I'll start this off with saying that this is my take on why i think that Bills didn't cave on Byrd's demands, and what I think the ultimate outcome of the Byrd situation will be: a trade during the next off-season.
The more I see this (young) season play out, the more I'm thinking that the Bills' decision to not give Byrd a huge contract has to do with long term financials, specifically regarding the salary cap. And the reason why I think that Jairus Byrd will be traded is that it's probably going to come down to signing Byrd to a big, cap eating contract, or signing Spiller to a big cap heavy contract, and still being able to operate with manageable cap space.
It's no secret that Byrd wants top money, and in many ways he's earned it. And while i don't agree with how he and his agent have gone about trying to secure said money, this is NOT the point of this post. And while the Bills still have a decent amount of cap space, they do also have one BIG name who's rookie contract will expire next season: CJ Spiller.
Now with the cap in it's current state, and uncertainty about how much it will rise in the future, I believe the Bills are setting themselves up in a position where they might need to choose between the two. Now they could probably afford to sign both to long term, big money contracts. But in doing so they also run the chance of putting themselves in salary cap hell; a similar situation that the Jets and the Ravens have found themselves in this previous off season.
Now it's no secret that in order to run a successful franchise on a long term basis, a team must avoid this at all cost (again, see look at the Jets). So it is with that in mind that I think the Bills are forcing themselves to not end up in that situation; and as a result, why they will cap-and-trade Byrd at the end of this season.
To explain this I want to look at the current set up that the Bills have on both offense and defense.
On offense we have a young QB with what is now regarded as a pretty great WR corps. But what is this offense without BOTH CJ Spiller and Fred Jackson? The answer: not nearly as good. EJ will continue to grow, and if early indications are of any merit, he should grow into a pretty good, if not great QB. But Hackett's offense is still VERY dependent on having a game-breaking running back there (Spiller), along with an in-between-the-tackles bruiser (Jackson) supporting him in a 1-2 punch. And I think that we can all agree that it would be near impossible to replace Spiller.
On defense, we have a system that is more dependent on the performance of the whole as opposed to its individual parts. Yes Byrd is a fantastic Safety. And yes he's a game breaker. But he is just one part of the whole in this system. And, I think, that the first two games have shown us that even without some of its top players (Byrd and Gilmore), this D can be pretty darn good.
While replacing a player the caliber of Byrd is obviously difficult, it is not impossible to replace his role with another good, young safety. Point is, loosing Byrd would not be the death blow that loosing Spiller would be. And if the Bills' front office truly has faith in Doug Marrone and his coordinators, and the systems that they have put in place, they should realize this too.
Which brings me to what I think the conclusion of the Byrd situation will be: a trade at the end of this season.
I think that the Bills want Byrd to play out his franchise tag in order to tag him again, and then trade him during the next off-season. In a way this situation would resolve itself in much of the same way that the Darelle Revis situation resolved itself in New York last year, all while preventing the salary cap situation that the Jets still found themselves in after the Revis trade.
Trading Byrd after another (hopefully) productive season, once he returns from injury, would allow the Bills the maneuverability to re-sign Spiller without having to worry about not being able to re-sign anyone else. But if you re-sign both to big contracts would GREATLY limit the things that you can do elsewhere. Which is the situation I think the Bills are trying to avoid.
As for trade compensation, it's all about when and where. Trading Byrd now would not get you nearly the compensation that trading him next off-season would get you. I personally see another type of Jason Peters trade: two or three picks, depending on the rounds that we get in return. Now I don't think that we'll get a first rounder for Byrd. Although that would be ideal, with the new rookie wage scale almost no player is worth a first rounder. But say the Bills do manage to get a first for him, then one or two late round picks would secure the trade. In alternative, a 2nd and a 3rd would not be out of the question either.
The result would be the Bills having much more cap space to work with, along with a few extra draft picks that could/would be used in finding his replacement, along with helping fill the other holes that the Bills have at Guard, Linebacker and Cornerback.
Yes trading Byrd does suck, but in the end this team can be better for it.