Flacco’s Deal About Risk, Not Cash, as Ravens Follow Wall Street

Joe Flacco could lead the Baltimore Ravens to their second Super Bowl title, never miss a throw and win the Most Valuable Player award, and it won’t change his contract negotiations one bit, team executives and analysts said.

Flacco’s contract expires after the Ravens play the San Francisco 49ers on Feb. 3 in New Orleans for the National Football League championship. He and the team are at odds over the value of an extension, which would be worth $16 million to $20 million annually based on other deals, and the Ravens’ top officials say his title-game performance won’t alter their approach.

If the quarterback doesn’t take the Ravens’ offer, the team will require Flacco to sign a one-year deal for $14.5 million to $15 million and assume all the risk of injury or poor performance that may lead to his dismissal, under a part of the collective bargaining agreement known as the franchise tag. It’s a pattern that Wall Street traders and corporate executives deal with in pricing an asset to mitigate risk.

“If they don’t get a deal done, he’s on a one-year tender,” said Andrew Brandt, a former Green Bay Packers executive and current ESPN analyst. “It’s leverage for the team, a powerful tool for management.”

Flacco, 28, wants to sign a long-term deal that includes a guaranteed signing bonus. If he gets hurt or plays poorly and is fired, he wouldn’t make another penny in base salary and would keep the bonus.

That solution also would benefit the Ravens by locking in Flacco at today’s market price and giving them a happier team captain, which matters in the locker room. The downside is that it would shift the risk of injury or poor performance back to the franchise.

‘Tag Him’

“He’s probably looking at the (Peyton) Manning, (Drew) Brees, (Tom) Brady level of $50 million or $60 million guaranteed and that’s versus $15 million guaranteed if they tag him,” Brandt said in a telephone interview. “The franchise tag has been part of this negotiation from the very beginning, and the team knows it, and the agent knows it.”

Joe Linta, Flacco’s agent, didn’t return calls seeking comment on the negotiations. Dick Cass, the Ravens’ president, declined in an interview to discuss the status of the talks.

Flacco has led the Ravens to the playoffs every year since being drafted from the University of Delaware in 2008, reaching three American Football Conference championship games and now a Super Bowl. He made $6.7 million this year, according to the NFL players’ union.

Postseason Streak

He is the first quarterback since the NFL merged with the American Football League in 1970 to make the playoffs and win a postseason game in each of his first five years. His six career postseason road victories are an NFL record, and in the last seven playoff games Flacco has completed 128 of 220 passes for 1,725 yards with 15 touchdowns and only two interceptions.

“Joe’s been playing at a very high level for a couple of years now,” Cass said.

Linta was quoted by NFL.com as saying Flacco should be ranked at least among the league’s top five passers. That would put him in a group including Manning, who signed a five-year, $96 million free-agent contract with $58 million in guarantees with the Denver Broncos, and Brees, with a five-year, $100 million contract extension including $60 million in guaranteed money with the New Orleans Saints.

Both those quarterbacks have Super Bowl rings. Flacco now gets the chance to join them.

“I’m just going to let my play speak for itself,” Flacco said at a news conference on Jan. 29. “If we come out here and play the game the way we should and the way we can, then we’re going to be feeling pretty good about ourselves and what we accomplished.”

Management Praise

Cass and General Manager Ozzie Newsome have consistently praised Flacco and said they want him with the franchise for the rest of his career. They also have said the Super Bowl won’t change that view.

“Some people will look at what he does on Sunday afternoon, but I have an entire body of work to look at,” Newsome said last week, according to the Baltimore Sun. “Joe sits right behind me on the plane rides home. I also know how he practices, how he works out during the offseason. I look to see how he interacts with players, how he reacts to losing, what type of leader he is.”

Before it's here, it's on the Bloomberg Terminal.