The salary cap is like a puzzle with 53 constantly changing pieces. The challenge is fitting those ever changing pieces into an unchanging and unbending cap figure. One of the best ways to successfully manage your cap is to use your rookie wage scale pieces efficiently. How do you do this? By favoring highly paid positions over lower paid positions in the first round of the NFL draft.
Let's begin this analysis with a couple of facts which provide the foundation for all that follows. First, let's agree that a large percentage of the top players in the NFL come from the first round of the draft. Seems pretty obvious, right? Skeptics will inevitably point to Tom Brady or Arian Foster and say see? You can find top talent anywhere! And that's true, as far as it goes. But one need only look at the perennial pro bowl type players and where they were drafted to see that although top talent comes from every round, and from UDFAs, first round picks are overwhelmingly the best shot at top talent.
Our second obvious fact is this: the rookie wage scale creates bargains for teams choosing wisely in the draft. Young players for the first 4 years of their career are now payed at well below market rates. This creates a means of putting together a cheap high performing base to your team, filling in free agents and veterans where necessary but keeping the core inexpensive by keeping it young.
Third obvious fact: rookie wage scale contracts are all slotted in, so that for example the #7 pick makes slightly less than the #6 pick and slightly more than the #8 pick, who makes slightly more than the #9 pick, etc. The salaries and cap figures are largely predetermined, and there is little room to negotiate a better deal, regardless of position or talent.
Fourth obvious fact: once the rookie contracts expire, salaries instantly readjust out of the slotted system and into the free market system. In the free market system some positions are much more highly valued than others.
OK, that takes care of the preliminaries. Now, what can we do with those facts? I think the place to start is with franchise tag salaries. Listed below are the 2013 franchise tag salaries, by position.
CB: Franchise: $10.668
DE: Franchise: $10.984
DT: Franchise: $8.306
K/P: Franchise: $2.926
LB: Franchise: $9.455
OL: Franchise: $9.660
QB: Franchise: $14.642
RB: Franchise: $8.079
S: Franchise: $6.798
TE: Franchise: $5.962
WR: Franchise: $10.357
A few things are noteworthy. These numbers are the average of the top 5 salaries at each position. The top player obviously receives more than these numbers, and the #5 player receives less. But for our purposes we will use these numbers to estimate the cost of a top free agent at each position. Not the best in the NFL, just one of the top FAs. As a rough cross check. Laron Landry is seeking about $6 million per year, a bit less than the safety number of $6.8 million, and Flacco will probably come in at about $17 million, a bit more than the QB number of $14.6 million. So using these numbers as a proxy for a top FA signing probably is roughly accurate.
Now we need to put all this information together in a somewhat cohesive form. First round picks are generally expected to start in their first year and by years 2, 3 and 4 they are expected to have a good chance to become a top player at their respective positions. So it is probably fair to say if an organization is looking to fill a hole with a draft pick, the first round pick is one primary way to do it. Another possibility is to sign a top free agent, who would also be expected to start right away and be a top performer for the next 3 or 4 years. The question arises, which positions should be filled through the first round of the draft, and which should be filled with FA signings? The answer of course depends on a million variables specific to each team, including cap space available, which positions are most talented in any particular draft, which areas are most in need of immediate performance, which players in the draft can be best expected to immediately earn a starting position, whether a team is a Super Bowl contender, a playoff contender, or in the rebuilding stage, and many other variables too numerous to quantify.
In order to simplify the analysis, let's concentrate on a single variable: cost efficiency. Assuming players of roughly equal talent, which positions should be prioritized in the first round? Here is where the cost of free agents comes in. Certain positions are much more expensive to fill via free agency than others. In particular, it is nearly impossible to obtain a top free agent at QB, and if you do it will cost you dearly. Let's ignore the QB position for the time being. Look at the other positions. A top FA might run you somewhere in the neighborhood of $10 to $11 million at the positions of Offensive Tackle, Defensive End, Outside Linebacker, Cornerback, and Wide Receiver. The numbers are not broken out for ILBs vs OLBs and OTs vs. OGs, but it is fair to assume OTs and OLBs make more than the average and OGs and ILBs make less.
In contrast to those expensive positions, Safeties and TEs make roughly between $6 and $7 million and RBs make roughly $8 million. Again, the numbers are not broken down this way, but it is safe to assume Guards and ILBs also make less than $8 million.
Now here's the kicker. If we choose to fill a hole via free agency, the amount it will cost you varies widely according to position. But if we choose to fill the same hole by our first round draft pick, it will cost exactly the same amount, regardless of position -- roughly $2 million in cap space the first year, and somewhat more each of years 2, 3 and 4. So, assuming all other factors are equal, and talent available is roughly equal, the best way to manage the cap is to use our high draft picks to fill expensive holes and use our free agent money to fill inexpensive holes.
An example might be helpful here. Suppose we have 2 holes to fill of approximately equal need: TE and DE. If we draft a TE in the first round and sign a top FA DE, it will cost us approximately $13 million in cap space. But if we fill the same two holes by drafting a DE and signing a top FA TE, it will cost us only $8 million in cap space, a $5 million cap savings in year 1, and additional cap savings in years 2, 3 and 4. If we continue to make such choices as often as possible, over the years we will accrue very substantial cap savings on the order of $10-15 million per year. This can make the difference between signing a couple of our own free agents and having to let them go, or signing a couple of good to excellent outside free agents EVERY SINGLE YEAR.
This is one reason why when you look at what positions get drafted in the first round frequently and what positions get drafted rarely, you will see lots of Quarterbacks, Offensive Tackles, Defensive Ends, Outside Linebackers and Wide Receivers taken in the first round and relatively few Tight Ends, Safeties, Guards and Running Backs. Over time, managing the cap in this way can make a big difference in whether you are a perennial contender or an also ran.
This is not meant to be any kind of ironclad rule. As we saw earlier in this analysis, there are innumerable other factors to consider, any one of which may be enough to override this simplistic value analysis. However, it does mean that if you are considering taking a Tight End, Safety or Guard with your first pick, especially a high first pick, you should think long and hard before pulling the trigger, and you should be absolutely sure your guy represents a considerable talent advantage over the available alternatives. In other words, if he's going to be the next Ed Reed or Tony Gonzalez, by all means pull the trigger. But if you're not so sure about that, choosing one of the cheaper positions to fill via the draft could prove to be a costly mistake in terms of cap management, a mistake that you will be paying the price for over each of the next four years.