How The NFL’s Settlement With Colin Kaepernick May Have Approached $40 Million

With Colin Kaepernick and Eric Reid settling their collusion case against the NFL last Friday, it certainly implies that both sides saw a potential to lose the case.  (Read Mike McCann’s excellent legal analysis of the issues both sides had to consider prior to settlement).

Further, with the court rejecting the NFL’s attempt for summary judgment, there had to have been NFL staff and owners concerned about publicly-revealed documents coming to light which could shed further negative light onto the NFL…something it would certainly desire to avoid, especially with the league coming off a highly successful 2018 season (ratings were up for the first time in 3 years, fueled largely by great matchups and dynamically offensive play throughout the season (aside from the lowest scoring Super Bowl in history).

Coupled with the recent story that Kaepernick’s alleged asking price to play in the Alliance of American Football league was $20 million, along with the CNN interview by his attorney that he still wants to play, it got me thinking about a few things:

• Had Kaepernick won his collusion suit, and if we just focus on compensatory damages (i.e. ignore pain and suffering), what dollar amount would we arrive at?  $40 million between 2017-2022, using a combination of models and comparison groups.

• Was it smart for Kaepernick to eschew the AAF?  Perhaps not, for there is no guarantee he will every be offered that type of money by an NFL team, and he could have used his profile and the reps to re-establish both his brand and his game while working his way back to the NFL.

• Will he be in an NFL uniform in 2019, and if so, at what price?  He’ll be signed to a 2-year backup role starting in 2019, with an average estimated value between $4-6 million.

A RECAP OF KAEPERNICK’S CIRCUMSTANCES

Let’s first recap some on-the-field facts pertaining to Kaepernick’s situation.  These are important because they provide context to his comparative abilities, and whether he was still good enough to be on an NFL roster in 2017 and 2018.

• Inserted as the 49ers starting quarterback midway through the 2012 season in place of the steady but less dynamic Alex Smith, Kaepernick went on to lead the 49ers to the Super Bowl that season, and subsequently started every game for the 49ers in 2013 and 2014.
• During these three seasons, the 49ers amassed a 25-14 regular-season record with Kaepernick as their starter, made the playoffs 2 of 3 years, reached the NFC Championship game in back-to-back years, and earned a 4-2 playoff record.
• All three years, under the guise of head coach and former NFL quarterback Jim Harbaugh, his median raw QBR metric was 65.7…and it never dropped below 60 (though it did decline from 2012 through 2014).  For perspective, the median raw QBR score across 33 NFL quarterbacks who saw significant time as a starting quarterback in 2018 was 58.6.
• More raw QBR stats…he had the top QBR among 12 playoff starting QBs in the 2012 playoffs, the 7th highest score among 31 QBs for the 2013 regular season, the 5th highest QBR among 12 playoff starting QBs in the 2013 playoffs, and was just above the median QBR in the 2014 regular season.
• Despite his coaching successes, and likely the result of personality rifts between coach and organizational leaders, the 49ers fired Coach Harbaugh in favor of first-time NFL head coach, Jim Tomsula, who had previously been the 49ers Defensive Line coach.  The 49ers offense sputtered in the absence of Harbaugh’s mentorship of Kaepernick, which subsequently led to Kaepernick’s benching halfway during the 2015 season.  The team finished the season 5-11, and Tomsula was fired after the season.
•  In 2016, the 49ers hired Chip Kelly as head coach.  While a dynamic coach at Oregon which helped propel Kelly to the NFL ranks, he was fired at the end of his third season with the Philadelphia Eagles in 2015, and ultimately was fired after just one season in San Francisco after the 49ers finished the 2016 season 2-14.  Kaepernick started 11 games in 2016, and while his raw QBR score for 2016 was 22nd among 30 NFL starters, he still finished above players who were still in the league in 2018…including Case Keenum, Ryan Fitzpatrick, Blake Bortles, Cam Newton, Trevor Siemian, Eli Manning, and Ryan Tannehill.
• Kaepernick’s last NFL game was January 1, 2017 in a 2-point home loss to their divisional rivals, the Seattle Seahawks.

So when you review the evidence, the one unequivocal conclusion which cannot be denied is that when teamed with an offensive-minded coach in Jim Harbaugh (who himself had prior experience playing in the NFL unlike Kelly), Kaepernick was – at the very least – an above-average starting QB between 2012-2014.

