Patrick Mahomes’ contract revision: More money now, but lots more flexibility

On Monday, we learned that the Kansas City Chiefs had restructured the contract of their superstar quarterback Patrick Mahomes. Reports indicated that the revision of his 2020 contract — which runs through the 2031 season — would pay him $210.6 million for 2023 and the three seasons to follow. That’s $52.7 million in average annual value (AAV).

The salary-cap site Spotrac has now published what we believe are the full details of the restructure.

For a while, Mahomes is again among the NFL’s top earners

Monday’s headlines correctly said that Mahomes was going to earn more over four years than any player in NFL history. In 2023 (and in the three seasons that follow), only Cincinnati Bengals quarterback Joe Burrow will be earning more in AAV ($55 million) each season.

Still, to be clear, this restructure adds no new money to Mahomes’ deal — which still runs through 2031. Instead, the restructure moves money he was due to be paid from 2027 through 2031 to 2023 through 2026.

To show you what I mean, here’s how the cap hit compares on a year-by-year basis.

The third column is the important one: how much the cap hit increases (or decreases) in each year (or years). As we see here, the 2023-2026 cap hit increases by $39.2 million — and decreases by exactly the same amount from 2027-2031.

Mahomes will be earning more than everyone (except Burrow) over the next four years, and all indications are that the two sides plan to come to a new contract agreement after the 2026 season — as Mahomes explained on Wednesday.

“I thought we found a good one in this negotiation that we did that we’ll be able to still keep cap space for other guys to get signed, but obviously, I got a little bit more money upfront and then we’ll kind of redo it and re-negotiate it whenever we get to that mark that we talked about,” said Mahomes. “It’s a special place and a special relationship that I have with the team to be able to trust them to be able to – even when I signed the last contract know that this was going to happen and then probably going to happen again at some point.”

Since this is a revision instead of a brand new-contract, it technically doesn’t move Mahomes to the top of the list of the league’s highest-paid players in AAV. On the books, Mahomes is still ranked eighth at $45 million AAV for the 10-year, $450 million contract extension he signed in 2020. But this contract is likely to be ripped up once the Chiefs make it through 2026.

Mahomes gets a lot more money in the short term

Even without any new money, Kansas City’s quarterback will be getting a lot more of it — sooner rather than later. Here’s how the cash he’ll get each year shakes out:

Again, it’s the third column that’s most important. Mahomes is getting at least $6.6 million more in each season from 2023-2027 — in all, a $45.8 million increase during that period.

Cap space creation

Kansas City general manager Brett Veach (and his expert number-crunchers) also used this revision as an opportunity to create 2023 cap space; as the first table shows, the team gets $2.6 million in additional space. We now estimate that the Chiefs have $6.8 million with which to work.

This is usually done by converting some as-yet-unpaid compensation to a signing bonus and spreading that cap hit through five years of the contract — and the revised deal does exactly that.

But Mahomes is also getting an additional $16.4 million signing bonus on top of that $4.2 million base-salary conversion. So when that $20.6 million signing bonus is spread over five years, it raises the yearly bonus proration of the deal by $4.1 million. Therefore, the team is gaining only $100,000 in cap space ($4.2 million minus $4.1 million) with these signing-bonus moves.

But Veach’s crew had another trick up its sleeve. Mahomes’ original contract carried two $1.25 million incentives: one for winning the AFC Championship game and another for being named the NFL’s MVP. Because Mahomes did both of those things in 2022, Spotrac was carrying those incentives against his 2023 cap hit as likely-to-be-earned (LTBE).

But the restructured deal redefines the triggers for these bonuses. One is now earned for becoming league MVP and appearing in the conference championship. The other is now paid with a Super Bowl win and playing in at least 50% of the regular-season offensive snaps — or at least 50% of the Super Bowl’s snaps.

According to Spotrac, “[by] converting these [previous incentives] to next-year-escalators, that $2.5 million [in LTBE incentives] can be removed from the 2023 salary cap (by way of a later adjustment).”

So adding that $2.5 million to the $100,000 gained through signing-bonus proration is how we get to a total of $2.6 million in new cap space in 2023.

But what is that “later adjustment”? Spotrac doesn’t say so, but we believe the answer is revealed in the second table. There, you can see that the 2023-2026 cash is increased by $45.8 million, but the 2027-2031 cash is decreased by $43.3 million. That’s a difference of — you guessed it — $2.5 million. So it appears that Kansas City has slipped an additional $2.5 million into the total pot to open up that much 2023 cap space.

Guaranteed NLTBE incentives

There’s another reason the Chiefs changed the triggers for Mahomes’ incentives. According to the NFL’s Collective Bargaining Agreement with the players’ union (specifically, Article 13, Section 6 (c) (xvi)), an incentive triggered by a team playing in a conference championship (or a Super Bowl) is automatically not-likely-to-be-earned (NLTBE). So these bonuses will always count against the cap only in the year after they are earned — when we always expect the salary cap to be larger.

Even more flexibility

Just as with the original contract, the revised deal is set up so that the team can convert Mahomes’ yearly roster bonuses — which accounted for about two-thirds of the money he was set to earn in the original contract — into signing bonuses that can be spread over as many as five years. So as reporters like to say, “with the stroke of a pen, the Chiefs can use Mahomes’ contract to create cap space.”

But in this restructure, the team has made several adjustments to make Mahomes’ contract even more flexible. While these changes haven’t created headlines, they may end up being the most significant revisions to the contract.

• The team has changed the date on which Mahomes’ yearly roster bonus is paid. As with the first contract, portions of Mahomes’ compensation for the upcoming year (and sometimes the next year) are guaranteed a few days after the beginning of each new league year. (Appropriately, this is right around St. Patrick’s Day). In the original contract, the current year’s roster bonus was also paid at that time. But now, Mahomes’ annual roster bonus will be paid on May 5. This additional time allows the team to have more information before it decides whether (and how much of) the quarterback’s roster bonus should be converted to create cap space. Before — when making this decision just as free agency was beginning — the team had to guess how much cap space it was going to need. Now, if necessary, the Chiefs can wait until after the draft to decide.
• The way Mahomes’ compensation is paid is shifting. From 2023-2026, a total of $58.9 million of his pay is being moved from roster bonus to base salary — the biggest chunk of it in the 2026 season, when Mahomes’s base salary rises from $2.5 million to $45.4 million. This has the effect of giving the team even more time flexibility. That’s because a signing-bonus conversion can be made on any base salary that has not yet been paid to a player — even after the season begins. But just remember: a player’s contract can only be restructured once in a season.
• Two void years have been added to the end of the contract. It’s pretty obvious that Mahomes and the Chiefs will come back to the negotiating table after the 2026 season; Mahomes himself said so earlier this week. (Back in 2020, most observers thought the deal would be re-negotiated after 2025). But under the current deal, Mahomes is still set to be paid $52.9 million in 2027; it’s possible (but not at all likely) he could end up playing another year before another restructure. Should he continue to play under the current deal after that, the two void years will allow signing bonuses created as late as the 2029 season to be pro-rated for a full five years.