The Dallas Cowboys have signed franchise quarterback Dak Prescott to a four-year $160 million extension worth an average of $40 million per year.
After more than a year of unsuccessful negotiations, Cowboys fans can breathe a sigh of relief. Just last year, many sports fans thought the two parties had agreed to a long-term extension in the ballpark of $30 million per year only to learn that they had failed to come to an agreement before the deadline.
The result? Prescott played last season on the bizarre construct that is the NFL franchise tag: a one-year deal worth $31 million that forced Prescott to stay with Dallas with the provision that the salary included a subsequent franchise tag that would escalate by 120% (what would have been a $37 million deal). Now he just inked his $160 million extension.
Let’s be clear: Regardless of why the initial extension fell through, Cowboys fans should be thrilled. They have a stud quarterback who will give them a chance to win for the next four years — a statement that only a shortlist of teams can realistically say.
However, the quarterback market has become much more expensive since that failed Prescott extension. Most notably, Kansas City Chiefs star quarterback Patrick Mahomes signed an unprecedented 10-year deal worth up to $50 million per year — a monumental extension that has redefined the quarterback market for years to come.
Sure, Mahomes is undeniably a better player than Prescott, but Mahomes’ $50-million-per-year salary threw the notion of Prescott signing for $30 million per year out the window. Fast forward six months and Dallas had to up its offer to $40 million per year for four years — likely about $10 million more per year than it was in the failed extension.
Interestingly, we’ve seen this narrative before: Nearly every year, the top free-agent quarterback gets a massive deal at a salary previously thought to be unattainable in the year prior for a player of that caliber.
Last year, Tennessee Titans quarterback Ryan Tannehill earned a four-year extension worth an average of $30 million per year. He had begun the season as a backup but resurrected his career over the course of 10 games through strong play.
At the time of signing, Tannehill’s contract was not met with glowing reviews. Was the market rate for a quarterback who is likely not one of the five best players at his position really worth $30 million per year?
Now, in the backdrop of Prescott’s $40 million average annual value, Tannehill looks like a bargain as a solid quarterback who is in the vicinity of Prescott as a player but is only about 62% of the price. Prescott’s salary of $40 million is high, and Prescott is a top-10 quarterback, but will Prescott’s contract age like Tannehill’s over the next four years?
Of course, no one knows for sure whether the market rate for a top-10 to even top-15 quarterback on the free agency market will jump to $45 million to $50 million per year, but if history is any indicator, it’s not as unrealistic as it might sound.
The Indianapolis Colts just traded the Philadelphia Eagles a conditional first-round pick for the less-acclaimed Carson Wentz and his $32-million-per-year salary. The San Francisco 49ers are paying the serviceable but much less dynamic Jimmy Garoppolo $28 million per year. The Rams just traded two first-round picks to the Lions to get out of quarterback Jared Goff’s $34 million annual salary in favor of acquiring quarterback Matthew Stafford and his $23-million-per-year comparative bargain of a contract.
The flat salary cap that will stay for the foreseeable future because of pandemic-related revenue shortfalls could break this trend. However, in sports like baseball that have already had an offseason in the decreased spending environment, we’ve seen that the flat salary cap seems to squeeze mid-tier players into lower contracts while leaving the top players on the market no worse off.
With half of NFL teams spending the offseason looking for a franchise quarterback, it seems fair to surmise that talented quarterbacks will always be at the top of the free-agent market and may stand to be relatively unaffected.
So yes, a price tag of $40 million for Prescott is steep, but it’s 100% in-line with the market rate. Is Prescott this year’s Tannehill, or will he be the next Goff or Wentz? Perhaps over the next four years, we will look at Prescott’s $40-million-per-year salary to be a bargain in the context of NFL quarterback contracts. It’s not as unfathomable as it may seem, but only time will tell.