Chiefs quarterback Patrick Mahomes landed the richest contract in American team sports history on Monday. The 2018 Super Bowl MVP signed a 10-year, $450 million contract extension worth up to $500 million with incentives. Mahomes dramatically raises the bar for quarterback salaries with his $45 million average yearly salary. The previous standard was $35 million per year, which came in the four-year extension Russell Wilson signed with the Seahawks in 2019.
Most expected Mahomes to become the NFL's highest-paid player before news of his deal broke, but the enormity of the contract took practically everybody by surprise. The tendency with lucrative quarterback contracts in recent years has been to do shorter deals. Prior to Mahomes' new deal, the five-year extension Matt Ryan signed with the Falcons in 2018 was the longest contract among the league's highest-paid quarterbacks. Extremely long quarterback deals had fallen out of favor by the middle of the 2000s.
The longest NFL contract currently in existence outside of Mahomes' is the eight-year extension offensive tackle Tyron Smith signed with Cowboys in 2014 to become the NFL's highest-paid offensive tackle.
It would be a shock if lengthy contracts started becoming the norm in the NFL. There are enough reasons why it's unlikely to happen, but contract security and cash flow in Mahomes' deal are two of the biggest.
Contract security
NFL teams love to have cost certainty with top talent for as long as possible. In the typical lengthy contract, the later years of the deal are essentially a series of one-year options where teams can release players when it best suits them.
Mahomes' contract is structured in a manner that would make other teams think twice about following in Kansas City's footsteps. The Super Bowl LIV MVP has protections in his contract that typically don't exist during the later years of NFL contracts.
A significant amount of Mahomes' compensation each year is in March roster bonuses that become fully guaranteed at least one year early. For example, Mahomes' 2027 compensation consists of a $10 million base salary, a $49.4 million third day of the league roster bonus and a $550,000 workout bonus. The $49.4 million roster bonus becomes fully guaranteed on the third day of the 2026 league year. The base salary and workout bonus are fully guaranteed on the third day of the 2027 league year.
Mahomes' 2026 contract year operates in the same manner so the Chiefs will be on the hook for his $38.9 million third day of the 2026 league year roster bonus in the previous March on the third day of the 2025 league year. All of the later years in Mahomes' contract are like this.
Over 80 percent of the $59.5 million Mahomes is scheduled to make in 2027 becomes secure a year in advance. After 2028, the percentage of Mahomes' compensation in a March roster bonus starts decreasing significantly. By 2031, the final year of the contract, the percentage of compensation in a roster bonus is less than 30 percent.
This structure, with the annual roster bonuses vesting early, is going to make it hard for the Chiefs to cut Mahomes during the bulk of his contract without incurring some major salary cap hit to part ways with him. The Chiefs will likely start converting some portion of the roster bonuses into signing bonus for cap relief at some point during the deal. This will make it even more difficult to release Mahomes because there will bonus proration in addition to the salary guarantee. Mahomes also can't be dealt to another team without his permission because he has a no-trade clause in his contract.
Cash flow
The security in Mahomes' contract may be appealing to other players, but the underwhelming cash flow won't be. Mahomes had two years left on his rookie contract when he signed the deal, and he's only receiving $6 million more over those remaining two years than if he played out his rookie deal. This pales in comparison to the extensions quarterbacks Jared Goff and Carson Wentz signed last year with the Rams and Eagles, respectively, when they were at same point in their careers as Mahomes is right now. Goff is getting $30 million more over the final two years of his rookie deal and Wentz is receiving $29.6 million more. This type of disparity is unexpected considering Mahomes is giving more than twice as many new years (10) as both Goff and Wentz (four).
The cash flow in the first three years of their respective deals is similarly favorable to Goff and Wentz. Mahomes is making $63,081,905 in his first three contract years (2020 through 2022). Wentz is making is $81,570,683 (2019 through 2021), which is nearly 30 percent more than Mahomes during the same period. Goff is at $84,542,682 (2019 through 2021), meaning he's getting close to 35 percent more than Mahomes.
Something I always look at it with players who are or would have been legitimate franchise tag candidates is how their actual deals compare to playing the franchise tag game. If Mahomes had played out his rookie contract, he would have made $27,631,905 in 2020 and 2021. The Chiefs would have put an exclusive franchise tag on Mahomes in 2022 absent a long-term deal. The 2022 quarterback exclusive franchise number, which would be the average of the top five 2022 quarterback salaries (usually salary cap numbers) at the end of that year's restricted free agent signing period, currently projects to $39.403 million. This number is subject to change depending on new quarterback deals, contract restructures, pay cuts and/or releases over the next two years.
