Josh Allen signed an eye popping contract worth $258 million over six years and Mike Florio of PFT has the details so let’s take a look at the contract based on Florio’s article.
The contract averages $43 million a year in new money and has about $100 million fully guaranteed at signing. Allen negotiated a player friendly vesting schedule along with non-guaranteed workouts that should put his virtual guarantee in the ballpark of $165 million. Florio talks about some rolling guarantees that may run with the contract but without the particulars of that it is hard to comment on it. Patrick Mahomes has a mechanism where basically every salary is guaranteed a year early so perhaps that is what is being done here.
The contract, due to the length, is harder to compare than other contracts. It was a very surprising decision to go with a six year contract which will tie Allen to the Bills through 2028 while the rest of the NFL had recently moved to a four year contract length (Dak Prescott, Deshaun Watson, Carson Wentz, and Jared Goff being the notable names).
In terms of money guaranteed at signing the numbers themselves are record setting, but in terms of the percentage of the contract value they are not. The $100 million number represents about 38% of the new money in the contract while the injury protection is around 60%. By comparison Prescott and Watson received 78% and 71% of their contracts protected for injury and 59% and 50% fully protected at signing. Again this is not exactly and apples to apples comparison because of the length of the contract and what I am assuming is a commitment of some sort to early guarantees on non-guaranteed salary in the future.
Here is the new money cash breakdown of the top four players at the salary scale. One thing to note about this contract is that it does not seem that Allen factored in the extra game check he was scheduled to earn this year and next. So realistically we should take about $1.57 million out of the cash flows, but since it was clearly negotiated without that in mind I’ll present the cash flows based on the salary as if the 17th game check did not exist.
|Player||Year 0||Year 1||Year 2||Year 3||Year 4||Year 5||Year 6|
I should note that I am missing $56K from the salary here so my guess is its in this years salary so I am estimating into the first years of the deal. The contract itself is much stronger than the Mahomes contract and if you notice is actually bigger than the Mahomes contract through the same length at $258M to $257.7M.
In terms of up front money the deal will come between the Watson and Prescott numbers and then making the turn in year 2 to take the role of actual market leader, out-earning Prescott by about $3.5M. The gap grows bigger in year 3 with almost a $12M gap between the two stars and then $16 million after four years.
Of course the big difference is that one player will be a free agent at that point and one will be locked into a contract. Is the tradeoff worth it? Not getting into the time value of money part of the equation I would think Prescott will come out ahead assuming of course he plays well. The difference to make up though years 5 and 6 would be $98 million, which for a QB probably will not be difficult.
Salaries continue to rise for the position and generally the third contract for a good QB will increase from contract to contract. For example Aaron Rodgers went from $22M a year to $33.5M a year, Matt Ryan from $20M to $30M and even Eli Manning went from $16 to $21M. Considering off this current contract Prescott will earn $95M in the first two years, that number will rise significantly over time which should more than make up for the two less years that appear to basically be guaranteed for Allen.
The bigger difference is can you get to a third deal? In Allen’s case he will 33 when this contract ends and likely late 30s for deal 3. Prescott will be 31 and 36, so in theory he could get two more market setting contracts while Allen will primarily be in the market for one, though it is not impossible to get three. I would think the important thing for Allen is to probably follow the Roethlisberger model long term which would be to dig in on the next contract after this to maximize his chance at the third deal.
It is an interesting case study to see what works out better. More certainty for the player like Allen or more upside potential for the shorter term contract like Prescott. Years ago many QBs signed long term mega contracts and regretted them which is what changed much of the recent dynamic. Teams are willing to trade off even these guarantee structures because for the QB the guarantee often means nothing since so many finish out their contracts, so any tradeoff for more years, lower APY, etc…generally works out well for the team. In any event this is stronger than the Mahomes deal in every way possible and it is not the two deals in one structure that Kansas City utilized.
As for releasing Allen if things go badly it will cost the Bills a lot. Based on Florio’s breakdown there is no feasible way to really cut him prior to 2025. Based on how the Mahomes contract works I would guess that 2026 to 2028 has protection one year early so probably something like a 2027 release with a big check coming Allen’s way if they release him. This type of structure increases the APY of the deals at any point if a player is cut and is an insurance of sorts for the player taking a longer term contract. The cap structure may lend itself to a restructure in 2025 which would be beneficial for Allen as well if the team has to convert salary for cap relief.
As for how this impacts the rest of the market it is anyones guess. You have Lamar Jackson and Baker Mayfield on the horizon and they will probably both be faced with the option of a six year deal or maybe taking a little less and doing a four year deal. The four year deal may also bring with it the headache of a franchise tag battle along the way as well. I would expect Jackson to earn more than Allen. Mayfield is more of a mystery to be but clearly would be in the $41M a year+ range if the Browns are talking extensions. My gut feeling is that all of the players signing the long term deals will be viewed as reasonable cost players two or three years from now unless they take a Wentz like plunge where the player just becomes an albatross.
Jason is the founder of OTC and has been studying NFL contracts and the salary cap for over 15 years. Jason has co-authored two books about the NFL, Crunching Numbers and the Drafting Stage, which are widely circulated in the industry and hosts the OTC Podcast. Jason’s work has been featured in various publications including the Sporting News, Sports Illustrated, NFL Network and more. OTC is widely considered the leading authority on contract matters in the NFL.