Expected Contract Outcomes – Expected Contract Value 2.0 utilizes an algorithm based on a player’s contract characteristics, age, position and 2015 performance to forecast probabilities as to the outcomes of contract termination decisions. The lower the Expected Outcome, the more likely the player’s contract will be terminated in 2016. A pay cut is treated as a termination. We have applied ECV 2.0 to all contracts scheduled to count $2 million or more against the 2016 salary cap with the exception of exercised 5th year rookie options. Expected Savings is the calculated by multiplying the probability a player will be released by the cap savings realized by the team upon such release.
Estimated 2015 Cap Space: -$1.7M ($140M cap limit)
Players Under Contract: 67
Pro Bowlers: 4
Unrestricted Free Agents: 14(6 with 50%+ playtime)
Draft Selection: 18
Salary Cap Breakdown
Free Agents to Re-sign
Justin Houston is a must sign if the Chiefs have any intention of keeping their defense as a strength of team. Houston is a devastating pass rusher that is the best outside linebacker in the NFL. Clay Matthews is the current positional price leader at $13.2 million a season and Houston is a superior player to Matthews even going back to the timeframe in which he signed his contract. He can push the $14 million mark. Kansas City can, and likely will franchise tag him to protect their rights. Kansas City has used the tag on Branden Albert, Tamba Hali, and Dwayne Bowe in three of the last four years so it’s a given they will find a way to use it here. This will be a very difficult negotiation for Kansas City who also failed to seal the deal with Bowe and Albert when tagged. The fact that they failed to get a deal done during the season gives Houston even more negotiating leverage because of the Chiefs cap concerns…The Chiefs have allowed their offensive line to deteriorate due to salary cap concerns, but keeping Rodney Hudson would be wise to begin reversing the trend. He has slowly grown into one of the better players in the NFL at the position which puts him in the $5-6 million dollar man club with potential to earn more. A team with extreme cap space like the Jaguars can more or less make an offer the Chiefs have no chance of matching if they let him get to March.
Free Agents to Let Walk
In a perfect world the Chiefs should bring back Ron Parker, especially with the health concerns for Eric Berry, which go well beyond the football field. But it’s not a perfect world and he could push for the $6M a year that was received by players like LaRon Landry and William Moore, which is just too expensive for the Chiefs at this point. The kind of contract that they would need to give him at that price would be incredibly player friendly giving them no realistic outs in the future…Mike McGlynn graded as one of the worst guards in the NFL by Pro Football Focus so it’s pretty obvious the team will be looking to replace him, even if he plays at the minimum.
Contracts to Modify
Sometimes in the NFL deals just don’t work out and that is what happened between the Chiefs and Bowe. Bowe showed every trait needed for a number one and it was easy to blame the lack of production on the lack of presence at the QB position. But he has had a professional QB for the last two years and done nothing. Bowe has a $14 million cap charge and the team saves $5 million if they release him, but given their lack of depth at receiver its best to find a way to keep him. If Bowe were to be released tomorrow I don’t believe he would have more than $4 million in value around the NFL and it might be less than that. If the Chiefs can get him to play for $4-5 million that creates at least $6 million in cap room, more than if they released him outright. This in my mind is a must do….There is likely no way for the Chiefs to function if Alex Smith carries a $15.6M cap hit. Converting $5M of his base salary to a bonus will free up just under $4M without damaging their future too much. They can save $8M if they go all in on his restructure though that will leave them with massive cap charges in the future… Tamba Hali will carry an $11.96M cap charge if the Chiefs can’t extend him. Hali will be 32 and the Chiefs should try to model a deal similar to the one the Ravens signed with Terrell Suggs last year once they had Elvis Dumervil as the proven young pass rusher. Suggs signed for just over $5M a year in return for some massive guarantees. His cap fell from $12.4M to $7.8M with the move, so the numbers should be similar here for the team.
