Brady Gets Extra $3 Million. Media Fawns Over "Sacrifice."

A strange story is wending its way through the internet tonight.  Here are the facts.

Tom Brady has restructured his contract yet again.  He has removed the skill guarantee on the remaining $24 million in base salary he was owed over the final three years of his contract, leaving only a guarantee for injury.  The practical effect of this change for Brady is he will be paid in full if injured, but he will not be paid if the Patriots cut him for declining skills.  Prior to the restructure Brady's base salary was fully guaranteed, so if the Patriots cut him he would still be paid in full.  In exchange for this removal of the skill guarantee Brady will receive an extra $1 Million in base salary each of the next three years, or a total of an extra $3 Million.  You can find a rather fawningly silly analysis, but factually accurate description of the restructuring terms here.

The internet is now chock full of articles proclaiming how wonderful Brady is for making this "sacrifice", and how great the Patriots organization is that they are continually able to work with their star players to advance the greatness of all things Patriots.  Here's a pretty typical example on Yahoo, by Frank Schwab. Ahem. Word of advice: don't believe the hype.

The media seems to have swallowed the PR coming out of the Patriots' and/or Brady's camp hook, line and sinker.  So you get somewhat breathless "analysis" like this, from Schwab's article (I'm not trying to pick on Schwab here, pretty much every media outlet in the country is currently publishing similar nonsense):

So now the Patriots, the No. 1 seed in the AFC, have $24 million more in cash than they expected to use in free agency. Jeff Howe of the Boston Herald and Mike Garafolo of Fox Sports 1 said that Brady will still make the $24 million if he's on the team through 2017, but if it were guaranteed the money would have to be held in a fund. Brady's move helps the team because it will have more cash on hand to spend, though it's more of a cash flow issue than salary-cap relief. But as Schefter also pointed out, now the Patriots could technically release Brady without any liability, so there is some risk involved.

Notice how the concepts of cash flow and cap space are somewhat vague and conflated, implying somehow that the Patriots have miraculously created an additional $24 Million to sign more players in free agency.  Schwab says "it's more of a cash flow issue than salary cap relief."  Well, yeah, if by "more" we mean it's zero cap space relief and 100% a cash flow issue.

Here's what's really going on.  Tom Brady will be paid $1 Million more in base salary per year for the next three years. That INCREASES the Patriots' cap spending by $1 Million per year, and DECREASES the Patriots' cap room by a corresponding $1 Million per year.  Not only did this restructure provide zero extra cap space, it cost the Patriots $1 Million per year in cap space starting in 2015.

In exchange the Patriots got the removal of the skill guarantee on Brady's base salary over the next three years.  Because that $24 Million was previously fully guaranteed, it was required by NFL rules to be deposited with the NFL offices as surety for the fully guaranteed payments.  The removal of the skill guarantee resulted in the release of that $24 Million from the NFL fund into the Patriots' general accounts.  In theory that gives the Patriots an extra $24 Million in cash to write bonus checks in the new league year. The key words here are in theory.  You see, the extra $24 Million is only significant as a cash flow issue, in terms of the Patriots being able to afford to pay free agents bonus money for which they may not otherwise have the cash on hand to write the necessary checks. It doesn't allow them a single extra dollar of cap space; it just means they have an extra $24 Million in their bank account.

Now, this extra $24 million in the Patriots' account is not found money; it will eventually be paid to Tom Brady as base salary over the next three years.  It is in effect a short term loan from Brady to the Patriots.  The only possible benefit to the Patriots would be if they were literally unable to come up with that $24 Million in cash to write checks without borrowing the money from Brady.  Does anyone seriously believe the Patriots are so strapped for cash that the $24 Million in cash allows them to write bonus checks that would otherwise bounce? If that is the case then the Patriots are on the verge of insolvency.  But I do not seriously believe that is a possibility, and neither should you.  Robert Kraft is a billionaire owner of one of the most successful franchises in all of sports.  The likelihood that he has no other way to raise an extra $24 Million in short term cash is virtually zero.

So what are we left with?   Brady got $3 Million. The Patriots got out of the skill guarantee, which was extremely unlikely to ever go into effect anyway, given that it only matters in the event Brady is cut for declining skill.  The Patriots lost $1 Million in cap space for each of the next three years. That's all there is to this. No great sacrifice by Brady. No extra cap room for the Pats to sign players. Just a cash for guarantee swap.

Somehow out of this rather insignificant $3 Million buyout of a skill guarantee Tom Brady is raised to sainthood and the Patriots are the most incredibly well run franchise in all of human history.  Don't buy the hype.  It isn't true.  It isn't close to true.  There was no great sacrifice by Brady; he'll end up making $3 million MORE.  There was no increase in Patriots cap space; they end up with $1 million LESS in 2015 cap space.  There was no huge increase in the Patriots' ability to sign players; there was no increase at all, unless you believe the Patriots could not have otherwise raised $24 Million in cash.  There was just an insignificant, minor guarantee buyout, with relatively trivial effects for both sides of the transaction.  The rest is just smoke and mirrors, the well oiled PR machinery up in New England, and the extraordinary gullibility of the media eager to deify Brady, Belichick and the Patriot Way.