Chargers head Brandon Staley confirmed that discussions for a Justin Herbert contract extension have started during the NFL Annual Owners Meeting held at the end of March. General manager Tom Telesco elaborated a couple of days later on SiriusXM NFL Radio.
"There's a lot that will go into, obviously, with these type of contracts and the amount of numbers that it's going to be,'' Telesco said. "It's just a good problem to have to know you have a franchise quarterback that's now moving into a veteran franchise quarterback. … Yeah, I know the numbers are going to be big. He's earned it, but we think we can win a Super Bowl with him. That's a good problem to have. We'll get it done at some point, and then we'll go from there."
Herbert, 2020's sixth overall pick, is scheduled to make $4,234,275 in 2023 on an $8,456,876 salary cap number. Telesco called picking up a fifth-year option on Herbert for a fully guaranteed $29.504 million in 2024 prior to the May 2 deadline a "formality."
Herbert is arguably the league's most prolific passer at the start of a career. He threw for a rookie-record 31 touchdowns and 4,336 yards (second most for a rookie) in 2020 to garner NFL Offensive Rookie of the Year honors.
Herbert's 14,089 passing yards are the most ever in a quarterback's first three NFL seasons. He has 94 touchdown passes, the second most ever during the first three years, and 35 interceptions.
Herbert's individual prowess hasn't translated to team success. The Chargers are 25-24 in the 49 games Herbert has started and made the playoffs for the first time in his career last season. An AFC wild card playoff game was lost to the Jaguars 31-30 after blowing a 27-point lead.
The fully guaranteed five-year, $230 million contract averaging $46 million per year the Browns gave Deshaun Watson in connection with his trade from the Texans last March has loomed large over the quarterback market.
A fully guaranteed contract doesn't seem like a realistic possibility for Herbert as the Chargers aren't considered a cash-rich team. Meeting the NFL's archaic funding rules where teams are required to put into an escrow account the amount of any guarantees in a contract other than those just for injury, including ones in future contract years, will be problematic for the Chargers.
Herbert's $16,890,004 signing bonus in his rookie contract wasn't paid in a lump sum. It was broken into four installments with the last payment coming on March 15, 2021.
There is one particular Chargers contract that could have a big impact on Herbert's negotiations. The Chargers put edge rusher Joey Bosa at the top of the non-quarterback pay scale in 2020 with a five-year, $135 million extension, averaging $27 million per year, when he was entering his contract year of a $14.36 million fifth-year option. Bosa's $102 million in overall guarantees and $78 million fully guaranteed at signing were both the most ever in an NFL contract for a non-quarterback.
The deal had an extremely player-friendly structure. Bosa's percentages of new money after each respective new year are outstanding for a five-year extension or straight five-year deal. He's at 31.4%, 47.14%, 64.92% and 81.21% after the first, second, third and fourth new years.
There's $63.64 million of new money fully guaranteed at signing since Bosa's $14.36 million fifth-year option was already fully guaranteed. This equals the new money after the first two new years or 47.14% of the new money in the deal. The overall new guaranteed money is $87.64 million, which is the new money after the first three contract years. This is 64.92% of the new contract in the deal.
When I was an agent, I would use favorable contracts done for similarly situated players on a team against them. It wouldn't be a surprise for Herbert's representatives at Athletes First to hold the Chargers' "feet to the fire" over Bosa's deal. The basic argument would be "you did it for Bosa, so you need to do at least that for Herbert."
Bosa was 2016's NFL Defensive Rookie of the Year. He was named to the Pro Bowl once (as a starter) in his first three NFL seasons, just like Herbert. Durability was a concern with Bosa, which likely contributed to the Chargers waiting until he was entering his contract year, after his fourth season, to extend him. That isn't the case with Herbert, whose negotiations have begun after his third season. He hasn't missed any games since becoming the Chargers' starting quarterback in the second week of his rookie year.
Bosa's deal represented an 8% increase over the five-year, $125 million extension Browns defensive end Myles Garrett had just signed to become the league's first $25 million-per-year non-quarterback. Packers quarterback Aaron Rodgers is the NFL's current salary standard bearer at $50,271,667 per year. He became the NFL's first $50 million-per-year player last March with a contract widely considered to be $150.815 million over three years although there are two additional below-market years (2025 and 2026) in the deal. A comparable percentage increase as Bosa got over Rodgers' would put Herbert in the $54.5 million-per-year neighborhood.
Bosa set new marks with guarantees for non-quarterbacks. Obviously, Herbert isn't going to do that for quarterbacks because of Watson's contract. Herbert should easily surpass what is currently the second most guarantees behind Watson's $230 million. Broncos quarterback Russell Wilson is next with $124 million fully guaranteed at signing and $165 million of overall guarantees in the five-year, $245 million extension, averaging $49 million per year, he signed last preseason.
Cardinals quarterback Kyler Murray had $160 million guaranteed for injury at signing that can become fully guaranteed at various dates in the five-year, $230.5 million extension -- worth up to $238 million through salary escalators -- averaging $46.1 million per year, he received last July when training camp started. An additional $29.5 million in the latter years of Murray's contract, which isn't guaranteed for injury at signing, can also become completely secure to bring the total amount that can be guaranteed to $189.5 million.
In a five-year, $272.5 million extension, averaging $54.5 million per year, there would be approximately $162.25 million fully guaranteed at signing and $210.75 million in overall guarantees with Herbert getting the same treatment as Bosa. Herbert's new money after the first two years (through 2026) would be in the $128.5 million neighborhood to match Bosa's 47.14 percentage of new money after his first two new years. The $162.25 million comes from adding the approximately $128.5 million to the fully guaranteed $33,738,375 million remaining in the final two years of Herbert's rookie contract, which includes his fifth-year option.
The same thing would be done with the overall guarantees. Bosa's overall guarantees equaled the new money in his first three new years, plus his fifth-year option. For Herbert, the new money after his first three years (through 2027) would essentially be $177 million to rival Bosa's 64.92 percentage of new money after the first three new years. Adding this roughly $177 million to Herbert's remaining rookie contract puts his overall guarantee at approximately $210.75 million.
The Chargers might have sticker shock, particularly with the guarantees, if Herbert's camp adopts this approach or a similar one in negotiations. A major resistance to treating Herbert like Bosa should lead his representatives to insisting on a shorter-term deal. A four-year extension might be more beneficial to Herbert anyway. He would be better positioned for the expected significant salary cap growth in the coming years thanks to new media rights deals reportedly worth $113 billion over 11 years and an influx of gambling revenue.
Regardless of whether Herbert signs a four-year or five-year extension, it's hard to imagine a scenario where he gets less than $50 million per year. Fellow 2020 first-round quarterback Joe Burrow, the first overall pick, is also expected to sign a contract extension with the Bengals before the regular season starts in which he becomes the league's highest-paid player. Whichever of the two quarterbacks signs first will likely serve as the salary floor for the other.