Players to Consider Releasing
Mike DeVito has missed 15 games in his two years with the Chiefs and it is unlikely they can risk a roster spot on him again. They have players who stepped up in his absence and he saves the team $4 million if cut….Releasing Donnie Avery saves the team $3.55 million and his production can easily be replaced by a minimum salary player…While the Chiefs like having Anthony Fasano it is time to go full steam ahead with Travis Kelce who is developing into a tremendous all around player. Fasno’s release creates just under $2 million in cap space…While it is nice to have a backup you can rely on if the Chiefs want to keep their best players in uniform next season, Chase Daniel probably has to go and you have to risk the QB staying healthy. Releasing Daniel will result in $3.8 million of cap space….Cutting Joe Mays, who had no impact last season, saves the team $3 million…The release of Hali and Bowe are also clear possibilities.
Everyone saw the writing on the wall for where this was headed once the Chiefs were successful in 2013. The team spent a great deal of money that season to add to a group of underachievers which did push them over the hump, but was going to leave them clawing and scratching for cap space down the line. With major players to re-sign one could argue that they have the second worst cap position in the NFL. There is no team in the NFL that would benefit more from the salary cap rising well beyond the NFL projections of $138-142 million.
If they are forced to carry Houston on the tag and we use our $140M cap estimate that puts the Chiefs in the ballpark of $15 million over the salary cap. With that kind of position it will be near impossible to free up space to negotiate favorable terms with Houston and Hudson, instead needing to go the large bonus and low cap charge in year one route. That said the Chiefs usually use such contract mechanisms so it is not the kind of departure from the norm it would be with other teams.
I think the Chiefs need to map out a plan and not dwell too much on one player. Houston should be the top priority but if it seems to be at an impasse they shouldn’t forget about Hudson and then scramble at the last second to come up with something. I feel like that was a problem in the year the re-signed Bowe and tagged Albert. They also need to decide quickly as to Houston’s willingness to come to terms quickly because if he does not then they need to make as many moves as possible to create the cap space to swing some leverage in their favor.
If the Chiefs do everything mapped out above and are forced to tag Houston it should leave them with $15 million to spend on draft picks, free agents and Hudson. If they do the low year one cap deal with Hudson they will have around $10 million after they sign rookies. I’d say that would max their free agent dollars at $6.5 million. They can get more relief from Smith to increase that figure.
I haven’t mentioned Berry at all but know I will get questions about him. The Chiefs can work out various terms with Berry to try to lessen the immediate cap hit. That can include a lower salary knowing he may not be able to play again or even splitting his salary over two years with the intent to put him on NFI and pay him over two years if he comes back the following season. I can’t see any scenario in which they cut him or simply make the decision to pay him nothing so I think its best to just operate on the assumption he’ll have his full cap charge for the offseason and they will come up with a solution in the summer when hopefully he is getting better and better news about his condition.
The Chiefs are in desperate need of a receiver but they won’t find it easy to get one in free agency unless they get a deal done with Houston. Cutting Hali may also be a pre-requisite to that. Given the makeup of the team I am not sure they can wait for draft development at this position so they will likely do whatever they can to make it happen. The large contract they gave to Bowe is also going to have receivers asking for the moon when they come to the team since the Chiefs already set their own precedent for the valuation of a number 1 projected receiver. One would lean towards Jeremy Maclin being their top target if they can find a way to squeeze him in.
There is no shortage of offensive lineman available in free agency, but being that they have let go of Albert, Geoff Schwartz, and Jon Asamoah it is hard to picture them going for players that would grade in the above average pay tier. I see this as more of a draft position to fill in the 2nd and 3rd rounds. I would imagine their secondary help will also come via the draft.
Not many teams seem to land in a position like the Chiefs are in right now. They are faced with the decision of the cap dictating difficult cuts or perhaps not the best terms if they keep the player on the roster. Unlike teams of the past with tough choices like the Raiders, Jets, and Colts this is far more complex because the Chiefs are highly competitive and filled with a mix of young and old that seems prepared to challenge now for at least a division crown.
