Do Massive Quarterback Contracts Limit Teams in the Long Run?
The passing revolution in the NFL was born from the rule changes in regards to defending receivers in the early 2000s. Since these changes, quarterbacks and passing games have become increasingly important in the NFL. Nothing has proven that concept more than Patrick Mahomes and the Kansas City Chiefs over the last two years, where their high-flying theatrics led to Mahomes throwing for 5,000 yards and 50 touchdowns in his first season as a starter and the Chiefs hoisting the Lombardi Trophy at Super Bowl 54.
With this change in how the NFL is played, the finances involved have also changed. Quarterback salaries have skyrocketed past their fellow players and now, more than ever, quarterbacks are immensely valuable, and they're paid like it.
Despite quarterbacks being so important in the modern game, there has been a thought ruminating throughout the NFL fandom that market-rate contracts for quarterbacks actively hurt their teams. The idea is that even though a quarterback is valuable, the contract tied to the signal-caller can hold back the team because they, theoretically, run out of money that should be allocated elsewhere.
Patrick Mahomes' half-a-billion dollar deal over this offseason has brought this argument to the forefront. The Chiefs won a Super Bowl with Mahomes on his rookie deal, in a year where Mahomes only made $4.6 million. It’s hard to argue that this wasn’t a massive advantage for the Chiefs and was a reason they won a Super Bowl. Who wouldn’t want the best quarterback in the NFL on a dirt-cheap contract? The unknown heading into the future for the Mahomes-led Chiefs is if his contract significantly affects their chances of winning another Super Bowl.
If we were to just look at Super Bowl-winning quarterbacks, however, the subset of data would be too small and would be skewed by Tom Brady. The current financial structure of the NFL has only existed after the 2011 CBA, which eliminated the overpriced rookie contracts that were crippling teams' salary caps. Over the last nine years, there is a larger subset of data that we could look at that would be a decent representation of how quarterback contracts affect NFL teams, specifically looking at teams who make the conference championship games. In a fair number of cases, the NFL’s one-and-done playoffs mean that teams have to also be lucky to win the Super Bowl, so looking at a larger subset of teams is a better way to analyze how quarterback contracts affect teams.
Going back to 2011 the following chart is the quarterbacks who made the conference championship games, their salary cap hit, their salary's rank among quarterbacks that year, and their salary cap hit as a percentage of the total salary cap of that year.
So, what’s the conclusion when digesting this data?
It’s a mixed bag.
During the last nine years, there have been a good amount of quarterbacks to make the championship game on their rookie deal. Luck, Wilson, Kaepernick, Mahomes, Goff, Wentz, and Bortles all gave their team an advantage at the quarterback position in relation to what other quarterbacks were paid in the NFL. For these teams, that meant that the team could invest more money in the rest of the roster. We saw this with the Chiefs in 2019 when they spent a lot of money to add Tyrann Mathieu and Frank Clark. It is clear that if you find the right young quarterback, it is immensely beneficial to have them at a below-market rate value.
While young quarterbacks on rookie contracts do make a sizable appearance, veteran quarterbacks aren’t exactly discarded either. Every year, at least one veteran makes the championship game, and usually, it is more than one.
The one thing that does remain consistent is that there seems to be a max amount of salary cap space a quarterback can take up in the last nine years, and that’s 15%. Only Aaron Rodgers in 2019 passed 15% and that was just barely. How many times do quarterback contracts pass this 15% threshold, exactly?
There have only been a total of 12 instances of a quarterback's salary cap hit exceeding 15% of the year's salary cap in the last 10 years. It has been happening more recently, but it still doesn’t happen routinely.
The reason quarterback salaries rarely eclipse 15% of the salary cap is that even though quarterback contracts have skyrocketed in the last few years, so has the salary cap. Since 2011, the salary cap has increased by $68.2 million. This sharp increase has led to contracts inflating quickly.
COVID-19 might affect this push-and-pull that quarterback contracts and the salary cap have had in recent years. If the salary cap does drop, then many teams will have quarterbacks taking up a huge chunk of their salary cap space and they will have to find cuts elsewhere.
In looking at Mahomes’ half-a-billion dollar extension, the main thing to keep in mind is that the Chiefs have pushed out the big salary cap years of Mahomes’ deal out a few years from now. Mahomes does not even earn a top-five quarterback salary in a given year until 2023. Using the charter outlined above about past quarterbacks to make the championship game, Mahomes’ salary in 2020-2022 seems to land roughly in line with what veteran quarterbacks made when they get to the championship games.
So the obvious question is, will Mahomes’ contract affect the Chiefs in the future?
The answer all depends on how high the salary cap rises.
In 2023, Mahomes’ salary cap hit is $42.45 million. If we apply the general rule of championship quarterbacks not taking up more than 15% of the team’s cap, then the salary cap in 2023 would have to be at least $283 million for the Chiefs to have minimal issues. COVID is putting this in danger, but there are signs that the salary cap might rise sharply soon with more games, a higher revenue share in the new CBA, and giants such as Amazon and Disney bidding on NFL games in a new TV deal.
Quarterbacks on high salaries will always be some amount more difficult to work around than quarterbacks on rookie deals. The question will be if the quarterback can make up for this financial disadvantage with their play. Quarterbacks like Patrick Mahomes and Russell Wilson are the types of quarterbacks that can do that. Other quarterbacks with high salaries in recent memory like Derek Carr and Eli Manning probably aren’t. In the end, that is the main question many will have to answer when it comes to quarterbacks and their contracts; will they be able to give back enough value for the contract to be worth it? If a quarterback can do so, then no reasonable contract is too much. Even half-a-billion dollars probably isn’t enough for Patrick Mahomes.