His play did diminish in 2015 and 2016, but that could have been a function of several things.  Playing for an inexperienced head coach who was not proficient with the offensive-side of the ball certainly didn’t help his performance in 2015.  Furthermore, the quirky style of Chip Kelly – which led to a short tenure in Philly and an even shorter tenure in San Francisco – didn’t help either.  Plus, trying to learn a third system of offense in 3 years likely didn’t help matters much either.

These facts do not absolve Kaepernick from select mistakes he made during those years, but do provide further context.  Specifically, and to know one’s surprise, coaching, scheme/style, and complementary parts can impact a quarterback’s performance.

ESTIMATING KAEPERNICK’S 2017 AND 2018 FOOTBALL EARNINGS:  $18.5 Million

If we assume collusion was at play, and if we just focus on earnings losses accrued from not playing football (i.e. excluding potential negative impacts on endorsement income), one must start by assessing Kaepernick’s estimated earnings from playing football in 2017 and 2018.  To make this assessment, one must ask these questions:

• Strictly focusing on football and based on his prior accomplishments, was he likely to be on a football team in 2017 and 2018?
• If he was on a team, would he be a starter or backup?

Let’s take each of these one at a time.

Was he still good enough and physically capable to play in the NFL during the 2017 and 2018 seasons?

Absolutely.

From a physical perspective, he was fine (i.e. no injuries preventing him from playing), and these were his age-30 and age-31 seasons, so well within a quarterback’s prime.

From a talent perspective, his QBR during his first 3 seasons would have ranked among the NFL’s top-half of QBs during the 2018 season.  And while his QBR dipped significantly in 2015 and 2016, it’s not implausible to suggest his poor play was a function of instability at head coach, playing under new schemes in successive seasons, and simply having a less talented complement of players at his disposal.  For example, Derek Carr of the Oakland Raiders – a 3-time Pro Bowler – has seen his QBR dip in 2017 and 2018 after a career-high in 2016.  Anyone following football knows that a big reason for this decline is related to a decline in the quality of the Raiders’ personnel, evidenced by their declining win totals since 2016.

Now, whether Kaepernick would have been a starting quarterback or a backup is a harder question to definitively answer, given that the answer does depend upon numerous situational things we’ve already mentioned herein (i.e. style of offense, style of coaching, the quality of complementary players, team chemistry, etc…).  To simplify, let’s presume he would have been equally likely to start or backup in 2017 and 2018.

To estimate earnings for these seasons, I will triangulate using three different approaches.  The first approach more scientific in nature, with the other two approaches based on different comp groups.

Method 1 – Regression Analysis

One way to address the question is build an explanatory model for estimating average annual salary.  Using data for 45 quarterbacks in 2018, including all quarterbacks who started at least 4 games for their team in 2018 and all backups making at least $2 million, I regressed average salary upon 5 variables (career QBR, years of experience, quarterback’s age, whether they were a starter, and whether they were on their rookie contract).  A caveat here, and that’s to say that if I had been hired to conduct a professional analysis for this case as an expert witness for the plaintiff, I would have – among other things – spent more time analyzing model fits which were even stronger than the one reported below, and would have included a larger subset of quarterbacks in the sample to present an even more robust analysis).

The results of the model suggest explanatory power (for those stats geeks among you, adjusted R-squared) of 84%, which is pretty strong.  All variables were statistically significant except career QBR…but that just barely falls outside of the 90% confidence range.

When one assesses Kaepernick’s earnings potential using this model for 2017 and 2018, and if we assume he would have been a starter, the model projects an average annual salary of $17.5 million…or $35 million over two years.  This is not far off from his alleged $20 million asking price for playing in the AAF.

On the flip side, if we assume he would have been a backup, the model projects an average annual salary of approximately $2.15 million…or $4.3 million over two years.

Method 2 – Veteran Free Agents Quarterbacks who Signed Deals in 2017

For an alternative perspective, since Kaepernick was essentially a free agent during the 2017 off-season, we could look at a small sample of quarterbacks who signed new deals during the 2017 off-season.  These comparisons are below.  GS means “games started” over one’s career, so GS/yr is games started per year.

