Breaking Down Alex Smith’s $68 Million Contract with the Chiefs

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Today I Was able to confirm the full details of Alex Smith’s new $68 million contract extension with the Kanasas City Chiefs. Smith, as reported in numerous places, will receive an $18 million signing bonus and $1 million base salary in 2014 which will reduce his cap charge from $8 million to $4.6 million.

In 2015 Smith has an $11.9 million salary that is fully guaranteed for injury and in 2016 he has a $14.1 million salary that is also fully guaranteed for injury. Both salaries become fully guaranteed is he is on the Chiefs roster on the 3rd day of the 2015 League Year. I would consider that a virtual certainty.

In 2017 and 2018 he has non-guaranteed salaries of $10.8 and $14.5 million as well as roster bonuses of $2 million in each season and $500,000 in workout bonuses.

All in all this is a very good contract for Smith. Despite the lower annual value than the Tony Romo($18 million) and Jay Cutler($18.1 million) contracts, when we break this down into yearly cash flows the contracts are very similar.

YearSmithRomoCutler
1$23,500,000$28,500,000$22,500,000
2$37,700,000$45,500,000$38,000,000
3$51,000,000$54,000,000$54,000,000
4$68,000,000$68,000,000$69,000,000

The primary difference is that Smith gives up the three year value compared to the other two players but receives a similar cash payout to Cutler over the first two seasons. Smith will have a more difficult time earning the three year value of his contract than the other two players due to either contract structuring (Romo via restructures and void years) or extension timing (Cutler gained by not being extended last season).

What Smith will hope for is that the Chiefs tight salary cap situation causes them to restructure his contract in 2015 or 2016.  My current estimates leave the Chiefs with minimal wiggle room next season and that is without Justin Houston under contract. Of course cap space can be created through releasing Tamba Hali or others, but if Smith is the guy they go to, then his three year salary will be almost fully protected through dead money protection.

View Alex Smith’s Contract and Salary Cap Page

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  • vibrolux

    Jason,

    I don’t follow the cash flow for Smith’s deal as you’ve described it. From the information you provide in the post,

    Year Cash Flow
    1 2014 Salary+Signing Bonus (1M+18M) $19.0M
    2 2015 Salary (11.9M) 30.9M
    3 2016 Salary (14.1M) 45.0M
    4 2017 Salary+Bonuses (10,8M+2.5M) 58.3M
    5 2018 Salary+Bonuses (14.5M+2.5M) 75.3M
    which seems substantially different from the breakdown you provide in the comparison of the 3 quarterback contracts. Smith’s deal seems to be about $10M cheaper than Romo’s and Cutler’s through 4 years.

    Also, I don’t understand how you can say that Smith “will have a more difficult time earning the three year value of his contract than the other two players” when earlier in the post you suggest that it is a virtual certainty that his salaries for 2015 & 2016 will become fully guaranteed.

    • Dont worry about the chart formatting as its fine. This is the difference between “new money” and total contract. Smith was under contract this year for $7.5 million. When you value an extension typically what you do is determine the “extension money” in a contract.

      For Smith the first extension year is technically 2015, since he was under contract in 2014. When we do his money we add his 2014 and 2015 salaries (its $31M you just missed his 100k workout bonus in there) and subtract out his old salary. That gives you the price that the Chiefs are paying him for his first new contract year, which is the $23.5 million.

      So the reason I say the three year total is more difficult to reach is because his third year is 2017 and not 2016. Romos contract was also an extension with one year remaining too. Cutlers was not.

  • vibrolux

    Sorry about the legibility of the table I provided. Apparently the comments system decided to reformat it.