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Going Deep on the Terry Deal
- Christian
- 6 hours ago
- 8 min read
An outstanding action for the Washington Front Office was to sort out a new deal for star WR Terry McLaurin. With this now in the bag, I immediately thought of approaching the insightful Colin Dunphy who is a real treasure to follow on X on all matters relating to the NFL cap. And, in particular, the dollars that relate to the Washington Commanders.
UKHTTC founder, Christian Burt, posed a few questions the way of Colin who delved deeper into the McLaurin contract and it’s current and future impact on the team.
Tell UKHTTC readers a little bit about yourself why are writing about the Commanders’ salary cap?
My name is Colin Dunphy and I’m a fan of the team with a special interest in team building. I’ve been writing and doing projects on the Commanders’ salary cap for about 4 years following covid times, with most of my stuff still available at www.mofopod.com.
I’m also on Big Doug and Carmi’s YouTube channel, with a 6-part mini-series on how to use analytics and build community, called “Pardon My Math.”
The guests were amazing, and I learned a lot, and recommend it to anyone interested in the history of analytics in the NFL. I grew up on Capitol Hill, and I now live in Clinton, MD on my family’s farm where I grow chestnuts and pawpaw’s as a pick your own orchard.
My previous career was as an organ donation coordinator. I do not have professional experience in data science or finance, but I have listened to a bunch of Over The Cap podcasts.
How does Terry McLaurin’s new deal fit into Washington’s overall salary cap strategy over the next few seasons?
At some point the Commanders will have to worry about the salary cap, but not this year, as they are like most teams in the NFL- not good enough, yet.
Cash, on the other hand, is what forms most rosters and contracts, so let's answer this question with an eye on how much the team is paying before evaluating their accounting of it. After all, spending cash wisely based on player markets is the business of football, while accounting for spending is just business.
The Commanders are currently on track to spend $289m in 2025 according to Over The Cap, which means less than their relative position to the rest of the league- middle of the pack (rank 16/32).
The highest spenders are the Vikings and Bills at $343m and $333m, respectively, which is $44m-54m above the Commanders. While the Commanders are spending slightly more than their cap space as indicated by the cash-to-cap ratio of 1.12, this is also ranked low relative to the rest of the league (22/32). All of this is to say the Commanders are not spending much relative to the rest of the league and they have levers to pull (like increasing contract proration) to spend more if they want to.
With the stunning production of highly drafted quarterback in Jayden Daniels, and the team’s surprising semifinal finish last year, the team should want to spend, and to that end, Terry is a great fit.
Considering explosive plays are largely the result of wide receivers (Brown, Fortgang, 2020), the team needs the 12-15 explosive plays Terry has provided over the past few years (per PFF), especially for their developing investment at QB. It’s good money to spend so long as the team has options if production tapers off, and they do in this case, with no guaranteed money due after two years.
The deal may be an important part of Jayden reaching his maximum potential within the next few years, which is the biggest win for all parties involved. Said Adam Peters, “the biggest thing was trying to keep Terry here for the long haul… and we got a chance to do that.”
What impact will this contract have on Washington’s ability to retain or pursue other key players going forward?
The most interesting impact this contract has on the future is that it shows us how the team may choose to structure contracts for players looking for their third or fourth contracts, such Laremy Tunsil, Deebo Samuel, Marshon Lattimore, and Daron Payne. Of those four, Deebo is the only one with a contract expiring this year, while the others will have one year remaining after this season. So, I did an exercise.
Using Terry’s previous contract APY at signing of 11.1% on Over The Cap’s history page as a basis for these players’ asking price (about $32m AAV) we might get an understanding of the value contract those players might receive from the team, which would be about 10.4%, or $29m AAV. Now, we know that’s not the year one or two cash, but we can use Terry’s deal to find that, too.
For example, if Tunsil signed a comparable deal next year, the year one cash would be about 12.5% of the cap, which is about $37.5m. Doing that for the rest of the aforementioned players, while accounting for their current APY at signing, we get: 12.5% for Deebo, 12.2% for Lattimore, and 11.5% for Payne. Spending on those four players combined would equal 48.7% of the cap, or roughly $146m in 2026 cash.
That sounds like a lot, but remember the Commanders are not spending much in 2026 ($188m), so the total would be around $350m-$360m, once the draft class is added and the roster is filled (don’t worry about the cap yet, only half of the $146m would flow through to the cap). That amount of spending may lead the league next year, but it won’t be by much, and the second-year cash will be much lower, like McLaurin’s.
All told, the 2027 value comes out to only $55m, for a two-year total of about $200m, or $100m per year to extend these four players. It's a lot, but very doable considering their current spending profile. Furthermore, it may be appropriate if the players are producing and they want to maximize this rookie QB window.
2027 is the first opportunity to offer Jayden an extension. Based off Joe Burrow's 2023 extension, the Commanders should prepare to pay a year-one value of at least 20% the cap, which would be about $62.4m.
