How Jon Gruden’s 10-year, $100 million deal with the Raiders transforms the head coaching market

The Raiders will reportedly pay Jon Gruden $100 million over 10 years to come out of the booth and get back to coaching. Every agent who represents a head coach should be licking their chops because of what Gruden’s payday means for the market.

Gruden’s salary makes his the second-highest head coach salary in the NFL. It had to be exorbitant to lure him away from ESPN and Monday Night Football, where Gruden was reportedly making upwards of $6.5 million per year.

The highest salary among NFL head coaches is Bill Belichick’s. He’s only gone to seven Super Bowls, winning five. To the Patriots, he’s clearly worth every penny of that $12.5 million he’s reportedly bringing in per year.

Until the Raiders decided to give Gruden this blockbuster deal, the Seahawks’ Pete Carroll was reportedly the league’s second-highest-paid head coach at about $8 million per year. Carroll signed an extension prior to the 2016 season, after he’d led the team to four straight playoff appearances, two Super Bowl bids, and a 43-8 Super Bowl win over the Broncos after the 2013 season.

Gruden does have a Super Bowl win on his resume. His Buccaneers beat the Raiders following the 2003 season. It happened just a few short months after the Raiders traded Gruden to Tampa Bay for four draft picks. With that said, Gruden also hasn’t coached at all since he was fired by the Bucs in 2009.

Still, Peter Carfagna, a sports law professor at Harvard and the director of the sports law track at the University of Miami’s law school, said it makes sense in this circumstance.

“It’s not a surprise, because when you look at building a multi-billion dollar stadium in Las Vegas, and sure. It just would be very smart to play off of this as kind of a one-off, I would think, in the pros,” Carfagna said. “Because it’s like Gruden coming home ... and now a sweet homecoming for [Al Davis’] son Mark to say, ‘Viva Las Vegas. Let’s gamble it all.’”

It doesn’t matter that this contract is nearly unprecedented at this level, because the Raiders set their own market, and they decided Gruden’s worth $10 million a year. This could change the entire head coach salary landscape.

We’ve seen it with quarterback salaries

The Raiders have been market trendsetters before. They changed the game at the quarterback position by making Derek Carr the highest-paid signal caller in league history with the five-year, $125 million extension he signed during the 2017 offseason.

But records were made to be broken, and the Lions came right along and topped it. Matthew Stafford’s $27 million per year is now the NFL’s high mark, and that will likely be eclipsed when players like Kirk Cousins and Jimmy Garoppolo get new deals this offseason.

Agents will — and should — push for whatever the market will bear for their clients. And the head coach market’s capacity changed dramatically with Gruden’s deal.

It happens in the college ranks, too

Nick Saban’s got the biggest college contract, raking in upwards of $11 million a year. It’s hard to argue with that when you look at his resume: 131 wins and just 20 losses, three BCS Championships, an appearance in every single College Football Playoff, two National Championship appearances in the playoff era, and two more championship wins in 2016 and 2018.

Texas A&M gave Jimbo Fisher the biggest overall contract in NCAA history when they signed him to a 10-year, $75 million deal. His per-year average doesn’t touch Saban’s, but the total dollar amount will factor into contract negotiations between programs and future head coaches.

Sometimes these generous contracts backfire, leaving schools holding the bag for massive buyouts. It would cost Clemson a whopping $40 million to get rid of Dabo Swinney. A&M had to shell out $10.4 million to former head coach Kevin Sumlin to even have the privilege of giving Fisher that salary. Even Bret Bielema, who was fired after a 4-8 season with the Razorbacks, had a $15 million buyout despite going 29-34 over five seasons in Arkansas.

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We may see a similar outcome if things don’t work out for Gruden with the Raiders. The team is set to move to Las Vegas before the 2020 season. California’s top-tier income tax rate is 13.3 percent, which is the highest in the nation. Nevada, on the other hand, has no state income tax whatsoever. ESPN’s Adam Schefter and Chris Mortensen suggested that the Raiders might try to sweeten Gruden’s deal with a backloaded contract for that reason.

When you factor that in, Gruden’s contract is worth even more. Carfagna said that’s the key.

“So that, net of tax, you could say it’s even richer than it’s announced as being,” Carfagna told SB Nation.

Depending on how his contract is structured, and if things don’t work out, the Raiders could be stuck paying Gruden a boatload of money and also paying a new head coach to right the ship.

If that happens, the Raiders may very well have to shell out a record-setting amount for that new coach, too, in part thanks to this Gruden deal.