Amid salary cap rise, what to consider as Dolphins negotiate with Tua Tagovailoa

Ahead of the start of free agency on Wednesday, an extension for quarterback Tua Tagovailoa isn’t the most pressing Dolphins matter.

Miami still needs to clear over $20 million in cap space to become compliant and have the flexibility to not only retain free agents but add players.

Tagovailoa’s expected extension, however, is the team’s most consequential matter.

A lucrative extension would tie the Dolphins to Tagovailoa, the No. 5 overall pick in the 2020 NFL Draft, for multiple seasons and confirm the public support Miami’s decision-makers have given him in the last few years.

The Dolphins have been in contract talks with Tagovailoa’s agent since the end of the 2023 season, but general manager Chris Grier said at the NFL Scouting Combine that there is no timeline to get a deal done.

A source reiterated that an extension for Tagovailoa, 26, is not imminent and that there is no rush to get one done. ESPN reported that talks could extend into the spring and summer.

If the two sides can’t strike a deal, Tagovailoa would play the final year of his rookie deal on the fifth-year option, worth $23.17 million.

A deal for Tagovailoa will likely make him one of the highest-paid players in the NFL but the mystery is how much the final figures will be. After struggling early and dealing with injuries, Tagovailoa has blossomed under head coach Mike McDaniel. In 2023, Tagovailoa was named to his first Pro Bowl and set career-high marks for passing yards (4,624) and touchdowns (29). He also played in every game for the first time in his career.

Last offseason, four of Tagovailoa’s peers — including a trio from the same draft class — signed deals averaging more than $50 million in annual value. While all these new contracts provide a framework for Tagovailoa’s extension, the comparison was a bit complicated by the recent increase in the salary cap. The previous deals were signed when the cap was set at $224.8 million per team. The NFL announced last month that the 2024 salary cap will be set at $255.4 million, a drastic rise and higher than most teams projected.

Grier said he was unsure how the increase in the cap would impact Tagovailoa’s contract demands.

While many of the raw reported numbers on a new deal — total value, average annual value, guarantees — are the focus of contracts, another important aspect to teams and agents is the percentage of the deal as it relates to the cap.

For example, Cincinnati Bengals quarterback Joe Burrow was the most recent player to reset the quarterback market. Last September, he signed a five-year, $275 million that averages to $55 million. When comparing it to the percentage of the cap, Burrow’s deal takes up about 24.5 percent of the 2023 cap.

When extrapolated to the current salary cap, a top-of-the-market quarterback deal comes in at around $62.4 million per year. It’s a steep price to pay one player but quarterback deals have been rising at a rate greater than the cap increase for several years. As the cap continues to rise in the coming years, the contracts will be significant but won’t have as much of an impact on cap flexibility as they initially appeared.

The deals signed last year by Burrow, Los Angeles Chargers quarterback Justin Herbert, Baltimore Ravens and quarterback Lamar Jackson and Philadelphia Eagles quarterback Jalen Hurts all provide a framework in terms of total value and contract structures. But the quarterback contracts that could be signed in the coming months may also serve as a guide — or a roadblock – in negotiations.

Jacksonville Jaguars quarterback Trevor Lawrence is eligible for an extension. Dallas Cowboys quarterback Dak Prescott could get a new deal to lower his $59.4 million cap hit. And Green Bay Packers Packers Jordan Love will be able to sign an extension in May.

Spotrac projects Tagovailoa will sign a four-year extension worth $220 million, which would tie Burrow’s deal with an average annual value of $55 million. In Spotrac’s projection for Tagovailoa’s deal, $165 million would be guaranteed, which would rank in the top 10 for quarterback contracts.

The amount of guarantees — and the structure of the payout — will be crucial to see just how long the Dolphins are contractually tied to Tagovailoa. Regardless, Tagovailoa is headed for a significant payday that will likely make him the highest-paid player in franchise history.

“I think we’re hopeful,” Grier said of the negotiations. “These are deals that very rarely come together quickly. There are a lot of pieces and moving parts. We’ve had positive discussions so far, and we’ll keep working here throughout the offseason.”