Derek Carr Takes A Pay Cut This Year — But Gains Job Security

ByJoey Heldon March 15, 2023inArticles›Sports News

For nine seasons, Derek Carr was the face of the Oakland and later Las Vegas Raiders. As the 36th overall pick of the 2014 NFL Draft, Carr immediately started under center for the team. It was an uneven tenure, with only two winning seasons — the same two seasons that resulted in trips to the playoffs — though it’s hard to pin all the losing on Carr. After the 2021 season and playoff appearance, it looked like the Raiders were turning a corner. But a disappointing 2022 resulted in Carr’s public benching with two weeks remaining in the season and the severing of a once-strong relationship.

The Raiders looked to trade Carr but ultimately released him to avoid paying a massive penalty . After his release, Carr joined the New Orleans Saints. NFL Network reporters Ian Rapoport and Mike Garafolo broke the details of Carr’s new contract. The deal is worth $150 million over four years, with $100 million in total guarantees.

But, as with many NFL contracts, things aren’t always what they seem on the surface. Let’s dive a bit further into the deal.

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The Raiders owed Carr $33 million this season, $75 million over the next two years and $116.3 million over the next three years. He’ll make $30 million, $60 million and $100 million over those same timeframes in New Orleans.

The final $50 million probably won’t actually end up happening, at least the way it’s structured now. Carr will be 35 years old by the time that final season approaches, and it’s likely the Saints will look to make some kind of change, whether it’s re-working the deal or seeking a trade partner.

Carr will also leave a state with no state income tax (Nevada) for one that does have a state income tax (Louisiana). The highest tax bracket in Louisiana is 4.25%, which isn’t as bad as, say, New York, a place Carr also considered. While the “jock tax” means Carr will pay income tax based on where he plays his games, for simplicity’s sake, we can assume he’ll lose about $4 to $7 million over the duration of this deal that he would have otherwise kept in Las Vegas.

Slight financial hit aside, this is a victory for Carr. Las Vegas didn’t want him, and because of the timing of his release, he got to hit the free agent market a month earlier than most other quarterbacks. He had a no-trade clause with the Raiders; he’ll also have one with the Saints. Those details have given him more control over his future and will continue to do so.

Plus, at this stage of his career, Carr has already made north of $135 million . His top priority is to win football games, and he’s joining a much more advantageous situation. The Saints are in the worst division in football — remember, Tom Brady and the Tampa Bay Buccaneers won the NFC South with an 8-9 record last season. Carr should be an upgrade from the Jameis Winston / Andy Dalton combo the Saints used last season, and no other team in the division has gotten much better this offseason.

That could put the Saints as the divisional favorites. If they can secure a playoff bid, anything is possible from there.

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Players On The Oakland Raiders Should Think Very Carefully About Their Next Contracts

ByJoey Heldon July 27, 2017inArticles›Sports News

Last season, the Oakland Raiders made the playoffs for the first time since 2002. Less than two months after the Super Bowl, the Raiders announced a move to Las Vegas.

While the team will remain in Oakland this year (and possibly up to two years after that), every player on the roster that’s planning to sign a long-term deal would be wise to think about their next contract. Specifically, they should structure it so the majority of guaranteed money comes when the team is in Las Vegas.

Why? It’s a simple matter of state income tax. In California, players pay up to 13.3 percent of their income in state taxes alone. That’s the highest rate in the United States. There’s no state income tax at all in Nevada.

Quarterback Derek Carr has already put this plan into action. He signed a five-year, $125 million deal that’s more back-loaded than a typical NFL contract. It makes him the highest-paid player in the NFL by yearly salary, and more importantly, it lets him keep more of his money.

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The team also signed guard Gabe Jackson to a five-year, $56 million extension. While the specifics of that deal haven’t been disclosed, Jackson likely loaded up the back end of the contract, as well.

The Raiders have a few other key pieces to lock up, including Khalil Mack and Amari Cooper . Mack’s contract expires in 2018 and Cooper becomes a free agent in 2019. It makes sense for the Raiders to try to extend these players now, when they’ll be at a slightly discounted rate.

Mack is likely due somewhere in the neighborhood of $110-$120 million over six years – but that number could increase if he has another terrific season, or if another top defensive lineman gets a big deal in the meantime. The Raiders have the cap space available, so they’d be wise to ink Mack to a long-term deal.

Mack, meanwhile, should structure things so that he’s making the majority of his money in the final three years of his contract. Let’s keep things relatively simple and say he signs for $120 million with $70 million guaranteed. Assuming the Raiders stay in Oakland until 2019 and the money is distributed evenly over six years, Mack stands to lose between $4.6 and just under $8 million to state taxes.

However, if he structures the deal to pay him significantly more in years four through six of the contract, he’d save millions. Even just a gradual raise each year would help tremendously. Again, to keep things simple, let’s say he instead makes just $20 million in his first three years, with the remaining $50 million guaranteed spread out over the final three years. Not only would he lose $2 million less to taxes, he’d have $50 million of tax-free money once the team is in Las Vegas. Not too shabby.

While these numbers are hypothetical, the lesson is real. To maximize their earnings, players should guarantee as much as they can in the latter half of their contracts.

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