The Redskins Options with Alex Smith

One of the things I have been getting more and more questions about is Alex Smith’s contract with the Redskins.  As we all know Smith suffered a really bad injury a few weeks ago and has now reportedly had complications in surgery that have made his future even more questionable than before. Smith was in just the first year of a $94 million contract when the injury occurred so let’s look at what will happen from this point forward.

Smith’s contract was a pretty standard NFL contract. TheRedskins fully guaranteed Smith $55 million upon signing, including a rather large $27 million signing bonus. All told Washington paid $40 million of that guarantee in the first year of the contract. The $15 million that remains will be paid in 2019. This money is a sunk cost for the Redskins (for the most part,more on that in a minute) and there is no way to avoid the payments.

Where the Redskins have options is with an additional injury guarantee in Smith’s deal. Smith’s 2020 $16 million salary is guaranteed for injury at the moment. An injury guarantee means that if a player’s contract is terminated while he is injured his injury protection kicks in and he earns his salary if hurt. The condition to collect on the guarantee is that Smith would not be able to pass a physical in 2020. So obviously that is a long time for Smith to recover from his injury.

The tricky part for Washington though is that the 2020 injury guarantee is what is called a vesting guarantee. A vesting guarantee is one in which the injury guarantee becomes fully guaranteed at some point in time. For quarterbacks these are often early in a contract and it is no different for Smith. His $16 million injury guarantee vests on the 5th day of the 2019 league year. What that means is even if Smith can pass a physical in2020 but his skills are so diminished that he can’t be effective the Redskin sare still on the hook for the $16 million if his salary vests.

If Washington cuts Smith before that vesting date they do have the ability to escape that $16 million guarantee depending on how Smith’s recovery goes. But the situation gets more complicated when we look at the salary cap implications of cutting Smith.

Smith’s current salary cap number in 2019 is $20.4 million. If he was cut that number would increase by at least $17.7 million, which is the remaining portion of his unaccounted for signing bonus, leaving the Redskins with a $36.6 million dead money charge.   On top of that typically future guarantees in a contract normally count when the player is released. Since Smith would be released with a failed physical termination in March the Redskins I believe should also have to account for an additional $16 million on the cap, regardless of whether or not the injury guarantee is actually paid in 2020 or not. If that is the case in brings thedead money to a ridiculous $52.6 million.

Regardless of whether Im incorrect on the acceleration of the guarantee, $36.6 million or $52.6 million is basically not feasible for Washington. The team has just $19 million in projected cap room for next year.Take off $17 million for Smith and they have nothing to spend. Add in the extra $16 million on top of that and they are in the worst position of any team in the NFL.

The Redskins could opt to use a June 1 cut on Smith. A June 1 cut essentially freezes Smith’s 2018 contract from March through June 1. On June 2 the cut would then be processed. In that situation the Redskins defer the $17.7 million in signing bonus acceleration to 2020.  However the guarantee still accelerates so if the injury guarantee does count on the cap that would add $16 million to histotal putting the Redskins right up against the cap. In my mind none of these options are really feasible.

Washington does not get any cap relief from the NFL for this injury, which seems to be a topic people are discussing for some odd reason.Teams take on risks when they sign contracts and they are penalized when the contract blows up. So there is no special list to put Smith on to hide his cap hit. He will simply be placed on the PUP list next year.

There is some relief that would come the Redskins way if Smith can not play. Per JI Halsell, the Redskins did take out a $12 million insurance policy on Smith when they signed the contract. If Smith is unable to complete his contract due to the injury the $12 million will be paid to Washington.  This reimbursement is going to give Washington salary cap relief but in my experience there is usually a delay in getting those cap credits meaning they usually come in future years so I don’t expect the $12 million to offset anything significant in 2019. 

So what can Washington do? They have a few options. One option might be to work with Smith to defer the date on which is full guarantee kicks in just to give the Redskins more time to decide on the contract. I wouldn’t see Smith’s side agreeing to this since this was a football injury and you negotiate these contracts to protect from these rare instances like this one. They could just let the contract playout and hope Smith can play football somewhere. Even though his salary would become fully guaranteed there are offsets on the salary so they may be able to recover some of that $16 million in 2020 if he can play in the NFL.

