Quarterback Alex Smith signed a four-year extension with the Kansas City Chiefs Sunday with $45 million in guaranteed money, as first reported by Terez A. Paylor of the Kansas City Star. At first glance, it might seem like $45 million guaranteed is a lot of money for Smith, at least as it compares to the guarantees handed out to other quarterbacks this offseason.
Of course, NFL contracts are never what they seem. Smith's deal is far more manageable for the Chiefs than the huge "guarantee" would make it seem, which is also precisely why it's the perfect deal for both sides.
The first and lasting impression will be that the Chiefs paid Smith like an elite quarterback, which should please Smith, his agent and his supporters. The reality of the contract should put Smith's detractors at ease because it will be good for the Chiefs in the long term, protects the team in the short term and the guarantee is not as much as it seems.
By signing Smith now, the Chiefs will be able to use the franchise tag next offseason on star outside linebacker Justin Houston if necessary. Had the team not signed Smith now, both Smith and Houston would have more negotiating power next year knowing the team could only use the franchise tag on one of them.
Having two important players whom the team wants to keep and only one franchise tag is a nightmare scenario. The Chiefs could've tagged Houston and tried to sign Smith next offseason, but the market price for Smith's services could have easily eclipsed that of tagging him.
This is especially true if the salary cap gets another large bump due to the influx of cash from the NFL's new television deals and digital products such as the recently launched NFL Now.
ESPN's Adam Schefter tweeted about the projected salary-cap increase:
Had the Chiefs elected to give the tag to Smith next year instead of Houston, the Chiefs would have to bid against the entire market for Houston. The price tag for a pass-rusher in his prime would likely be astronomical on the open market, so that was never going to happen.
The only other option would be losing either Houston or Smith. Even Smith's detractors have to admit that he's a serviceable quarterback, and you don't get rid of a serviceable quarterback until you have an equal or better replacement.
Ask the Oakland Raiders, who traded away Carson Palmer and the $15 million he was scheduled to make in 2013 and replaced him with Matt Flynn and Terrelle Pryor last offseason and with Matt Schaub this offseason.
Whatever extra the Chiefs may have given Smith to get the deal done now will be more than worth it down the line. Not only that, the Chiefs can move on from Smith after 2014 or after 2016 for a minimal cost.
At most, it's a three-year commitment to Smith. Had the Chiefs waited until after the season, they likely would have been on the hook for another year because Smith's 2014 salary would not have been included.
Smith received $45 million guaranteed, but only $30 million is for skill and injury, according to Mike Florio of Pro Football Talk. The other $15 million vests in 2015 and is for injury only.
|Projected vs. Actual Alex Smith Contract Comparison|
|Comparison||Guaranteed||Average Per Year||Total Value|
|Projected||$29.0 million||$16.4 million||$82.0 million|
|Actual||$45 million ($19 million in 2014, $26 million in 2015/2016)||$15.1 million||$73.7 million|
|Difference||$16 million||$1.3 million||$8.3 million|
|B/R (Projected), Jason La Canfora CBS Sports (Actual)|
Jason La Canfora of CBSSports.com provided further clarification on Smith's deal Tuesday that differed slightly from Florio's numbers. Smith will receive a signing bonus of $18 million and his base salaries in 2015 and 2016 totaling $26 million are guaranteed for injury until the third day of the 2015 league year, when they become fully guaranteed.
Smith's $15.1 million yearly average is right in line with expectations. Smith's guarantees cover the first three years and the total value of the deal over that span are $45 million, which also averages out to $15 million per year. It actually seems like Smith traded a little yearly average for guaranteed money.
Since Smith is a vested veteran, and his $7.5 million base salary in 2014 was about to be fully guaranteed in Week 1, the guaranteed money was a bit overstated. The only full guarantee the Chiefs gave to Smith as a practical matter was $11.5 million, but they will also give him $26 million more in 2015.
After the guarantees run out in 2016, Smith has roster bonuses of $2 million each year over the final two years of the deal per La Canfora. Smith traded what equals three years of security for a lower base salary and then what is basically a year-to-year deal.
|Smith's Contract Structure (in millions)|
|Year||Base Salary||Signing Bonus (Prorated/Guaranted)||Roster Bonus||Total Cap Hit||Dead Money|
|Jason La Canfora on Twitter (*Guaranteed, **Guaranteed for Skill, For Injury 3rd day of league year 2015)|
This Chiefs secured Smith's services for a fair price, but it also established a realistic timeline for finding his replacement. Since Smith is a competent starting quarterback, he should buy general manager John Dorsey and head coach Andy Reid a few years to find a franchise-caliber quarterback to replace him.
After 2015, the Chiefs may be able to get out of the deal by paying a salary cap penalty of $14.4 million before his injury guarantee converts into a full guarantee. After that, they wouldn't be able to realistically get out of the deal until 2017 at a cost of $7.2 million against the cap.
In the interim, the Chiefs will remain competitive and build around Smith so he can be successful. Even being tight on cap space won't bother Dorsey because his philosophy is to build through the draft and let his coaches develop players.
The only way the deal could come back to haunt the Chiefs is if Smith's performance declines over the next few seasons. Part of the reason fans have such a love-hate relationship with Smith is that his raw statistics don't suggest he's very good, but he somehow manages to still win games.
Maybe Smith has just been lucky to be on good teams that play soft schedules, but there's obviously more to it. One of his undervalued traits is his ability to protect the football, which means he'll rarely be the sole reason his team loses a game.
Smith is risk-averse to a fault, having attempted just 8.1 percent of his passes over 20 yards last season, according to Pro Football Focus (subscription required). Smith hasn't attempted more than 10.5 percent of his passes over 20 yards since 2007 and hasn't eclipsed 9.7 percent since Jim Harbaugh helped him save his career in 2011.
|Year||Pass Attempts > 20 Yards||% Attempts Over 20 yards|
|Pro Football Focus|
The upside of conservative play is obviously very few turnovers. Smith's teams can play good defense and perform on special teams knowing that the offense isn't going to blow it. That also means the offense isn't going to get the job done all the time either.
Should Smith start turning the ball over without a corresponding jump in offensive output, he would have almost no value to the team. In this scenario, Smith would be nearly worthless.
A good example of this scenario playing out was in Houston last season. Schaub signed a four-year, $62 million extension with $24.75 million guaranteed in 2012, according to ESPN.com, but the team benched him in 2013 for poor play.
Schaub threw too many interceptions in 2013 and wasn't able to get the ball into the end zone enough to compensate for his struggles. The team shipped him to Oakland this offseason for a sixth-round pick, and he lost the starting job to rookie Derek Carr.
If Smith continues to be a solid, uninspiring performer, the Chiefs absolutely did the right thing by signing him. If his play declines and the Chiefs want to get out of the deal before 2017, than the deal is a bad one.
Part of making sure the deal pans out is ensuring Smith remains productive. One of Schaub's problems was that defenses figured out Houston's offense. If Reid can keep things fresh for Smith, there's a good chance he'll continue to be productive for many more years.
It's already apparent that Smith has taken to the scheme, a fact that Reid himself pointed out (via the Kansas City Star).
"Alex is a smart, talented football player that has adapted well to our offensive scheme," Reid said. "He also, obviously, has had a tremendous amount of success as a quarterback in this league. We as a team are very happy to have Alex as our quarterback moving forward."
It's how far forward that's the question.