The wrong decisions though can really damage the team in the future, pigeonholing the team into the 2015 roster for the next few seasons without opportunity to really change much. I’ve seen plenty of teams go through that and it is not a pleasant experience and extremely frustrating for the fanbase. This will be a team to watch over the next few weeks to see what direction they are headed for in free agency.
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.
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.
Kansas City Chiefs wide receiver Dwayne Bowe has been suspended for one game due to violation of the NFL drug policies. Due to the suspension he will lose $176,471 in signing bonus money and $514,706 in salary for this season. Bowe will also void his salary guarantees of $8.75 million in 2014 and $1.5 million in 2015, though at this stage the 2014 guarantee voiding is simply a matter of semantics as the season is just a few weeks away.
Bowe had signed a five year, $56 million contract extension last year that now looks like one of the worst investments in the NFL. Bowe struggled last season despite the presence of a better QB in Alex Smith and will now be lost for one game this season. The voiding of the $1.5 million guarantee next season will give the Chiefs more benefit if they decide to cut him next season. His cap charge next year will be just under $14 million and the cost to cut will now be just under $9 million. He is set to earn $11 million in cash compensation so Bowe needs to be great for the 15 games he has if he wants to remain on this team next season.
According to KCTV5, Chiefs star running back Jamaal Charles is going to hold out of training camp in the hopes of earning a new contract with the Chiefs.
Charles’ situation is not all that different than the contract situation of Andre Johnson that I have alluded to in the past concerning the disgruntled wide receiver playing for years on an under market contract. Charles was one of the last signings under the old CBA, agreeing to a five year extension worth $27 million in December of 2010. Rather than fighting the uncertainty of the labor situation, Charles agreed to the deal in the midst of a 1,400 yard campaign in lieu of becoming a restricted free agent in 2011 in a very uncertain market.
Though Charles was injured in 2011, it became apparent that if he was healthy he was going to be grossly underpaid by the time 2012 rolled around. Following the mega contracts given to Adrian Peterson, Chris Johnson and, to a lesser extent, Deangelo Williams, a number of players earned massive contracts including Arian Foster, Ray Rice, LeSean McCoy, and Jonathan Stewart. Foster’s contract had to be a dagger into the back of Charles as Foster was also set to be a restricted free agent when he signed his contract.
The following table presents the financials of the various running backs in the market:
|Player||APY||Guarantee||1 Year Cash||2 Year Cash||3 Year Cash|
The difference between Charles and everyone of his peers is startling. Four players earned $29 million or more in the first three years of their contract. All earned over $22 million. Charles earned $18.1 million.
From a performance standpoint its hard to make an argument that any has been better. When we break things down into dollars per annual contract value its clear who is one of the best bargains in the NFL.
|Player||Rush Yds||Pass Yds||Total Yds||Tot Yds/APY|
It’s no contest as to who has the greatest team value, which usually means a poor contract for the player.
Charles is only scheduled to earn $3.9 million this season, which will only further the split between he and the other players. That number ranks 14th in the NFL and is $985,000 less than James Casey will earn as a fullback/tight end for the Eagles. Casey played about 14% of the offensive snaps for the Eagles last season. Other players earning more include a seemingly washed up Chris Johnson ($4M from the Jets in free agency), Toby Gerhart ($4.3M in free agency from the Jaguars), and Donald Brown ($4M in free agency from the Chargers). In 2015 Charles salary will jump to $6 million, none of which is guaranteed in the event of an injury.
Charles is hitting the age where the declines in production often come fast and so does the decline in salary, a topic we touched on with Marshawn Lynch a few weeks ago. That kind of makes this his last opportunity to likely gain some leverage since his performance has been so good and he is the best offensive player on the team. Charles is currently the 8th highest paid player on the Chiefs.