Mahomes would have made in the neighborhood of $67 million by going year-to-year depending on where the actual 2022 franchise number was finalized as opposed to the just over $63 million in his actual contract. A second franchise tag in 2023 at a CBA-mandated 20 percent increase over Mahomes' projected 2022 franchise number would be $47,283,600. Mahomes would be approximately $11 million ahead of his new deal by continuing to play the franchise tag game.
A third franchise tag in 2024 with a 44 percent increase from the 2023 figure would be astronomical at slightly over $68.1 million. If Mahomes wasn't tagged a third time, he would have been in a position to literally name his own price to remain in Kansas City long term at that point. The financial discrepancy becomes much greater with a third franchise tag. Mahomes would be approaching $182.5 million from 2020 to 2024. He is making just under $141.5 million in the first five years of his contract.
Apparently, maximizing income wasn't a top priority for Mahomes, which is certainly his prerogative, as it is for most NFL players at least on their first couple of veteran contracts.
Mahomes' contract is also backloaded. He is getting $197.75 million (or 43.9 percent) of the new money after the first five new contract years (2022 through 2026), which averages $39.55 million per year. $252.25 million of the $450 million (56.1 percent) is in the final five new years for an average of $50.45 million per year.
In what's considered a neutral deal, 50 percent of the new money would be in the first five new years. Since that would be $225 million, there's a $27.25 million shortfall keeping the deal from being considered neutral.
Who's next?
There are only two quarterbacks on rookie contracts, Deshaun Watson and Lamar Jackson, that the Mahomes' extension could be relevant for right now based on performance in their brief careers. The Texans have had preliminary discussions with Watson, the No. 12 overall pick in 2017 who is under contract through the 2021 season, for a new deal. Watson is reportedly taking the opposite approach of Mahomes by seeking a three-year extension.
The days of the next man up becoming the league's highest-paid player are probably over for the foreseeable future. Mahomes raised the salary bar for NFL quarterbacks by just over 28.5 percent in average yearly salary. Typically, when a player is made the highest paid in the league, it's only by a few percentage points at the most. For example, Wilson's deal is 4.48 percent more than Packers quarterback Aaron Rodgers' extension.
Watson will likely try to narrow the $10 million per year gap between Mahomes and Wilson by getting closer to the former than the latter. The franchise tag analysis discussed earlier could be helpful in that regard.
The Texans might choose to focus on Mahomes' new money average in the front half of the deal as a salary ceiling for Watson. Wilson's $38 million per year after the first three new years is still the best in the NFL. Mahomes is at $37.95 million. His deal doesn't first crack the $40 million per year mark until the sixth new year in 2027, when six new years average is $42.95 million.
Jackson has already become the most dangerous run/pass threat to ever play the game in just two NFL seasons. He established a new single season quarterback rushing record with 1,206 yards on the ground in 2019. Jackson led the NFL with 36 touchdown passes, winning MVP honors in the process. The 32nd overall pick in 2018 is the first player to have at least 3,000 passing yards and 1,000 rushing yards in the same season.
Jackson was much improved from his rookie season in 2019. Taking another step forward in 2020 would only add to Jackson's contract leverage.
The Ravens would be justified in having reservations about a Mahomes-type commitment to Jackson because of their quarterback's playing style. Running quarterbacks are thought to be more susceptible to injury than more conventional ones. If Jackson continues to carry the ball at a similar rate as in his first two seasons, a serious injury may be inevitable because of number hits he's expected to take.
An interesting dynamic with Jackson is he doesn't have an agent. That hasn't been an impediment to Texans offensive tackle Laremy Tunsil and Seahawks inside linebacker Bobby Wagner getting excellent deals. Jackson should be able to do the same by also using competent advisors to help with the process.
Final thoughts
Don't expect Mahomes to reverse the trend of shorter term contracts where players are looking to get multiple bites at the apple in an effort to try to maximize earnings. Mahomes is the rare quarterback with the potential to be the greatest of all-time. He needs to keep playing at a high level while winning multiple Super Bowls to receive serious consideration for that distinction. Mahomes is attempting to strike a balance between being compensated fairly and allowing the Chiefs to consistently remain contenders with his contract.
