Mahomes' contract

[CTJetsFan]

Not sure if anyone else caught this last week, but the guys on Moving the Chains were talking about KC's cap situation re: re-signing Chris Jones and others. Someone asked how they can do it given the size of Mahomes' contract. Well apparently they structured it in a way that was genius. Instead of guaranteeing salary every year and a big signing bonus (which is prorated over the life of the contract), they put a bunch of roster bonuses in his contract every year that they then convert to signing/option bonuses which then can be prorated going forward from that year using void years.

As example (#s may be off a bit), Mahomes had a $35 million roster bonus cap charge this year, but then he and the Chiefs converted it to a signing/option bonus which then spreads it over 5 more years (I think) which reduced the cap hit this year by 28 million (only a 7 million hit). Apparently these are in every year of his contract. With the cap going up the way it does every year, this is a no brainer way to pay big $ players.

That's a smart GM there. Makes me wonder if the JD used any of these contract loopholes for the AR deal.

https://www.pff.com/news/nfl-salary-cap-terms-tricks-to-know-ahead-of-nfl-free-agency-2021#:~:text=Players receive a lump sum of cash%2C typically,installments%2C up to a maximum of five years.

[hawk]

It is pretty normal.  

Each year the can gets kicked down the road, the more the cap hit will be.

[Adoni Beast]

Smart teams do smart things.

Stupid teams do well...ya know....

[rangerous]

Pretty soon these players will get those twenty year payouts like Bobby Bonilla.  Interestingly, Bonilla made out better by opting for this as opposed to a lump sum pay out.

[section314]

4 minutes ago, CTJetsFan said:

Not sure if anyone else caught this last week, but the guys on Moving the Chains were talking about KC's cap situation re: re-signing Chris Jones and others. Someone asked how they can do it given the size of Mahomes' contract. Well apparently they structured it in a way that was genius. Instead of guaranteeing salary every year and a big signing bonus (which is prorated over the life of the contract), they put a bunch of roster bonuses in his contract every year that they then convert to signing/option bonuses which then can be prorated going forward from that year using void years.

As example (#s may be off a bit), Mahomes had a $35 million roster bonus cap charge this year, but then he and the Chiefs converted it to a signing/option bonus which then spreads it over 5 more years (I think) which reduced the cap hit this year by 28 million (only a 7 million hit). Apparently these are in every year of his contract. With the cap going up the way it does every year, this is a no brainer way to pay big $ players.

That's a smart GM there. Makes me wonder if the JD used any of these contract loopholes for the AR deal.

https://www.pff.com/news/nfl-salary-cap-terms-tricks-to-know-ahead-of-nfl-free-agency-2021#:~:text=Players receive a lump sum of cash%2C typically,installments%2C up to a maximum of five years.

Heard part of that also, when they were talking about % of the total cap space of a team that some of these big contracts take up. The one that caught my eye for obvious reasons, was Derek Carr. He counts 4.5 % of the Saints cap, the 8th highest paid player on the team. 

[NYJCAP2]

This is the best show to listen to if you’re interested in learning about the salary cap, contracts, player/position values.
 

They are all in on the “business season” as they call it and they are pretty neutral in most of their assessments.

[Scott Dierking]

14 minutes ago, rangerous said:

Pretty soon these players will get those twenty year payouts like Bobby Bonilla.  Interestingly, Bonilla made out better by opting for this as opposed to a lump sum pay out.

That is a questionable stance. On basis, receiving money now is smarter than receiving money later.  A lot of factors that come into play, but that is the general feel.  

[rangerous]

5 minutes ago, Scott Dierking said:

That is a questionable stance. On basis, receiving money now is smarter than receiving money later.  A lot of factors that come into play, but that is the general feel.  

Obviously it depends on what the amounts are, you know 20 million up front or 20 million over 20 years.  They are not the same thing. There was an analysis of Bonilla contract on npr (of all places) and they showed Bonilla made out better.  I believe the analysis said that Bonilla actually looked into the financial aspect of taking the money both ways.

[JetPotato]

30 minutes ago, Adoni Beast said:

Smart teams do smart things.

Stupid teams do well...ya know....

...hire defensive coordinators as 1st time unproven head coaches every few years, with no QB, leaving 2nd rate offensive staffs that can't identify or develop talent at that position?

I have other guesses if that's wrong.

 

[Scott Dierking]

3 minutes ago, rangerous said:

Obviously it depends on what the amounts are, you know 20 million up front or 20 million over 20 years.  They are not the same thing. There was an analysis of Bonilla contract on npr (of all places) and they showed Bonilla made out better.  I believe the analysis said that Bonilla actually looked into the financial aspect of taking the money both ways.

It is a coin flip in this particular case. Bonilla's choice was $5.9M or $29.8m over 35 years. On market average, you should be able to double your money every 10 years, as long as you are in holdings that average 7 percent or so (Typical market expectations).

Given those assumptions, The Mets (Wilpons) should have come out slightly ahead. There are, of course no guarantees.

