Watson contract could cause NFL financial earthquake

The Texans have not spent much time in the spotlight. The 19th-year franchise has never played played in conference championship game and has been booked in the lowest-profile playoff time slot -– the Saturday afternoon wild-card game -– in each of its six postseason appearances.

But this is suddenly an all-action organization. Bill O'Brien's splashy trades have generated immense attention, and the contract Houston's head coach-GM authorized for left tackle Laremy Tunsil reshaped the offensive line market. The extension that appears next in Houston’s offseason queue may well become a landmark NFL agreement.

Regardless of the criticism avalanche the trades involving Tunsil, Jadeveon Clowney, DeAndre Hopkins and Brandin Cooks caused, it is impossible to dispute the Texans employ one of the league’s top talents. Deshaun Watson has more than justified then-GM Rick Smith’s draft-day trade-up in 2017, and the two-time Pro Bowl quarterback has never been more important to his franchise than he is post-Hopkins. Watson has earned a lucrative extension, and if the Texans do for him what they did for Tunsil, it could cause an NFL financial earthquake.

The Texans' $22 million-per-year Tunsil deal made their left tackle the league’s highest-paid offensive lineman, topping Eagles right tackle Lane Johnson’s salary by a staggering $4M. If Watson's price range ends up where Houston Chronicle reporter Aaron Wilson mentioned -– $40 million-$42 million in average annual value -– several teams’ situations stand to change dramatically. 

That unexplored salary territory would dwarf Russell Wilson’s league-record contract ($35M AAV) by a degree the modern quarterback market has not witnessed. Such a deal could alter the Cowboys’ trajectory and put Patrick Mahomes to a seminal decision when his negotiations with the Chiefs commence. 

Although Dallas’ Dak Prescott turned a fourth-round salary (four years, $4M) into an exclusive franchise tag ($31.5M), extension talks for the two-time Pro Bowler have dragged on for over a year. While Wilson signed for less than NFL-record money on his second contract in 2015 -- rather than play a fourth season on his third-round salary -- Prescott refused to buckle during his first extension-eligible year and now possesses increased leverage after his best statistical season. The fifth-year quarterback shows no indication he will back down, so a Watson windfall may change everything for the Cowboys.

Cowboys executive VP Stephen Jones has consistently mentioned a top-market Prescott pact as a potential impediment to the team building a long-term contender. Prescott is just two years older than Watson (26 to 24). The 2016 Offensive Rookie of the Year's actions to this point would make the prospect likely of him waiting out the Texans' negotiations with their passer in an effort to secure a better deal. 

Although the Cowboys have traditionally taken care of their own, Prescott is not quite a top-tier quarterback. Would the franchise balk at a $40M-AAV accord and consider a trade? Unless the Cowboys want to go down the fruitless path the Redskins did with Kirk Cousins -– two franchise tags before allowing a free-agency defection because of a third tag’s astronomical price –- that may be their only value-recouping option if Watson moves the financial goalposts into another stadium. And Dallas now features Andy Dalton as mid-level insurance. 

The Cowboys have done extensive work to lock down their nucleus over the past two offseasons. The other Texas team’s quarterback decision intervening with Dallas’ nearly finished plan would represent an incredible plot twist.

The quarterback market became increasingly team-friendly in the mid-2010s, with its top salary moving only from $22M to $25M from April 2013-July 2017. Cousins' March 2018 fully guaranteed Vikings deal led to QB prices spiking. But during the two-year boom that ended with Wilson's $35M-per-year extension in April 2019, Rodgers’ August 2018 contract ($33.5M AAV, up from Matt Ryan's $30M-per-year accord that May) represented the only $2 million-plus markup from the NFL’s previous salary roof. Watson may catalyze the next wave the way Cousins triggered the late-2010s market surge. 

Mahomes should be the player who takes NFL salaries into a new neighborhood. Neither of the Texas-stationed QBs are on the Super Bowl LIV MVP’s level. A Watson deal that hits or surpasses $40M would force the Kansas City icon to make a decision he should not have to: accept a team-friendlier deal or maximize his value and weaken the Chiefs’ chances of building a dynasty.

No team has won a Super Bowl with a quarterback making even $20M annually. Mahomes signing for the near-$45M-AAV price his talents warrant -- in a world where Watson raises the bar past $40M -- would radically change the Chiefs’ calculus. That would adjust the Ravens' parameters with Lamar Jackson once he becomes extension-eligible next year.

These mega-deals would have been less onerous before COVID-19. The next round of TV deals were set to produce bigger cap increases over the course of the new CBA. But because of the coronavirus pandemic, there's a possibility the cap could not only decrease for the first time since 2011 but potentially be reduced by more than $40M, from a little more than $198 million. It all depends on if the pandemic prevents fans from attending games this season and, then, if the NFL opts to implement a gradual cap reduction over multiple years rather than a 2021 cliff dive. If the cap decreases, new deals for superstar QBs could be much different. 

In fact, the pandemic could redefine sports salaries. Through an NFL lens, it would have a major effect on recent draftees on the verge of second contracts. The league's next generation of superstar quarterbacks headlines this group.

Amid this much uncertainty and with Watson under contract through 2021, O’Brien green-lighting a monster re-up this offseason would invite more scrutiny. An increasingly flawed Houston team would encounter trouble trying to build around a record-setting Watson extension.

The ascendancy of Mahomes and Jackson has changed Watson’s place among young signal-callers, and Prescott’s role on arguably the NFL’s most popular franchise gives him a higher Q rating as well. It would be fascinating if the Texans’ quarterback becomes the one to change equations. A number of teams' big-picture plans may hinge on Houston's endgame.