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AI should be signing players to longer term extensions and FA contracts to be competitive
One thing I've noticed in this game is that the AI are reluctant to hand out significant long term contracts to top players to keep AAV down. I don't think I ever see the AI hand out longer than an 8 year contract, and this is usually only to premium free agents who are under 30 - most other players cap out at 6 years. What this does is keep the average value of the contract higher and makes it difficult for teams that are going for it to compete. In real life, teams will often sign players to long contracts that they know will likely age poorly but they only care about what the player is providing for the next 3-4 years - so for example you would sign a free agent to a 10 year 25m AAV deal rather than a 7 year 35m AAV deal, because the 10 year deal will help the team better in the short term (and the player still gets the guaranteed money).
Also, I notice the AI never signs extensions for players before their arbitration and the extensions when they do happen aren't very favorable - they might buy out one year of free agency but often the extension is for so much money that it seems there's hardly a difference between that and just going through arbitration like normal. In real life, teams sign extensions early because they can pay a player for less than they would demand on the open market in return for the player getting financial security. I see a lot of extensions where the player is getting like $40m a year and that just wouldn't happen in real life because the whole reason for the extension is to get a lower AAV. Also, the extensions always follow arbitration-related increases - e.g. $12m $16m $20m $25m instead of using a flat aav which can also help teams stay competitive by locking down the player for cheaper in their prime.
Overall, I would really like to see AI teams taking much more risks with contracts. This would prevent the "flattening" effect where all the teams cluster around the middle and small market teams rarely ever succeed - and would also be more difficult to play against as a player because you would be facing more competitive teams.
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