Explaining the Guarantee Mechanisms in Patrick Mahomes's Contract
I’m still on vacation, and will be for a while longer, but the Patrick Mahomes deal is a big one for the sport, and I came across some interesting information the other day on how the Chiefs and their reigning Super Bowl MVP came to a middle ground in a very creative way.
So you won’t get my full GamePlan column like a typical Thursday, but here’s a little info on the mega-deal.
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The raw numbers, you know. Mahomes got a 10-year, $450 million extension that puts him on a path to earn at least $477 million, and potentially over a half billion, between now and the end of the 2031 season, during which he’ll turn 36 years old. The first three years are fully guaranteed, and the first five are injury guaranteed. The flip side: In signing this deal, Mahomes got really, really rich, but also signed away pretty much his entire earning prime to the team.
What did he get in return? You’ve probably heard the clunky term “guarantee mechanisms” over the last couple days. Here’s what he really has—de facto, baseball-style buyouts in his contract that make it almost impossible (or at least astronomically costly) for K.C. to bail before the deal expires. And to give you a better idea of what that means, here’s a bullet-point cost assessment that explains how this goes.
• If the Chiefs cut Mahomes today, his cap number would jump from $2.8 million to $63 million.
• On the third day of the 2021 league year (that’s in March), Kansas City can cut Mahomes a check for $52.25 million to get out of the deal. If they go forward with it, an additional $40.45 million becomes fully guaranteed.
• On the third day of the 2022 league year, K.C. can pay Mahomes $70 million to get out of the deal. If they go forward, another $38 million becomes fully guaranteed.
• On the third day of the 2023 league year, K.C. can pay Mahomes $78.4 million to get out of the deal. If they go forward, another $38.9 million becomes fully guaranteed.
• On the third day of the 2024 league year, K.C. can pay Mahomes $76.85 million to get out of the deal. If they go forward, another $3.05 million becomes fully guaranteed.
• On the third day of the 2025 league year, K.C. can pay Mahomes $41.95 million to get out of the deal. If they go forward, another $38.9 million becomes fully guaranteed.
• On the third day of the 2026 league year, Mahomes’s $49.4 million roster bonus for 2027 becomes fully guaranteed.
• If they cut Mahomes after the 2026 season, he’ll have had a five-year, $247 million extension, and get to free agency at 31. If they don’t, they have to guarantee another $55 million.
• If he’s on the team that March, on the third day of the 2027 league year, they’ll be paying him a $49.4 million roster bonus, separate from the $55 million guarantee, which in essence locks in a $250 million windfall over the deal’s final five seasons.
So if you look at all the penalties for bailing, it’s pretty fair to guess that the Chiefs getting out of this deal is unlikely.
Two other things that should be noted here. The Chiefs and Mahomes’s people planned for COVID-19 with this deal. They knew the NFL might try and push pay cuts on players, so they agreed to keep the cash relatively low in 2020. And they knew the cap might be low in 2021 in the aftermath of whatever this season becomes, so Mahomes’s cap figures don’t jump until 2022.
As for what the Chiefs get out of this—they now have certainty on their spending. They know what they’re working around for the foreseeable future with Mahomes’s monster deal, which is a tremendous edge to have in building your team.
Now, I’ll get back to my vacation.
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