How Chip Kelly's contract with UCLA saves the 49ers

Chip Kelly is now in Westwood, but his new contract with UCLA will help save the 49ers a significant amount of money...

Chip Kelly's deal to become UCLA's head coach will save the 49ers approximately $7.5 million, according to a source familiar with his contract situation.

"Chip did the 49ers a solid," the source told NBC Sports Bay Area.

The 49ers fired Kelly at the conclusion of the 2016 season after he served just one year of his four-year, $24 million contract. The 49ers' future financial commitment to Kelly is offset by the contract he signed with UCLA.

UCLA on Saturday announced the agreement of a five-year, $23.3 million contract with Kelly. The school also announced a $9 million "reciprocal buyout," which has no impact on the 49ers' payments to Kelly. The reciprical buyout refers to the compensation required if UCLA fires Kelly or he leaves the school early for another job.

The source said Kelly and UCLA agreed to a contract structure in which Kelly receives standard percentage raises in his contract that is consistent with typical coaches contracts.

The 49ers' four-year contract with Kelly averaged $6 million a year but was structured to provide 20-percent salary increased each year. Kelly's deal with UCLA is similar with consistent raises scheduled for each season. Kelly and UCLA could have put together a contract with comparatively low base salaries in its first two years to force the 49ers to pay more, the source said.

The source did not provide the exact numbers of Kelly's contracts, but based on the typical pay raises, Kelly was scheduled to earn approximately $6.5 million in salary in 2018 – the amount guaranteed in his 49ers contract – with about $3.125 million coming from UCLA.

In 2019, UCLA will pay Kelly approximately $3.75 million while the 49ers make up the estimated remainder of his scheduled $7.7 salary from the deal he signed with San Francisco in January of 2016.

The 49ers would have owed Kelly approximately $14 million in salaries in 2018 and '19, but UCLA will pay nearly half that amount, saving the 49ers close to $7.5 million.