Ten years. $503 million. From his agent:
Congrats to @PatrickMahomes on agreeing to terms on a 10-year extension worth $503 Million. He gets $477M in guarantee mechanisms and ability to have outs if guarantee mechanisms aren’t exercised. No trade clause. First half billion dollar player in sports history. History made. pic.twitter.com/beSGN4jyej
— Steinberg Sports (@SteinbergSports) July 6, 2020
On the surface, it’s the largest contract in sports history, topping Mike Trout’s 12-year, $430 million contract with the Los Angeles Angels. Mahomes’ contract is a market-setter at the quarterback position, except no player is poised to match his present value — a highlight machine under 25 with a Super Bowl ring and an MVP award — anytime soon.
However, Mahomes’ contract is a bit more complicated, even by NFL standards, than the graphics being trotted out on social media suggest.
Mahomes is not simply receiving $50.3 million per year for a decade. Inside the 117-page document is a tangled mess of incentives, bonuses and guarantee conditions that make this deal not as valuable as a half-billion dollars, but still bigger than anything we have seen in the NFL, or likely will see for the foreseeable future.
Here’s how it reportedly works.
The details of Patrick Mahomes’ new contract
For starters, it’s worth noting that the shiny $503 million number comes via some creative math.
In reality, the deal is a 10-year, $450 million extension that is added onto the two years and $27 million remaining on his rookie deal, per Sports Illustrated's Albert Breer. That forms a 12-year, $477 million deal. You reach $503 million by adding the $25 million in incentives for AFC Championship wins and Super Bowl wins over the life of the contract.
If that sounds like a deal that isn’t really worth $503 million, it’s because it isn’t. It’s a reflection of the fact that NFL contracts are usually reported with the maximum value of the contract as their featured number, with the guaranteed money as a throw-in. That’s different than, say, MLB, where the guaranteed money is the featured number while incentives and options are thrown in. So when an NFL player and an MLB player are both reported to sign a $100 million deal, the MLB player is probably the only one actually getting $100 million.
Mahomes’ deal has $63 million fully guaranteed (though plenty more is practically guaranteed) and $141 million in injury guarantees, per Breer. His largest cap hit will be an incredible $59.9 million in 2027, according to Spotrac, and will never dip below $40 million after 2025.
You can see how that works in the full breakdown of Mahomes’ contract from NFL Network’s Tom Pelissero.
Warning: you are about to see a lot of numbers.
Here's a breakdown of the cash flow on Patrick Mahomes' new contract with the #Chiefs. It'll take more than one tweet to fully explain, but the bonuses have varying vesting dates that paint a fuller picture of how the deal works. pic.twitter.com/LepwqYMT0K
— Tom Pelissero (@TomPelissero) July 6, 2020
Basically, Mahomes’ contract seems structured so that he will be receiving relatively small base salaries for the majority of the deal. He doesn’t even hit $10 million salary in a season until 2027. His signing bonus is also not too large, at just $10 million.
So where does Mahomes get his supposed half-billion dollars? That “roster bonus” column. As long as Mahomes is on the Chiefs’ roster, he will be raking in enormous amounts of cash through roster bonuses. And it will be very hard for the Chiefs to get him off the roster (as if they’d want to do that) because, as Breer reports, the roster bonuses vest one to two years in advance. So Mahomes being on the Chiefs’ roster will guarantee his roster bonus for the next season or two.
In a follow-up tweet, Pelissero framed the contract a different way by showing how much money Mahomes is guaranteed depending on the date, as long as he’s still with the Chiefs.
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
By next March, Mahomes will be guaranteed more than $100 million. By the beginning of the 2026 league year — which is, coincidentally, the first time the Chiefs could realistically get out of the contract, thanks to the roster bonus schedule going from two years in advance to one year — Mahomes will be guaranteed nearly $275 million. He hits that $477 million number, the real “value” of his contract without playoff incentives, at the beginning of 2031.
That all adds up to Mahomes having less actual guaranteed money than most people would think, but still being essentially guaranteed hundreds of millions of dollars thanks to the structure of the contract. The Chiefs won’t be able to bail from the deal until more than halfway through the contract, and even then, unloading Mahomes would be difficult.
But the Chiefs could still get out of the deal, which raises the question of whether or not we should really be thinking of Mahomes’ deal as the most valuable in sports.
Is Patrick Mahomes’ contract really more valuable than Mike Trout’s?
Here’s the thing about Trout’s mega-deal: It didn’t require hundreds of words to break down. Until the 2031 MLB season, Trout is getting a base salary of more than $35 million each year, plus a $20 million signing bonus. That’s it, no opt-outs or roster bonuses. His biggest incentive is $500,000 for MVP awards.
And all that money is guaranteed, as is tradition in baseball. Meanwhile, Mahomes won’t be guaranteed that much money until 2030, at which point he will be 34 and possibly not the same player we’re currently watching. The usual aging curve of NFL quarterbacks is encouraging enough that there is a very good chance he’ll still be worth it, but that’s something Trout doesn’t have to worry about at the end of his deal.
Obviously, the vast, vast majority of Americans would take either contract, given the opportunity. Both athletes stand to be the wealthiest players of their generation in their respective sport. And yet, you have to wonder if the reason Mahomes’ contract is being reported as bigger is because the NFL has always gotten away with presenting different numbers for its contract values.
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