the value of the 5th year option goes up.  If he turns into just an average starter maybe his value does down.  Also a lot of second contracts are structured where the 1st year is a lower cap hit then the later years.  Here again there are a lot of variables but with us picking at the end of the 1st round I'm not so sure the 5th year option is as big of a deal as some would have you believe.  Also the position you draft influences the value of that 5th year option.

 

 

 

[ecu88]

Good info and take

[iamhubby1]

There is also the possibility that if you know you want to keep the player. You can always use the time the 5th year gives you to work out a long term deal. Ala Cam and Luke.

 

And of course if you find you don't want the player, obviously, you won't use the 5th year option.

 

All it really does is keep those good/great players from getting to their 2nd contract as early as other round guys.

 

But yeah, lots of variables in play.

[PntherPryd]

Good info but it is not just a reason to stay put at 30,  it could also be used to drive up the take if Cleveland or Dallas want to trade up to get a QB.

[The Lone Panther]

TL:DR