The Buffalo Bills signed quarterback Josh Allen to a six-year contract extension last week. The structure of Allen’s new contract, comparable to the long-term mega-deal signed last year by Patrick Mahomes with the Chiefs, is an interesting contrast to the typical QB contract.
When evaluating deals that are fundamentally non-guaranteed or deals with a small signing bonus, it is much different than analyzing deals that are fundamentally guaranteed. Like in basketball, no one in the media, and no agents try to publicize the cash flow, because it largely does not matter; the player is getting the whole deal. Whether front-loaded or back-loaded, it really does not matter. As some players move to getting fully guaranteed deals or even deals that are effectively guaranteed in the NFL, the priorities in the breakdown of those deals changes.
When looking at Allen’s new contract, his cash flow compared to Mahomes looks very strong — but it’s just okay against some of the other quarterbacks in the league. Still, it does not matter because it is effectively guaranteed. For me, I am largely focused on the guarantee structure — the average of the deal and the length, to a lesser degree — as the guarantee structure becomes more favorable. Yes, the cap will go up and the average value of your position will go up, but with secured money, as a player, you do not need to be overly worried about anything else.
My main point is that cash flow in deals that are not guaranteed or only partially guaranteed is very important. It is the only money you know you will definitely get. Cash flow in deals that are guaranteed, like those of Allen and Mahomes, is much less important. In the case of those two, they might have sacrificed some long-term cash for the guarantee that they really cannot get cut for the better part of their deals.
Allen received a six-year deal, averaging $43 million over the course of the new years. If he would have signed a three-year extension, it probably would have been around $40 million annually, which means in essence, the average of the second three years would be $46 million. So, essentially both parties decided that three years into this deal, $46 million would be fair for a top quarterback entering free agency. It potentially could be low, but it will not be massively low.
For the player, my overall thought is that the benefits of getting a deal two years early – one that is virtually guaranteed and may only be slightly under-market in the last two years — is a very reasonable trade-off. Allen could have taken a shorter deal instead of the six years and made a little bit more cash, but that is a lot of risk for the next negotiation. Now, he may make a couple million less, but it will not be until 2025 that Buffalo can even consider cutting him, and that will come with a dead cap of over $62 million. If they cut him in 2026, they incur nearly $27 million in dead cap charges. That is a lot of security for Allen that will not be tied to his performance. The Bills are certainly tying themselves to Allen, but I think both parties did a good job here, and it ended up around where it should be.
I had a very similar sentiment when Mahomes signed his contract last summer. His deal is as close to a 10-year guarantee as you are going to see in the NFL with a similar pattern to Allen’s. He effectively has a $450 million contract plus some incentives, along with a no-trade clause. Had he signed a five-year deal for around $40 million annually, it would not be seen as overly low at the time. Five years from the start of his extension, he will essentially be signing a $50 million annual contract, which is likely to still be a really good deal at the time.
Overall, I think both the Bills and Chiefs organizations did an excellent job in potentially saving some cash in the latter years of the contracts, while the players received substantial commitment from their clubs, with the ability to sign long-term contracts 2-3 years before they were due to hit free agency. Both players have also ingratiated themselves to the cities they play for, and this is likely the best path towards building a perennial contender for both organizations. And since this provides immense marketing opportunities for the players, that only adds to their financial gain.
Jack Wolov contributed to this story