Since the rumor mill has been picking up regarding the idea of the Broncos picking up Tony Romo, I think it’s reached the point where the financial consequences of such a deal should be explored further.
The first set of questions that need to be addressed fall in the category of “what does each party want?”
What do the Broncos want?
On this side, I see the answer as fairly straightforward. The ideal veteran quarterback acquisition would be primarily as insurance toward the development of Trevor Siemian and Paxton Lynch. Such a quarterback could be capable of winning the job over both of them in training camp, but would be paid on the presumption that he would not. The price the the Broncos would ideally value such a quarterback would be no higher than the highest of the veteran backup quarterbacks or fringe starters. Right now, that upper bound is set by Robert Griffin III at $7.5 million APY.
Of course, if the Broncos acquire Romo it’s not going to be with the intent with being a prime backup or fringe starter. One indication of how much higher the Broncos would go comes from Benjamin Allbright, speculating a range of $10 million to $12 million APY. While that’s reasonable speculation, the major problem with it is that in a few days, there will be no quarterback anywhere near that range. The lowest paid quarterback that will still be on his contract in 2017 is Andy Dalton at $16 million APY. The only precedent for paying a veteran QB in the $10-$12 million APY range is…Ryan Fitzpatrick’s one year deal with the Jets last year. No one will think that Romo is comparable to Fitzpatrick.
Thus, if the Broncos are serious in acquiring Romo or any other quarterback at that price, they will be breaking from current market precedent in order to do so. John Elway and the front office are capable of landing such precedent-breaking deals, but I would prepare for it being a difficult feat to achieve.
What does Tony Romo want?
This question is far more difficult to take a guess on, because only Romo himself will know that answer. There are two general paths his desires could take him down.
If he wants to be a starting QB at market value, there will be no shortage of suitors out there for him. They will include usual suspects like Cleveland, San Francisco, Chicago, and the New York Jets. The downside is that none of those teams can be considered even remotely competitive at this point. True contenders will be slim at around the $20 million APY that Romo could probably get if he wants it. Kansas City has publicly committed to Alex Smith. Houston can’t get out of the $16 million Brock Osweiler noose that’s around their neck in 2017. Buffalo might be the only other marginally contending team that could make sense, but only if they part ways with Tyrod Taylor, adding another quarterback to the market.
And finally, there is no practical way for Denver to take on a $20 million APY quarterback for 2017. It would eat up near half of their current cap space this year while they have urgent needs at other positions. Using cap tricks to gain room in 2017 could negatively impact 2018’s cap. Von Miller’s highest cap charge comes in that year ($22.5 million), and a $20 million APY quarterback would chew up a third of their current space that has only 26 players under contract. While Denver’s possible desire to fit a veteran quarterback in the $10-$12 million APY range may not have precedent, it’s also perfectly logical given the Broncos’ current roster construction.
Now, if Romo cares less about maximizing his pay and more about finding a team that he can win a Super Bowl with, then there’s little doubt that among all other teams the Broncos make the most sense. The simplest evidence in favor of this idea is that Romo has already made $115 million on his veteran contracts alone. Some players want things other than getting as much money as possible, and there’s nothing wrong with that.
However, Romo will still be under pressure from his agent, who in turn will under pressure from the agent community in general, to not completely roll over to Denver’s requests. The Broncos have already developed a reputation as very tough negotiators (few others would be able to squeeze future Hall of Famers like Peyton Manning and DeMarcus Ware into pay cuts), and there’s likely little desire for that reputation to get strengthened against future players.
A contract that tries to find middle ground
This is a contract that I see as rather unlikely. I’ve always seen Romo as an unlikely acquisition to begin with, and if it does happen, I’d expect one side or the other to cede decent leeway to get it done. But this is an attempt to meet halfway between the Broncos’ financial needs due to their roster construction, and Romo’s value among comparable quarterbacks.
Here’s how the 2017 structure works: Romo gets a $6 million signing bonus and a fully guaranteed base salary of $4 million. An important cession that I think Romo needs to yield is agreeing to hefty per-game roster bonuses in all years of his deal. This is in case his back, collarbone, or other body part goes out again. In the worst case scenario, the Broncos are out only $6 million in cap space in 2017, and $4 million in 2018.
If Romo plays good, but not great, his highest Year 1 total is $14 million–just a shade under the starting QB market, but a shade above the range the Broncos might prefer him at. The $6 million in incentives comes in if the Romo does play great, and thus would elevate his pay into the starting veteran QB range. Creativity can be had with these incentives–one possible idea is $2 million for starting a playoff game, $2 million for winning the AFC Championship Game, and $2 million for winning the Super Bowl, similar to Manning’s pay cut that he earned back.
Years 2 and 3 each have a $4 million option bonus attached to them. If the Broncos decline them in either year, the only dead money would be minimal prorated signing bonus money. Romo would also become a UFA that’s eligible to qualify for the compensatory formula, in case another team wants to give him a try for one last shot in his career. If the Broncos accept an option, they would elevate Romo’s pay back to within the veteran quarterback range, with the caveat that he would be subject to $4 million in per-game roster bonuses each season.
*Note that if Romo’s 2018 option was exercised, it would be prorated like a signing bonus with $2 million counting each in 2018 and 2019.
Trading for Romo might not be as crazy as it sounds…
The total of the contract above is $54 million over 3 years. Although I think there’s a wide latitude of negotiation beyond those numbers, I intentionally used those years and total amount for a reason: this is the exact amount that Romo would be due if a team traded for him.
Such a contract as it stands now via trade acquisition is actually a very good deal for a team when compared to the veteran quarterback market. Romo would be only making $14 million in 2017, and while his compensation of $19.5 million in 2018 and $20.5 million in 2019 is back in line with veteran quarterback pay, there’s a big worry from Romo’s standpoint: not one dollar of any of this money is guaranteed, either in full or under any conditions.
If Romo were traded, the lack of guarantees would give him incentive to renegotiate his contract, in order to get some guaranteed money secured. The team that trades for him would then ask for something in return…say, the institution of per-game roster bonuses should his injuries flare up again.
One barrier to a trade comes not from Romo or any acquiring team–it comes from the Cowboys. Dallas would be unable to use the June 1 designation that can earn them some 2017 cap relief under a trade. That means that whatever compensation the Cowboys would get for Romo would have to be what they feel is commensurate with their necessity to restructure even more contracts that mortgage their future.
…but the Broncos should have little need to trade for Romo
While the rumor mill has stoked the Romo to Denver fire, one aspect it’s been consistent upon is that the Broncos are not interested in trading for him. I believe that is the correct path. If Romo wants to get paid like a standard starting veteran quarterback in 2017, then there will be plenty of teams interested–and the Broncos will not be one of them. But if Romo is willing to take a hair cut in exchange in going to a contending team, then Denver will have considerable leverage over any other team’s offer on the open market.
I am still of the position that it’s less likely than not that Romo becomes a Bronco, although I will admit the odds in favor have increased since I last thought about this in January–and the preponderance of the evidence could easily shift in the other way in a few days. But I likely will not be against a Romo acquisition if Elway feels that is the best path to get the Broncos back to where they belong. That’s because Elway has an excellent reputation of getting the best deals for the team, and he also has an excellent reputation building a winning football program as a whole.