There was big NFL news on Monday as Kansas City Chiefs quarterback Patrick Mahomes signed a ten-year contract extension with a base new money value of $450 million and a possible maximum new money value of $475 million. When the remaining two years of his old money his added, Mahomes now has an opportunity to earn $502,631,905 in the next 12 years. With Mahomes’ contract being such big news, it’s worth breaking it down in a post to see what exactly it is and isn’t.
For starters, Mahomes had two years left on his original deal and he was set to earn a total of $27,631,905 through 2021. That old money was rolled into his extension.
An interesting aspect of Mahomes’ new contract is its overall structure and cash flow schedule. Of the entire deal, Mahomes received just a $10 million signing bonus. That means he’s set to pocket just $10.825 million in 2020, an extremely low amount. It is worth pointing out, however, that upon signing, Mahomes is guaranteed to get $63,081,905, which is the first three years of the deal and his total base cash flow amount through the 2022 season.
Mahomes’ contract is structured with 11 consecutive years of huge roster bonuses, which you might as well call option bonuses. Once exercised every March, those trigger more future guaranteed money. For example, next March Mahomes is set to receive a roster bonus of $21,716,905 and unless cut before the third day of the new league year, his 2023 scheduled earnings of $40.45 million become fully guaranteed. Those rolling guarantees continue on throughout the contract. To better illustrate this, below is a schedule of the guarantee trigger dates in yellow provided by Tom Pelissero of the NFL Network.
Rolling guarantees are common in NFL contracts, but never over the entire life of a 10-year extension (12-year deal). Patrick Mahomes gets over $63 million fully guaranteed at signing and $103M by next March. Most of the salaries and bonuses vest a year or two before they’re due. pic.twitter.com/az8jsKBZgN
— Tom Pelissero (@TomPelissero) July 7, 2020
Once again, I should note that Mahomes’ overall cash flow in his new deal isn’t great. Take note that Mahomes was originally scheduled to make $27,631,905 over the course of the next two years and he’ll now earn just $6 million more than that in his new deal over the same period. And while $63,081,905 is fully guaranteed at signing, he was guaranteed $27,631,905 before inking his new deal. In short, he only gained $35.45 million in fully guaranteed money by signing on for an additional 10 years.
On the surface, Mahomes’ yearly cap charges all seem very reasonable throughout the life of his deal. Even his 2022 cap charge of $31.45 million might not look too bad come that season, depending on the overall impact the coronavirus pandemic has league revenue, and ultimately the salary cap. If, however, the Chiefs need salary cap space, they can easily convert a yearly roster bonus into a signing bonus to free up significant chunks. The first of those conversions could take place as early as next March if need be.
Because of the way the rolling guarantees are structured, Mahomes isn’t likely going anywhere for a long while and especially with him reportedly having a no trade clause in his new deal. In short, there’s a very good chance that Mahomes sees most of, if not all of, this huge contract. On the flip side, however, it doesn’t appear as though Mahomes will have much room to bargain for more money down the road. He basically traded that right away for those rolling guarantees that will make it extremely hard for the Chiefs to cut him and especially not until 2029. That trade off for having a contract that he should ultimately earn a huge chunk of also cost Mahomes some early-deal strong cash flow.
While not included in my table below, starting in 2022, and for 10 consecutive years, Mahomes has a $1.25 million incentive for winning AFC Championship game and a $1.25 million incentive for winning NFL MVP, according to Adam Schefter of ESPN. That’s the $25 million of incentives over 10 years that takes the total possible value of his deal up to $502,631,905.
With Mahomes’ new deal essentially having a new money average of $45 million, he’s now easily the highest paid player in the NFL. His new money average is $10 million more than that of Seattle Seahawks quarterback Russell Wilson so expect him to remain on top for a few more years. The devil is in the details, however, as Mahomes’ new money average through the first five new years of his new deal (through 2026) is just $39.55 million. Within five years, Mahomes’ new fabricated money average of $45 million is likely to be surpassed by a few players and the Chiefs quarterback won’t actually be earning that average then, either.
|Year||Base Salary||Prorated Bonus||Roster Bonus||Workout Bonus||Guaranteed Money||Cap Charge||Cash Flow|