I think what I might look to do is make the best of a bad situation. Odds are the Redskins are going to have to pay $31 million more dollars and account for $52.6 million on the salary cap for a player who most likely won’t play another meaningful snap for the organization.

If the Redskins reduce Smith’s salary next season to $1 million they can reduce his 2019 salary cap number from $20.4 to $10.275million giving them more money to spend on the season while they have to carry Smith on PUP. In 2020 you do the same if there is no new CBA agreement in place to bring his cap number down to around $15.1 million.  At that point the Redskins will have deferred $27.2 million in cap charges to future years.

While this “kicking the can philosophy” is one I don’t like this is a unique situation. They aren’t adding money by doing it its just finding a way to shuffle it for accounting purposes. I cant come up with a scenario where it makes sense to take these massive cap hits in 2019 or 2020.My hope is that if there is a lockout I can release Smith in 2021 before alockup becomes official and potentially escape the $27.2M in dead charges entirely. Or maybe release at the end of the year if I have the cap room to doit in 2020 since a lockout would likely eliminate carryover anyway. Remember the Redskins will also be getting some type of credits for Smith because he cant play too which will help lessen the blows.

At the worst kicking the money in Smith’s contract allows me to use around 13% of my salary cap for the next three years on Smith rather than using 27% of my cap all on Smith next season and really blow up my year.  The goal for Washington at this point now should be to just mitigate the impact on the salary cap and find the best way to account for his money without compromising the way I am going to build the team.

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


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.

View Alex Smith’s Contract and Salary Cap Page



Is Alex Smith Worth $18 Million a Season?


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.

Win %44.7%61.1%74.4%
Comp %66.4%59.9%62.7%

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.

Turning to more advanced metrics which are provided by Football Outsiders, Pro Football Focus, Advanced Football Analytics, Pro Football Reference and ESPN we get the following:

Total QBR65.657.555.4
PFF Pass13.34.477.33
Air Yards/Comp6.617.45.76
Avg. YAC5.024.665.40

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.




The Cap Implications of Trading 49’ers QB Alex Smith

According to CBSSports’ Jason LaCanfora a deal for the former starting QB of the San Francisco 49’ers is complete and will happen as soon as the new League Year begins on March 12

When the 49’ers signed Smith last year to a 3 year deal it was more or less a 1 year deal for the 49ers who knew last year that Smith could be replaced by Colin Kaepernick if the situation presented itself. To ensure that they could move Smith off the team without issue the 49’ers did not use a signing bonus in Smith’s contract instead opting to guarantee his 2012 base salary and a small portion of his 2013 base salary. For Smith’s benefit the contract contained a $1 million dollar roster bonus due on the 2nd day of the league year which would likely force the 49ers to either release him or trade him before that date, essentially giving Smith all of free agency to find a new team. If the 49ers failed to do that his entire base salary will guarantee on April 1st.

Provided the 49’ers make the trade official before 4PM on March 14, at which point his roster bonus will be earned, the 49ers will clear all of Smith’s $9.75 million in cap charges off the books free and clear. The team that acquires him will pick up the $1 million in current guarantees, the $1 million roster bonus obligation, and the remainder of his base salary guarantee that kicks in on April 1st. So this will be one of those rare cases where the entire salary cap charge transfers with the player. Included in Smith’s cap charge is a $1 million dollar performance incentive that I believe is still considered “likely to be earned”. If he did not earn that incentive last year then his cap number will be reduced by $1 million of what I have listed here.

Because the 49ers need to be under the salary cap prior to the start of the League Year, Smith’s current cap figure will still impact their 2013 salary cap for at least one day, still putting them in a position where they may need to cut a small amount of salary from their current roster before the season begins. The team trading for Smith will need the cap room to fit his salary cap number on the books on the day of the trade. The two teams rumored to be trading for him, the Chiefs and Jaguars, both have the cap room needed to execute the move.

Follow this link to view the cap charges associated with Smith’s 3 year contract.