It was a wild day for tight ends with George Kittle quickly resetting the market at $15 million a year and then hours later Travis Kelce jumping into the mix signing a surprising $14.3 million per year extensions. However the two contracts look to be radically different and this is where using annual contract values to compare contracts can somehow get a bit murky.
Mike Garafolo has the important cash flow breakdown of the Kelce contract:
Travis Kelce cash flow:— Mike Garafolo (@MikeGarafolo) August 13, 2020
The #Chiefs wanted to keep their core of players together. The Mahomes, Jones and Kelce deals are going to help them do that. https://t.co/Bf3XXhtLSE
The important numbers here are the first three years of the contract. The $9.25 million salary in 2020 is exactly what Kelce was set to earn in 2020. So the new money for that year is zero. Next year Kelce was set to earn $9 million in base salary (he has some escalators he could earn so I would not be surprised if they were playing off a $9.25M salary) and will earn a raise of $4.25 million. The third year of $7.5 million brings the new money total for the first new contract year to $11.75 million.
$11.75 million is right in line with the current market for tight ends and actually less than Kelce earned on his last extension. It is a far cry from Kittle’s $18 million reported signing bonus. Through two years Kelce will earn $25 million in new money, an average of $12.5 million a season. It is increase of $2 million in total over Hooper;s contract and I would imagine far under Kittle’s two year salary.
The big money is unlocked on the back end where Kelce would earn $40 million over three years and $57.25 million over four years. Kelce will be 35 and 36 during those years making them far less likely to be earned. Maybe Kittles numbers pushed those last two years up but those are easy concessions for a team given the age of the player.
The reported guarantees have fluctuated between $25 and $28 million and I would imagine that entails Kelce’s salary in 2020, 2021, and 2022 minus whatever money is tied up as a per game or workout bonus. Since Kelce was a lock to make the 2020 roster and a virtual lock to make the 2021 roster it is essentially a one year extension worth around the franchise tag for the position. The $12.5 million two year average is around what I figured would be the target number for him on an extension so the likely earning years fall right in line with the market.
For the Chiefs this is a no brainer contract. They will not spend a dime extra in 2020 and get way ahead of the possibility of the Eagles and Zach Ertz coming to an agreement that pushes the market on the front end of the contract much more than this one. They should get salary cap relief both this year and next which is what they need and it should be easier to move on from the player in the future if necessary.
These type of contracts are generally shrewd moves by teams as a way to get salary cap relief and cost certainty on veteran players. While they certainly do not always work out they are a good way to manage the cap, the teams cash flows, and keep a harmonious locker room for the foreseeable future. The Steelers had done contracts like this years ago for Troy Polamalu and Heath Miller and the Vikings did similar for Linval Joseph and Everson Griffen. They are generally no risk contracts for the teams because even if the player doesnt live up the deal the added money was minimal.
So why would Kelce take this contract? One is that there is cost certainty for him. Given the Chiefs cap situation I will guess that they did use a signing bonus for cap relief. The signing bonus is money for the players to keep even in a Covid shortened year while base salary is not. Even if there is no signing bonus some of the money potentially lost this year may be protected in the future depending on the structure of the future guarantees. This also protects Kelce’s status in the unlikely event that the team needed to move on from him in 2021 or 2022 as a consequence of the salary cap.
It is also worth noting that prior to today this was also going to be a market setter even if the back end is being used to prop up the numbers. So it is a strong contract its just not $14 million a year strong.
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