In opposition to the NFL teams investing heavily in revamping themselves this winter, there is one organization having a very surprising offseason by staying almost totally silent. In previous years, the Indianapolis Colts had been one of the league's most active teams in free agency under current general manager Ryan Grigson, costing the team dearly during a four-year window in which Andrew Luck was one of the most comically underpaid players in the NFL. But until they signed cornerback Patrick Robinson to a three-year, $12-million deal last week, the Colts had almost entirely stayed out of the veteran free-agent market.
It's hardly as if the Colts are a finished product; not only did Indy produce a wildly disappointing 8-8 season in the dismal AFC South last year, but it did so after a 2015 free-agent spree gone bad. Big names such as Andre Johnson, Frank Gore and Trent Cole failed to impress, leading to changes and pay cuts this offseason. Indy still has nearly $23 million in cap space available, but despite losing Jerrell Freeman to the Bears and moving on from the likes of Johnson and Coby Fleener, it has spent the vast majority of free agency on the sidelines.
That isn't necessarily a bad thing, and given that the vast majority of his free-agent signings haven't panned out, Grigson may have learned a valuable lesson about how to value veteran talent. There's one other quiet factor lurking: The fact that Indianapolis' most important asset is no longer the bargain he once was.
To cut off any hot takes at the pass: The Colts aren't going to lose Andrew Luck. There's no evidence that Luck wants to leave Indianapolis, and even if he did, the league's contracts are weighted in such a way as to anchor a true franchise asset like Luck in one place for as long as his team wants. Luck would basically have to refuse to sign an extension and settle for multiple years with the franchise tag before he would become cost-prohibitive for the Colts, a step that is exceedingly unlikely to occur.
Luck's immediate future with the team, then, will revolve around signing him to a massive extension, one that will set the scale for quarterback deals to come while defining just how the Colts will build around their star passer. His first raise, though, already has come. When Indy picked up Luck's fifth-year option before last season, it lined him up for a hefty boost in compensation. The fourth and final year of Luck's rookie deal, in 2015, paid him a $3.4 million base salary and left him with a cap hit of just over $7 million.
Now, as he enters that fifth-year option, Luck benefits from being a top-10 pick. Players taken in the first 10 spots of the draft are given a fifth-year salary commensurate with the transition tender for their position, while players taken later in the first round are offered a fifth-year salary at the average figure of the players ranging between third and 25th at their respective position. (Players taken after the first round have no fifth-year option available.) For Luck, that's a dramatic difference; his fifth-year tender is $16.2 million as opposed to the $10.6 million he would have earned as a later first-rounder.
That also influences the degree of difficulty in signing Luck to an extension. If you think about talent when you're trying to figure out how much a player will get paid in free agency, you're leaving the most important part of the equation on the table. Leverage matters far more, and Luck has more of it than most other players in his position.
Think about Russell Wilson, one of Luck's contemporaries. Wilson would have been able to hit free agency after four years without the possibility of a fifth-year option, but the entire value of his contract amounted to less than $3 million, including a fourth and final year with a base salary of just over $1.5 million. It behooved Wilson to listen to the Seahawks about an extension, because the difference between his salary and the sort of money he would get as part of an extension was staggering. Luck already has banked more than $22 million from his rookie deal and can pick up $16.2 million more this year without sacrificing any long-term leverage.
When you look at the list of recent second contracts, Cam Newton's deal is the best comparison for Luck's set of circumstances. Like Luck, Newton was a former No. 1 overall pick entering the final year of team control with a hefty fifth-year option, then $14.7 million. Even though Newton signed this deal before his MVP campaign in 2015, it's no surprise that Newton -- and not Wilson -- is the one with the largest outlay of cash during the first three years of his extension, a common league measure of true contact value:
You can see how important leverage is by this chart alone. Despite the fact that he has all of seven career starts to his name, Osweiler was able to use the power of the free market to make it all the way to $55 million in the first three years of his deal, nearly as much as the far more successful Wilson was able to extract from the Seahawks in a closed bidding process. (Wilson's deal did guarantee far more.) Even Sam Bradford, who hasn't been a good professional quarterback, is in line to receive about as much over the two years of his deal as Andy Dalton will nab over the first three of his extension. That's the value of having options and leverage.