Stafford and Carr are clear starters over the course of their careers, and despite having lower career QBRs compared to Kaepernick, most would not equate Kaepernick’s future expected performance to theirs.  Conversely, though Taylor has a higher career QBR than Kaepernick, he has less experience as a starting QB, they are similar in age, and Kaepernick has 6 playoff starts and 4 playoff wins to Taylor’s none.  Thus, as a starter, it seems fair to align Kaepernick no lower than Taylor’s $15.25 million annually…or $30.5 million for 2017 and 2018.  (I realize Taylor largely backed up Baker Mayfield in Cleveland during 2018, but his 2017 deal was based on the assumption he’d be the starter going forward with the Buffalo Bills).

As a backup, using these comps (and in particular, Foles and Schaub), an average “price” of $5 million annually seems reasonable, given that Kaepernick’s QBR lies between the other two, and at least compared to Schaub, more games started per season played, and much younger…or $10 million over 2 years.

Method 3 – Veteran Quarterbacks Ranked Beneath Kaepernick in 2016 QBR

While Kaepernick’s QBR ranked among the bottom third of NFL starting quarterbacks in 2016, it was still higher than 6 veteran quarterbacks.  Furthermore, 3 of these 6 signed new deals in 2018…and 2 of these 3 (Bortles and Keenum) signed deals with average annual values of $20 million and $18 million respectively…largely on the strength of strong 2017 seasons, which they then leveraged on the 2018 free agency market.

While Kaepernick’s declining numbers in 2015 and 2016 may not have warranted a shot at a starting position to begin the 2017 season, experiences of Bortles and Keenum show that it is possible to jump from a low-to-high payday on the strength of one well-timed good season.

Thus, using the median 2-year earnings of Bortles and Keenum as a case comp for this starter scenario, Kaepernick would have earned $21.6 million over these two seasons.  Alternatively, for the backup scenario, the only comp from this peer group is Ryan Fitzpatrick.  If we assume a “wash” between Kaepernick being younger versus having a slightly lower QBR than Fitzpatrick, and simply use Fitzpatrick’s experience as a proxy for Kaepernick over these 2-years, then Kaepernick would have earned approximately $7 million over this stretch.

Triangulation – A Weighted Average of Methods and Scenarios

In sum, when estimating Kaepernick’s likely earnings from football for 2017 and 2018:

• Method 1 yielded $35 million as a starter, or $4.3 million as a backup;
• Method 2 yielded $30.5 million as a starter, or $10 million as a backup;
• Method 3 yielded $21.6 million as a starter, or $7 million as a backup.

If I place 50% weight in Method 1 (a more rigorous statistical approach), and 25% each in Methods 2 and 3, then a weighted average calculation yields $30.52 million as a starter, or $6.4 million as a backup.

If we further assume for simplicity sake that he was equally likely to be a starter or a backup, then his estimated expected earnings across these two seasons is approximately $18.5 million.

COMPENSATORY DAMAGES AFTER 2018:  $21.5 Million

If we continue to presume the collusion scenario, then Kaepernick not playing in 2017 or 2018 further diminishes his earnings potential thereafter…in large part because teams will presume his skills (both physical and “game sense” like reading defensive coverages) will have atrophied.

For example, had he played in 2017 and 2018, and exhibited a reversal of fortunes on-the-field, he could have parlayed this into a big “payday” befitting of a starting quarterback.

To be conservative:

• Let’s presume that Kaepernick would play from now (2019) until he is 35 (2022), or 4 more seasons;
• In the backup scenario, suppose he averages $4 million annually over these seasons (conservative because this is less than what Schaub signed for in 2017);
• This would produce future earnings as a backup of approximately $16 million over those 4 years;
• In another scenario, let’s presume he signs one 2-year deal similar to above ($4 million annually), and because of great performance during that contract, he earns a new 2-year contract paying “starter” money for 2-years.  Further, to be conservative, we’ll select a price of $15 million annually (which is below Taylor’s last deal).  In all, this would yield $38 million between 2019-2022.
• Conservatively, if we presume the backup scenario is 75% likely while the starter scenario is a mere 25% likely, then Kaepernick’s estimated earnings between 2019-2022 is $21.5 million.

In all, based on my calculations and assumptions herein, the sum of his estimated 2017-2018 and 2019-2022 gross compensatory damages is $40 million.

We will likely never learn what Kaepernick settled for, but based on this analysis, I wouldn’t be surprised to learn that he received a payment of between $20-40 million.

For a $14 billion enterprise like the NFL which just finished a banner year after two years of numerous public relations losses, that price is a small price to pay to avoid unsavory revelations about how teams, owners, and the league interacted during Kaepernick’s free agency.