AgentDib":vcxifn6i said:
The important distinction here is that the 5th year option is derived from the average of the 4th-25th highest paid players at their position. On the other hand, initial salaries are based on draft slot and not the player's position. This means that the calculation above is going to be very different based on position and ultimately whether it's beneficial will depend on how the player develops relative to the 4th-25th players at their position.
Successful QB careers are long enough that the total value of the first two contracts is not an accurate way of looking at this compared to cash flows. Bridgewater's 5th year option in the Bridgewater (#32) vs. Carr (#36) example will be around $17m. The first four years of Carr's contract are $1.5m cheaper in total due to being drafted four slots later. If you escalate 2016 QB salaries by 3% over the next two years then Bridgewater would need to be the 15th best(paid) QB at the time of his second contract to make this a break-even proposition for the Vikings. And while an extension (figuring 5% savings) would likely be preferable at that point it too is likely eclipsed at the #11 mark and far exceeded should the QB in question turn out to be a top QB.
The final thing to consider is that the 5th year option is not mutually exclusive with an extension but is instead a benefit to the team. There's a huge difference in time value of money between {$40m, $X, $X}, {$2m, $40m, $X}, and {$2m, $17m, $40m}. It's essentially a much cheaper one-off franchise tag.
This analysis is totally fair and I wanted to piggyback off this with a few extra details.
QB is a bit unique in that teams are not afraid to overpay at the position, even for a mediocre QB. Two recent examples of this are Sam Bradford and Brock Osweiler. Neither of those QBs are top 15 guys, and yet they got more years and more money (APY) than the 1 year, $17.696m they'd have gotten on a 5th year option had it been available to use.
Bradford and Osweiler are clearly overpaid, but the way the NFL works, most QBs in the league are overpaid these days because there aren't enough starting QBs. Therefore, I'd expect most teams to pick up the 5th year option, even if its value on paper is sub-par. In other words, NFL QBs very often have value that is outside the domain of moneyball principles. In what other sport would the very best player at the most important position make almost the same money as an average starter at his position? This strange dichotomy leads to average and mediocre QBs getting much bigger deals than they should. Which means that a QB would have to be pretty bad for a 5th year option to not look like a solid move.
Of course, if the QB ends up being really good, then the option would save the team a couple million dollars over the franchise tag in year five, and would free up the tag for another player if needed. Using the 5th year option instead of the franchise tag would also save money in year six (and possibly beyond) since it would result in a smaller franchise tag number (when compared to the cost of back-to-back franchising).
All that said, the majority of non-QB players who are eligible for 5th year options are declined by teams. It's just too expensive to be worth using unless the player is a bonafide star.
So in conclusion, the 5th year option has significant allure if the player is a QB (since the QB position is an exception to the usual moneyball rules of the NFL). But for all other positions, the option's value is a lot lower since moneyball principles play a bigger role. This is why Seattle hasn't cared at all about trading out of the first round, because they know that since they aren't drafting a QB in round one, the player they would have drafted with their first round pick probably wasn't going to justify the 5th round option cost.