Add that to the $55m from the second year cash for paying the players above, and the existing 2027 spending according to Over The Cap, and you get an estimated total of only $245m for around 39 players, including two draft classes. That leaves probably around $70m to fill out the roster before spending reaches the level of the cap ($315m?), which is plenty assuming they draft at a league-average hit rate.
In terms of structure and guarantees, how does McLaurin’s deal stack up against other top wide receiver contracts around the league?
Terry McLaurin’s Contract Cash Comps | |||||
Player | Year 1 | Year 2 | Dead Cap if Cut | Year 3 | Year 4 |
Terry McLaurin | $35.4m | $49.7m | $25.5m | $75.1m | $106.2m |
Tee Higgins | $35.9m | $58.9m | $7.5m | $85.2m | $115m |
DK Metcalf | $35m | $60m | $18m | $86.5m | $114m |
Data from Over The Cap |
Contract structure is the most overlooked component of evaluating contract value. Guarantees are very helpful, but alone, they often miss part of the picture.
For example, McLaurin’s guaranteed money is $44.65m through two years, however, he would need to never play a down under this contract for the team to come close to paying only that value.
As that is very unlikely, the cash payments (non guaranteed roster and workout bonuses), during those years become “effectively guaranteed.”
While the term is slightly subjective, it gives us the most likely minimum outcome of this contract: $49.65m (according to Spotrac) to be paid over two years. That’s basically $25m per year for two years assuming he’s active ($2.3m worth of very attainable incentives available per year on top of that).
However, when we look at year three, we see another cash payment for McLaurin of $25.5m, meaning the third year will cost about the average of year one and two, or in total, $25m per year for three years.
Does that sound like a “two-year deal” to you? I don't think so. If McLaurin maintains his production through year one and two he will have a strong chance of justifying a third year. The structure allows it, and his production will likely dictate it.
The fourth year of his contract has a cash value of $31m, which is a $5.5m increase over the previous year. That increase represents a 21.5% change over the previous cash payment ($25.5m), while if the salary cap rises to $350m, it would increase about 25% over today. So, although he would be 33 years old, if McLaurin can maintain his production, the year four cash seems justifiable at 8.9% of the cap.
This is a contract Terry can retire on. It’s not back-loaded with cash payments unlikely to be seen as we saw with Tyreek Hill in 2022.
That’s a win for the McLaurin camp, but to ask Adam Peters, he would say the team as well. “It’s a three-year extension, so he’s under contract for four years, and I don’t think anybody up here or in that locker room would be surprised if he plays all four of those,” said Peters.
Another likely point of negotiation was the year-one cash, which at $35.4m, is slightly more than DK Metcalf ($35m) and just under Tee Higgins ($35.9m). That’s a strong value for a 30-year-old wide receiver on a rapidly changing team with one year of service remaining under contract. There’s significant downside risk to McLaurin’s career after this season, and this year-one cash, may indicate he wanted to hedge against downside risk.
So, while the average annual value ($29m new money) is not as high as the player reportedly would have liked, they probably wanted this year-one cash value more, which should be conveyed in any analysis. Not doing so may misrepresent the spirit of negotiation, in my opinion.
One small note in Terry’s favor, the team prorated his 2026 $10m option bonus, which increases the dead cap hit if they decide to cut him in 2027, but Over The Cap and Spotrac do not show that. The dead cap hit would be $25.5m, not $18m, which may make it slightly easier to justify keeping him on the roster in 2027, as the hit would be as much as the cash value. Ultimately, dead cap hits are sunk costs, so the influence is often minimal, but it’s worth noting.
Moving on to points of negotiation that were important to the team, the 2-year cash is significantly lower for McLaurin ($49.65m) than for Higgins ($58.9m) or Metcalf ($60m). This is where the team comes out on top, but it’s not to be unexpected considering the difference in age- McLaurin is two years older than Metcalf and four years older than Higgins (they all have 5 or 6 years of service).
This trend continues into year three and four where McLaurin lags the others by about $10m over the life of the deal.
From your perspective, did the front office or McLaurin’s camp come out as the bigger ‘winner’ in this negotiation — or was it true middle ground?
The two- and three-year cash values both come out to $25m per year, which sounds close to the APY of the team’s opening offer according to the reporting of Ben Standig, now on Substack.
However, once the new money is incorporated with the old, those cash values likely come down to around $22m per year, so if McLaurin’s camp accepted the initial offer, he may have taken a loss of around $3m-4m per year in AAV (total value of deal would probably be $94m instead of $106m). Therefore, I think the team has increased the value of its offer by around $10m-$12m since the beginning of negotiations.
If Terry’s camp were to match DK and Higgins’ year-two cash values, they would need to raise the value of the deal by yet another $10m. Therefore, I think it’s fair to say they met in the middle over the full term of the contract, as both sides probably moved about $10m from their starting values.
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