Charles does not have as much to lose as some other player. While he does have a $1 million reporting bonus in his contract, he does not have any signing bonus money that can be forfeited. Charles had received a roster bonus in 2010 that is prorated like a signing bonus but does not count in the forfeiture equation. Players can also hold out for five days without real penalty. So this may turn out to be much ado about nothing.
For the Chiefs this is just another in a long line of players who are looking for new contracts from a team that really has very little cap room to be able to accommodate them all. Kansas City went on a spending spree of sorts in 2012 and Dwayne Bowe receiving a deal worth $11.2 million a season likely sets an expectation that the Chiefs should pay their perceived high end player, top end money.
In addition to Charles looking for a new contract, quarterback Alex Smith and pass rusher Justin Houston are both in the final year of their contracts and expecting new contracts. Kansas City has $10 million of cap room left for this season and already has $126 million committed to the 2015 salary cap. Smith is likely seeking around $18 million a season and Houston in the ballpark of $10 million. That makes for a very complex series of negotiations if the Chiefs want to keep this team together in hopes of making a long term contender rather than a one season surprise in the playoffs. It is one of the most delicate situations in the NFL and the news about Charles makes it that harder. Over the next few weeks we will see if the Chiefs are up to the task.
The Kansas City Chiefs have released CB Brandon Flowers from his five year, $48.75 million contract extension that he signed in 2011. Flowers had been scheduled to earn a $250,000 workout bonus, $2 million upon reporting to training camp, and another $5.25 million in base salary for the season. In 2015 he was scheduled to earn the same workout bonus and $6.25 million in base salary. It is possible he earned his 2014 workout bonus but the rest of the money will all disappear from the books. All told the $48.75 million extension turned into a two year deal worth $24 million.
The release leaves the Chiefs with $3 million in dead money in 2014 and another $4 million in dead money in 2015. This dead money comes from the remaining prorations of a $10 million signing bonus paid in 2011 and another $4 million bonus paid just last year for salary cap relief.
The move will create $7.5 million ($7.25 million if the workout was earned) in cap space for Kansas City in 2014 and another $7.5 million in 2015. This is much needed room for the Chiefs who will likely need the space to extend QB Alex Smith and pass rusher Justin Houston, both in the final seasons of their contracts.
Earlier today there was some discussion about Alex Smith and the Kansas City Chiefs negotiations being pretty much at a standstill due to Smith believing he should be paid upwards of $18 million a season. This figure should come as no surprise to those who listen to the podcast or follow my Twitter feed as I’ve mentioned that number many times in the past. Smith was basically considered a bust for the first six or seven years or his career and little more than a game manager at his best, but the marketplace puts a premium on QB play and there is little mid tier market that exists at the position anymore.
It was not that long ago that the QB market was kind of filled with a few tiers of players. At the top tier you had Drew Brees and Peyton Manning making around $20 million. Following that grouping was Matt Schaub and Mike Vick in the $16 million range. A step down from there were players like Carson Palmer, Ryan Fitzpatrick, and Mark Sanchez in the $13 million range. In between it all you had the outdated contracts or Eli Manning, Phillip Rivers, and Ben Roethlisberger that had set the market a few years back.
Slowly that mid tier of Vick and Schaub through Sanchez evaporated. The new NFL has essentially divided the QB position into high paid veterans and rookies. Aaron Rodgers, Matt Ryan, and Joe Flacco all make over $20 million a season. The low floor was set when Tony Romo, a statistical gem but with a lack of success, made $18 million a season in a new contract signed in 2013. Matt Stafford, a former number 1 overall pick, signed for about $17.7 million. From there you drop all the way down to Smith at $9.3 million and Palmer at $8 million to get a recent reference point (Tom Brady took unique $11.4 million a year deal that won’t be applicable to anyone else). After that it becomes rookie ball and hanger ons.
My assumption last season was that Jay Cutler of the Bears would be the player to re-define that mid tier contract in the $15-$16 million range. Cutler was a classic player to fit that mold. He was talented and had that draft pedigree but there were flaws which never saw the talent turn into stats or incredibly productive team performance. He was the type of player a contending team would never give up on, but probably not the type of player you build around.