The largest three-year financial figure, as far as I can tell, belongs to Joe Flacco of the Ravens. Flacco will make a staggering $76.8 million over the first three years of his deal, which will technically be his third NFL contract, given that it's a badly needed restructuring masquerading as an extension. Nearly $15 million of that figure is option bonuses Flacco already was due under his last extension, though; if you remove them, the largest three-year contract figure belongs to Philip Rivers, who picked up $68 million over the first three years of his new deal with the Chargers.
The number to look for with Luck is $70 million. That's what his agents will likely hope to see over the first three years of his new deal, which would be a massive raise over even what Newton got this time last year. It'll be tough for Luck to get there on his second deal, given that those sort of massive guarantees often come as part of third deals for quarterbacks. Indeed, Ben Roethlisberger, Eli Manning, Rivers and Flacco all picked up three-year terms larger than the $61.7 million Newton received in his new deal. In addition, as Mike Florio pointed out last week, the Colts could franchise Luck in 2017 and 2018 and owe "only" $71.1 million over the next three years without having to make a long-term commitment to Luck, who has been hit more than any quarterback in recent league history since joining the NFL and finally missed time last year with a lacerated kidney.
$66 million is probably a more plausible number for Luck's first three years, which would still be a leap over Newton's figure. The Colts could structure that a number of different ways. To use as much cap space as possible in 2016, the smartest plan would be to give Luck a small base salary with a reasonable signing bonus and a significant roster bonus. If the Colts give Luck a five-year deal with a $35 million signing bonus, that bonus would be spread over the next five years of Indy's cap at $5 million per season (plus the cost of Luck's base salaries). If they instead go with a $20 million signing bonus and a $15 million roster bonus due a week after the deal is signed, Indy could have $19 million in bonuses assigned to their cap for 2016 and just $4 million in bonus accounting due per year on their cap from 2017-2020.
If the Colts aren't going to sign Luck to an extension by early July, it's not clear why Grigson decided to hold onto his cap space for this upcoming season. The Colts have plenty of holes Grigson could have filled with one- and two-year deals for veterans.
And in thinking about this Luck deal to come, more than anything, it keeps coming back to how the Colts wasted an opportunity. They had a franchise quarterback playing against one of the easiest schedules in all of football on a seemingly-annual basis and had him with an average cap hit of right around $5.5 million for most of that time frame. Given that upper-echelon quarterbacks are pushing cap hits in excess of $20 million and even approaching Drew Brees' record at $30 million, it doesn't take much to imagine just how much surplus value Luck's deal created for the Colts over the first four years of his rookie contract.
That money simply wasn't invested wisely. It brought the Colts the likes of Ricky Jean-Francois, Donald Thomas, Arthur Jones and Todd Herremans, players who failed to impress during their time in Indy. And the roster is still lousy with middling veterans such as Gore and D'Qwell Jackson. The best veteran free-agent acquisition on the roster is 35-year-old safety Mike Adams, who will make less than $6 million over a three-year stretch even after 2016 is up.
Those signings were supposed to patch up the roster as Grigson rebuilt the Colts around Luck, but as we sit here in 2016, there just aren't many homegrown talents on the books in Indy. Grigson's drafts and draft pick usage haven't been anything to write home about. His first draft delivered Luck (a shoo-in first overall pick) and a pair of valuable receivers in T.Y. Hilton and Dwayne Allen, but since then, it has been a disappointment. Their 2013 first-rounder, Bjoern Werner, was cut this offseason. Their 2014 first-rounder went to Cleveland in the Trent Richardson trade. And their 2015 first-rounder, wideout Phillip Dorsett, seems like a luxury item after catching 18 passes as a rookie.
There are a few useful parts later in these drafts, but the Colts are both low on picks and low on success rate; they haven't had a compensatory pick higher than 254th during Grigson's reign, given the GM's investment in free agents. And that's the concerning thing if you're a Colts fan, although it will change when they get a fourth-round pick for Fleener. It's not that you will wake up one day and be left without Luck. It's that you'll wake up one day and realize that you had a franchise quarterback and failed to surround him with talent.