Darryl Tapp's and Kelly Jennings' Paydays

The Texans signed Charles Spencer, the 65th overall pick in the draft, to a four-year, $2.2 million contract. That includes a signing bonus of $610,000 with minimum base salaries for the next four year of $275,000 (2006), $360,000 (2007), $445,000 (2008) and $530,000 (2009). Spencer is one of the two lineman I referred to in my previous post that were picked up at the top of the third-round. Spencer projects to start for Houston, and is considered one of their key rookies.

Darryl Tapp, the 63rd overall pick should be in store for something very similar - maybe a little bit higher signing bonus. Spencer's cap number for 2006 is $427,500. If Tapp had a $700,000 signing bonus, his cap number would be $450,000. The Texans swift signings help set the market for the Seahawks with Seattle picking at the bottom of each round, and Houston picking at the top of the following round. The signing of second-round pick (33rd overall), OLB DeMeco Ryans helps set the market for 31st overall pick Kelly Jennings as well. The Texans reportedly signed Ryans to a four-year, $5 million contract. Given all of the signing to date, I would project a 5-year, $7.8 million deal for Jennings with just under $5 million guaranteed, or something very close to that.

This is a great time to point out an economic study, The Loser's Curse: Overconfidence vs. Market Efficiency in the National Football League Draft by Cade Massey (Fuqua School of Business, Duke University) and Richard H. Thayer (Graduate School of Business, University of Chicago). It contends that lower draft picks are actually worth more. It has been mocked on ESPN.com's Page 2, but the basic point seems painfully obvious to me. Take the Seahawks for example, Darryl Tapp and Kelly Jennings will earn somewhere between $7 and $8 million combined over the next 4 years. Top pick, Mario Williams, will earn an average of $9 million per season for the next 6 years ($54 million total). For the Texans to get the same value for Williams as the Seahawks will from Tapp and Jennings, his contribution on the field needs to be worth about six or seven times as much as that of the Seahawks top two picks over the next four seasons.

Mario Williams contract initially has $21.75 million in guaranteed money that jumps to $26.5 million next spring with an option the Texans are expected to exercise. The contract also includes bonuses, incentives and escalators totalling $8.1 million, which would make the deal reach $62.1 million over 6 years. Williams will make $47.25 million over the first four years of the deal before any bonuses. Between $5 and $6 million of the $7 or $8 million Jennings and Tapp will receive over the next four years should be guaranteed money. Len Pasquarelli details the specifics of Mario Williams contract (ESPN.com Insider is required to view the article).