Somehow he ended up surpassing Romo in annual value at $18.1 million a season. That should have sent shockwaves around front offices in the NFL because it signaled that talented veterans were going to get paid at a very high level moving forward. It opened the door for Smith, who had been a bargain the last two seasons, to really reach for the stars in contract talks.
Here are how Romo, Cutler, and Smith stack up in some key categories. Please note that these stats are three year averages and are for the seasons leading up to the extension, meaning 2010-2012 for Romo and 2011-2013 for the other two.
Outside of age and record it is difficult to see any manner in which Cutler compared favorably to Romo. In fact he was outdistanced by Romo in every other category. Smith and Cutler are certainly comparable players. Cutler is going to throw for more yards but that comes with a far higher risk than Smith, who is not nearly as turnover prone. That probably intensifies the game manager label for Smith, but you are also paying for more games when you get Smith. Though the Bears did not sign a pricey backup for Cutler, most teams would consider signing a higher priced backup due to the injury history. Dallas did that with Kyle Orton in the event Romo had another bad injury. Smith has been durable.
Even moreso than traditional numbers, these categories are dominated by Romo. What Cutler did besides being younger than Romo to warrant a similar contract is hard to imagine. In these categories Smith would be considered a bit superior to Cutler. Cutler’s main strength is that he throws the ball further down the field than Smith. The YAC is not as strong for Cutler, but he would seem more reliable in getting yards without help compared to the others.
Regardless of how you look at the numbers I think it is clear that Smith has a strong argument to match or slightly exceed Cutler’s salary. Smith is one year younger and in the last three seasons been much more successful. While some of Smith’s wins are attributed to being on an excellent team in San Francisco he should benefit greatly from his trade to Kansas City where the team went from worst in the NFL to a double digit win team with Smith at QB. It has marked three straight years that his teams have gone to the playoffs.
Kansas City’s salary cap situation may make things difficult if Smith signs a Cutler size contract. Their salary cap is incredibly tight and it may require a contract with heavy prorated bonus money. The Bears signed Cutler on terms they wanted. The Chiefs probably can not do that with Smith. If they are not sold on Smith at these numbers then its best to hold off before doing a contract even if, in the long run, it makes the cap numbers more difficult to manage. If they still believe that Smith is a game manager that has been lucky by circumstance the last few years then they are better off waiting on a new contract. If things go poorly for him this year they will reap the benefits down the line. This was one of the mistakes Houston made when they extended Schaub a season too early only to regret the decision before the ink even dried on the contract.
Realistically it is hard to believe that Smith could increase his value that much more by winning a championship. The current low value player who received the salary boost from a Super Bowl win is Joe Flacco at $20.1 million. Flacco was 28 when he signed his contract, three years younger than Smith will be if his contract expires. So you are not looking at a difference of $4-5 million per year if he wins as was the case with Flacco.
The bigger risk for the Chiefs in waiting is what happens with the turnover from the 2004 QB draft class, all of whom are in situations that likely will require extensions by the 2015 season. Manning, Roethlisberger, and Rivers are all playing on contracts that really have no valid place in the market. They only have one more year of NFL experience than Smith and could be comparison points for him. If they all end up over $20 million it could push the value for Smith, even if he has a similar season as he had in 2013. That could also benefit the Chiefs if those contracts do not surpass the $20 million barrier and barely surpass the Cutler contract. Manning and Roethlisberger have more championships and ties to their cities while Rivers is going to be a much stronger statistical performer than Smith. Having a strong understanding of where those contracts could be headed might be important in the Chiefs decision making process.
But the $18 million asking price is not outlandish based on what Smith has done the last few seasons. It’s a valid asking price given the Cutler contract and will likely be around what Smith earns from the Chiefs or another team in the NFL. We’ll see how it plays out over the summer.