Tue, 11 Aug 2020

Spagnola: Beating Mahomes Deal Over 5 Years

Dallas Cowboys
09 Jul 2020, 20:24 GMT+10

FROM HOME, Texas - Let's be real during these unreal times.

Take Patrick Mahomes, and his gazillion-dollar contract.

First it's a 10-year extension. But he still has two years left on his rookie contract. That means Kansas City has 12 years of control over the already greatest quarterback to ever play in the National Football League. These combined contracts now run from 2020 to 2031. Twelve whole seasons.

Next, thanks to Kansas City agreeing to these very generous guarantee mechanisms, Mahomes' deal has $477.631 million in potential guarantees, most stating if he's on the roster the league year's third day (usually early March) then that guarantees a pricy roster bonus plus the usual base salary for the next year. Some guarantees are for two years in advance, according to his contract figures and notes on spotrac.

Bailing on the contract in some instances would create as much as $50 million in dead money against the cap.

So the $(fill in the number)-million question has become:

How does Mahomes' contract affect the Dak Prescott negotiations, an answer we will partially receive by next Wednesday, the deadline for a franchise-tagged player to negotiate a long-term deal or forever hold his peace until 2021?

My answer?

Really doesn't.

First of all, Mahomes agrees to a 10-year extension. Apparently Dak's people can't even agree to the five-year timeframe the Cowboys are proposing. They reportedly want a four-year term. So my educated guess is they ain't touching a 10-yearer.

Next, and this is key: Cash flow. That's right, cash flow.

Do you want it now, cash that is? Or do you want the security of getting it over time? In Mahomes' case, over more than decade.

See, not sure where the Hunts are on cash flow. But we can probably guess where Cowboys owner Jerry Jones is, and has been. See the yacht, and all the business and land investment deals.

So for argument sake, let's say the Cowboys were offering Dak a five-year deal, complete with a $50 million signing bonus for a total package of, oh, like, and I'm being generous here since it's not my money, $190 million. Let's also guarantee 75 percent of it, or $142.5 million.

Dak signs today, and the Cowboys hand him the $50 million signing bonus they can prorate over five-years on the salary cap for $10 million a year. And let's say he successfully plays out the contract. At the end of the 2024 season he'll have made $190 million.

Now then, look at the inner-workings of Mahomes' deal. He is being paid a $10 million signing bonus, with the far majority of his contract tied to roster bonuses. So his new cash flow for the 2020 season will be $10.825 million, the signing bonus plus his fourth-year base salary on his original contract of $825,000.

Heck, if cash flow is your thing, see the difference?

Heck, too, Dak could nearly triple that modest sum if he simply plays on the $31.4 million franchise tag.

Now then, in 2021, Mahomes will receive a guaranteed $21.716 million roster bonus. Add that to his $990,000 fifth-year base on his original deal, plus a $100,000 workout bonus, he'll rake in $22.8 million vs. Dak having banked my projected $50 million signing bonus already.

See what I mean?

In fact, the cash flow in Mahomes' deal would amount to $141.481 million after five years, an average of $28.36 million a year.

Let's assume Dak plays out my projection total over a five-year term, then the $190 million comes out to $38 million a year. And on the conservative side, say the Cowboys were only offering Dak the reported $35 million a year, a total of $175 million, his cash flow at the completion of the contract will be nearly $33 million more than the Mahomes total.

Mahomes would need seven seasons to exceed my projection of Dak's $190 million. And by 2026, who knows if pulling in the $41.95 million Mahomes is scheduled to receive will be even market value for a top quarterback in the NFL.

Again, you want it now or you want guarantees for later?

Mahomes' 24-year-old logic on all this?

"Not only does it give me the security that I've always wanted but also it allows an opportunity for the team to be great around me the entire duration of my career," Mahomes is quoted as saying after signing.

He's right about that. His 2020 cap hit will be a modest $5.346 million, possibly leaving enough money in the kitty for the Chiefs to still sign franchised defensive lineman Chris Jones to a long-term deal by the July 15 deadline.

Even his 2021 cap his is not that outrageous, $24.806 million, and that somewhat creates leeway against the cap if a decline in NFL revenues for this season causes the cap total to remain at best stagnant.

In fact, his cap hit in 2022 would match what Dak's cap hit would be this year if Dak plays under the franchise tag he signed last week, $31.4 million.

Mahomes would say he listened to the long-term security advice of his father, Pat Mahomes, and godfather, LaTroy Hawkins, both longtime MLB pitchers, saying, "They didn't sign that long-term contract but they saw players who did and ... how they were able to go out there and play free, knowing they had the security that they had always wanted.

"The biggest thing they preached to me is kind of the same thing I already thought. It was good to just hear them. You want to have great players around you. You don't want to be a guy that takes up all the money and then all of a sudden you're having to sign different guys that will take cheaper deals."

Mahomes' cap number doesn't rise by today's standards significantly higher until the $42.45 million in 2023. But who knows, over the past nine years the team salary cap has risen an average of nearly $11 million a year. Conceivably the $198.2 million total for 2020 could jump to nearly $233 million by then, especially with the NFL due for a new TV network contract, making that number more palatable for the Chiefs.

Again, we come back to cash flow now vs. long-term security, since those retroactive roster bonus guarantees the Chiefs agreed to would create salary cap hardship if they, for whatever reason, wanted to release Mahomes. And the soonest that can reasonably take place would be cutting him in 2027, thus not guaranteeing his 2028 salary and roster bonus while creating $55 million in dead money incurred for guarantees already in place for 2027.

About Kansas City's only fiscally responsible way out of the current deal is renegotiating, and Mahomes would have to agree to that. And he would only do that if the quarterback market rose exponentially by the time he's 30. Then again, what if it has?

So therein lies the answer to that aforementioned pricy question.

To me, it's in the flow ... of cash. Greedy me, wants it now.

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