The gut punch, is that the Mets were using Madoff.  

Personally, if I had the decision, I would have taken the lump sum myself. But again, close call.  

[Adoni Beast]

9 minutes ago, JetPotato said:

...hire defensive coordinators as 1st time unproven head coaches every few years, with no QB, leaving 2nd rate offensive staffs that can't identify or develop talent at that position?

I have other guesses if that's wrong.

 

I think you're on the right track.

[PFSIKH]

40 minutes ago, rangerous said:

Pretty soon these players will get those twenty year payouts like Bobby Bonilla.  Interestingly, Bonilla made out better by opting for this as opposed to a lump sum pay out.

I wonder if there is something like that in the CBA to prevent it.  

Ohtani deferred a good chunk of his contract to when he will not have to pay the ridiculous CA taxes.

MLB Union > NFL Union.

[Scott Dierking]

23 minutes ago, PFSIKH said:

 

MLB Union > NFL Union.

A truer statement has not been uttered on this site.

MLB players have the luxury of elongated careers, while their NFL brethren have no such luxury. NFL players can't even hold a picket line in solidarity, as has been proven. Good to be an NFL owner.

[section314]

1 hour ago, NYJCAP2 said:

This is the best show to listen to if you’re interested in learning about the salary cap, contracts, player/position values.
 

They are all in on the “business season” as they call it and they are pretty neutral in most of their assessments.

For my taste it’s the only thing to listen from now through the draft. 

[JoeNamathsFurCoat]

Short answer is no.

Douglas is not a cap guru.

Probably failed elementary school arithmetic.

[section314]

3 minutes ago, Scott Dierking said:

A truer statement has not been uttered on this site.

MLB players have the luxury of elongated careers, while their NFL brethren have no such luxury. NFL players can't even hold a picket line in solidarity, as has been proven. Good to be an NFL owner.

Want to recommend a book that I am finishing up…The Big Time by Michael MacCambridge. It focuses on the 70’s and how it transformed sports in our country. Covers everything from how TV started to make sports what they’ve become, the beginning of the growth of women’s sports, how the country changed in so many ways after Vietnam and Watergate etc. Focused on Marvin Miller a bunch. As a guy who went from 12-22 in the 70’s it was like going back in a time capsule. Trust me, you will find it a great read.😎

[Scott Dierking]

6 minutes ago, JoeNamathsFurCoat said:

Short answer is no.

Douglas is not a cap guru.

Probably failed elementary school arithmetic.

I don't want my GM to be an accountant. I want my GM to be a strong personnel evaluator who hires strong accounts that can wrangle the complexities of the cap.

Is Douglas that personnel guy? Magic 8 Ball says "Reply Hazy, Try again". 

[Scott Dierking]

2 minutes ago, section314 said:

Want to recommend a book that I am finishing up…The Big Time by Michael MacCambridge. It focuses on the 70’s and how it transformed sports in our country. Covers everything from how TV started to make sports what they’ve become, the beginning of the growth of women’s sports, how the country changed in so many ways after Vietnam and Watergate etc. Focused on Marvin Miller a bunch. As a guy who went from 12-22 in the 70’s it was like going back in a time capsule. Trust me, you will find it a great read.😎

Will definitely get that. Love that stuff. Thanks, 314!!!

[bicketybam]

Mahomes cap hit for 2024 is $58.6 million.

[section314]

25 minutes ago, bicketybam said:

Mahomes cap hit for 2024 is $58.6 million.

Wow. But, in fairness, he’s probably underpaid.😎

[NYJCAP2]

41 minutes ago, section314 said:

For my taste it’s the only thing to listen from now through the draft. 

I also enjoy when Pat talks about his time with the Jets and Hess.

[CTJetsFan]

30 minutes ago, bicketybam said:

Mahomes cap hit for 2024 is $58.6 million.

I believe that # is before the conversion of his 2024 bonus. His cap # comes down to about 23 million according to this when they do the conversion I mentioned in my original post

https://bleacherreport.com/articles/10109970-nfl-insider-explains-how-patrick-mahomes-could-restructure-chiefs-contract-to-help-kc

 

[bicketybam]

I believe that # is before the conversion of his 2024 bonus. His cap # comes down to about 23 million according to this when they do the conversion I mentioned in my original post
https://bleacherreport.com/articles/10109970-nfl-insider-explains-how-patrick-mahomes-could-restructure-chiefs-contract-to-help-kc
 

I was just going by Spotrac.

https://www.spotrac.com/nfl/kansas-city-chiefs/patrick-mahomes-21751/

[PFSIKH]

18 minutes ago, CTJetsFan said:

I believe that # is before the conversion of his 2024 bonus. His cap # comes down to about 23 million according to this when they do the conversion I mentioned in my original post

https://bleacherreport.com/articles/10109970-nfl-insider-explains-how-patrick-mahomes-could-restructure-chiefs-contract-to-help-kc

 

That article states what the Chiefs could do.  SPortrac shows Jones' contract as a manageable 7+M this season.  To your point, Mahomes has 66M in roster bonuses the next two years he can push to the future.

