Mahomes signs historic $503M 10-year deal

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Patrick Mahomes:

“I want to be a chief for a long time.”

The Gist

Patrick Mahomes signed a record-setting 10-year deal with the Kansas City Chiefs worth up to $503 million on Monday, making it the largest contract in sports history. The Super Bowl champion and MVP could be in Kansas City through 2031.

The 24-year-old quarterback will have an average annual salary of $45 million, starting with the 2022 season.

Key Insights

Starting in 2022, once the new contract kicks in, Mahomes can earn $1.25 million if the Chiefs reach the Super Bowl and an additional $1.25 million if he is named NFL MVP for a maximum of $2.5 million per year in incentives.

In other words, for Mahomes to make the full $502.631 million his 10-year contract extension offers, he needs to lead Kansas City to the Super Bowl as the league MVP every season for an entire decade.

Mahomes' contract provides $141.428 million in guarantees over 12 years, but only $63.082 million guaranteed at signing.

The chances Mahomes plays out this entire contract as it stands are slim. Mahomes would need to be just good enough to justify his massive roster bonuses without being good enough to warrant a new extension.


The Rise of an MVP

In his first year as a starter, Mahomes completed 66 percent of his passes for 5,097 yards and 50 touchdowns with only 12 interceptions. These stats earned him NFL MVP of the Year.

That season he also played the AFC Championship Game against the New England Patriots. The game went to overtime, Chiefs lost the coin toss, Pats scored the game-winning touchdown, and Mahomes never saw the ball after regulation.

Touchdowns

Last Season

Mahomes’ 2019-20 year brought injuries and a drop in production with 4,031 yards, 26 touchdowns with five interceptions. However, in the postseason, after winning a bye, he had three double-digit deficit comeback wins, one of which was the Super Bowl against the San Francisco 49ers, where he led Kansas City to their first championship since Super Bowl IV.

Interceptions

Money vs. Championships

"I want to be a chief for a long time," Mahomes stated in a conference call with reporters on May 1, 2020.

 Many analysts believe that for Mahomes, this negotiation is more about the years than the money. For example, in 2014, Green Bay Packer Aaron Rodgers was the highest-paid quarterback in the league, with an average salary of $22 million. Just five years later, Dallas Cowboys quarterback Dak Prescott allegedly turned down a deal for $33 million per year in September 2019.

Mahomes currently has sponsorship deals with EA Sports, Head & Shoulders, State Farm, Oakley, and others, and the trend could keep climbing if the Chiefs continue to win Super Bowl championships.

For example, Michael Jordan is worth $2 billion today. However, he only made $90 million on the court. 

Someone like Patrick Mahomes is in a unique situation, where the amount of money any team could pay him could pale in comparison to the amount of money he could make off the field, and the best way to do this is by winning championships.

Look at Tom Brady, who earned less money than Peyton Manning, Eli Manning, or Drew Brees throughout his career. However, he also won more Super Bowls than all three of them combined.

The reason Jordan won six NBA championships is that the Bulls' second-best player, Scottie Pippen, was just the 122nd-highest-paid player in the league despite being a seven-time NBA All-Star. 

Patrick Mahomes at Jimmy Kimmel studio


However, the new contract is still a good deal for the Chiefs as Mahomes will count for only $5.347 million against Kansas City's salary cap in 2020. The contract is also back-loaded in a way that accounts for a forecasted rising salary cap over the next decade.

The gist is that the Chiefs will never be overpaying for Mahomes as long as he continues to play since he entered the league. If anything, he eventually will be underpaid. It sounds like a recipe for Mahomes to have his cake and eat it too.

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