[jeremy2020]

When you have a younger QB that you know is your franchise guy and is gonna be around for 10 or so years.. Allen in Buffalo has the same setup. They can just free up a lot of cap space with the one contract. Alternatively the Jackson, Herbert and Hurts contract use the "option" bonus to spread it out.

[CTJetsFan]

6 minutes ago, PFSIKH said:

That article states what the Chiefs could do.  SPortrac shows Jones' contract as a manageable 7+M this season.  To your point, Mahomes has 66M in roster bonuses the next two years he can push to the future.

You're right. The discussion I heard on the radio was last week before the Jones signing was official. They were discussing what they thought KC would do based on Mahomes' deal. 

Have to assume KC will do the bonus conversion as that is probably why they set the contract up that way, but hasn't been done yet.

Just brought the topic up as an example of what can be done with big ticket contracts and cap room.

I still think the NFL and NFLPA should consider some form of cap exemption for the QB position (where their salary doesn't, or partially doesn't, count against the cap).

 

[83Kelly2Allen18]

3 hours ago, JoeNamathsFurCoat said:

Short answer is no.

Douglas is not a cap guru.

Probably failed elementary school arithmetic.

What is a cap guru?

This isnt Newtonian physics or Relativity for crying out loud

😂😂😂🤣

[PFSIKH]

2 hours ago, CTJetsFan said:

You're right. The discussion I heard on the radio was last week before the Jones signing was official. They were discussing what they thought KC would do based on Mahomes' deal. 

Have to assume KC will do the bonus conversion as that is probably why they set the contract up that way, but hasn't been done yet.

Just brought the topic up as an example of what can be done with big ticket contracts and cap room.

I still think the NFL and NFLPA should consider some form of cap exemption for the QB position (where their salary doesn't, or partially doesn't, count against the cap).

 

Dude, I figured Mahomes did something as well.  Then I saw the first-year cap hit for Jones.  

[Sperm Edwards]

Genius, lmao

Nobody else ever thought of converting current-year salary/bonus into signing bonus spread over a number of years.

Groundbreaking stuff.

[jetsfan56]

Genius, lmao
Nobody else ever thought of converting current-year salary/bonus into signing bonus spread over a number of years.
Groundbreaking stuff.

I believe that is exactly the way AR’s contract is structured 🤷‍♂️


Sent from my iPhone using JetNation.com mobile app

[TuscanyTile2]

This is a skit btw.  Was posted 10 months ago.

[hawk]

10 hours ago, bicketybam said:

Mahomes cap hit for 2024 is $58.6 million.

 

10 hours ago, CTJetsFan said:

I believe that # is before the conversion of his 2024 bonus. His cap # comes down to about 23 million according to this when they do the conversion I mentioned in my original post

https://bleacherreport.com/articles/10109970-nfl-insider-explains-how-patrick-mahomes-could-restructure-chiefs-contract-to-help-kc

 

 

10 hours ago, bicketybam said:

I was just going by Spotrac.

https://www.spotrac.com/nfl/kansas-city-chiefs/patrick-mahomes-21751/

It is pre conversion.  So that $34.9 will be spread out over 5 years.  In 2024, he should be around $30 mill cap hit.

2025 however, his cap hit jumps from $60 to $67, when they will convert again, and it will be around $40.

In 2026, his cap hit now becomes close to $77 million when they will convert 35 or $40 million of his Base salary to signing bonus, and so on and so on.

At some point, his cap hit will become a locked obstacle for a year or two. 

God Forbid he receives a career ending injury.

However, I'd deal with his cap hit for his production.

[OtherwiseHappyinLife]

22 hours ago, Scott Dierking said:

It is a coin flip in this particular case. Bonilla's choice was $5.9M or $29.8m over 35 years. On market average, you should be able to double your money every 10 years, as long as you are in holdings that average 7 percent or so (Typical market expectations).

Given those assumptions, The Mets (Wilpons) should have come out slightly ahead. There are, of course no guarantees.

The gut punch, is that the Mets were using Madoff.  

Personally, if I had the decision, I would have taken the lump sum myself. But again, close call.  

Damn, I like when you talk cumulative stock market returns.  
 

[OtherwiseHappyinLife]

17 hours ago, Sperm Edwards said:

Genius, lmao

Nobody else ever thought of converting current-year salary/bonus into signing bonus spread over a number of years.

Groundbreaking stuff.

[CTJetsFan]

ESPN’s Adam Schefter reports Patrick Mahomes has agreed to a restructured contract.

 

Converting a huge chunk of his salary to a pro-rated bonus, Mahomes is clearing a whopping $21.6 million in space. The back-to-back champs have been quiet in free agency thus far, but this hints at some coming moves as K.C. embarks on the quest for the NFL’s first-ever threepeat.