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How Much Ketchup can Half a Billion Buy? Breaking Down Mahomes' Record Deal with Kansas City

First things first, can someone please put me in touch with Patrick Mahomes? I have a fantastic investment opportunity that I'd love to run by him. It's a great organization called The Human Fund (please tell me that you all understand the reference). If not, that joke was a real swing and a miss - much like the Chicago Bears' Draft performance in 2017!

But anyway, back to the point of this blog. Yeah, the guy got paid. A lot. Like, A LOT a lot. But you already knew that before you clicked the link to visit this here post. I want to give you my expanded thoughts on this record-setting contract in terms of how it affects both Patrick Mahomes and the Kansas City Chiefs moving forward, but first, I'll actually answer the question posed by this blog's title. After all, I'm not sure if you heard, but...Patrick Mahomes puts ketchup on literally EVERYTHING (gross, I know).

  • According to Statista, the average price per unit of Tomato Ketchup today is $2.82

  • When considering inflation, the average price per unit in 2031 is expected to be $3.07

  • Assuming he plays out his entire contract as currently constituted and incurs no other expenses, Patrick Mahomes would be able to purchase 149,348,478 units of ketchup

Before any of you get on me for actually going through that exercise, the research took less than 5 minutes and I did the rest with Microsoft Excel. Not a big deal.

Back to the matter at hand, though. Monday afternoon was moving along just like most others in today's day and age; I was working from home, sitting on the couch with my laptop in front of me, taking a break from working to peruse Twitter and suddenly: the Adam Schefter tweet surfaced. Patrick Mahomes, who everyone knew the Chiefs had to pay sooner or later, had agreed to a TEN year contract extension with Kansas City. Like most big contracts, details were scarce initially, which of course led everyone and their mother to speculate as to what those details were until they finally began to trickle out.

We quickly learned that the deal was worth more than $400 million in total, although we didn't know by exactly how much. Soon afterward, it was pointed out that, when taking into account the remaining years and money on Mahomes' Rookie contract, this was now the richest agreement in sports history, surpassing Mike Trout's 12 year/$426.5 million pact signed in March of 2019. However, with official contract terms still not reported as the afternoon dragged on (well, at least it felt that way; in reality only a short time had passed), some league insiders began to wonder if Mahomes' extension with Kansas City might be the first to be directly tied to the NFL salary cap. Adam Schefter, during a series of tweets that had to have given him carpal tunnel syndrome, even reported that this could be the case.

As we soon found out, Mahomes' deal was not, in fact, tied to making a particular percentage of whatever the NFL/Chiefs salary cap figure would be in future years, but instead a hard negotiated number of $477 million. In addition, there were incentives placed into the contract that could bring its total value to $503 million over 10 years. After most of the guesswork had come to an end and the general public, pundits and analysts all had a hard figure in front of them, the next question became exactly how "real" the money was. What I mean by this is: how much actual guaranteed money was included in this deal? Often times, people see the reported years and money in NFL contracts and lose their minds, when in reality, there is very little guaranteed cash involved and teams can get out of the agreement after only a couple of seasons. As we soon found out about Mahomes' contract, it had a little bit of both.

The way Mahomes' deal was reported made it sound like the Chiefs essentially guaranteed $477 million to their star QB over the course of ten years. However, while there is a good amount of guaranteed cash ingrained in the first few years of this contract, what follows afterward could be best described as a series of option years. These appear to be a bit tricky from Kansas City's standpoint, though, as these options (or "guarantee mechanisms," as they were coined on Monday) need to be exercised at least a full year in advance. If any of these options are declined over the life of the deal, the Chiefs would then need to release Mahomes outright. While it seems unlikely that Mahomes' play will fall off to the point where Kansas City would even consider proceeding in this manner during that time, the advanced nature of the guarantee dates could create an interesting predicament for the team cap-wise.

Honestly though, from Kansas City's perspective, this deal does make a great deal of sense. While most Quarterbacks are committing to their teams for 5-6 seasons and then giving themselves the opportunity to either once again hit the open market or negotiate a raise, Mahomes has theoretically agreed to commit the next 12 years of his life to the Chiefs. And while the deal that he just signed is, in theory, the richest in sports history, the fact remains that he likely could have convinced Kansas City to fork over this same average annual salary on a shorter term contract, allowing him the opportunity to hit free agency again while still in the meat of his prime years. So, when you also take into consideration how much the NFL's salary cap should continue to rise during the time that he's signed away to KC, there's likely more inherent risk for Mahomes in signing this deal than there is for the Chiefs.

Perhaps Patrick Mahomes has decided that the money he's already guaranteed in this new contract is more than he'll likely ever need (which of course it is); after all, an athlete's primary concern in these cases is often injury and Mahomes was granted $140 million in injury guarantees the minute he put pen to paper on Monday. Some might forget that Mahomes did suffer what appeared to be a very serious knee injury last October in a game against the Denver Broncos. As it turned out, the severity of his ailment was fairly minor, but next time he might not be so lucky. The fact that Kansas City provided Mahomes with a nine figure golden parachute in the event that his next injury proves to be debilitating could have given him incentive to agree to these terms. On the other hand, perhaps it's the intent of both Mahomes and his representatives to re-negotiate this deal at some point during the life of it - while this could be a gamble on their part, Mahomes certainly wouldn't be the first athlete to gamble on him or herself in this regard and will definitely not be the last, either.

To summarize, my thoughts on this record agreement between Patrick Mahomes and the Kansas City Chiefs are as follows:

  1. Yes, he can buy a lot of ketchup to put on food where ketchup simply does not belong. That math definitely checks out, I just looked over my Excel formulas.

  2. Although the NFL's Salary Cap is likely to increase steadily over the life of this contract, make no mistake, the Chiefs have a 3-4 year window to maximize their existing core and try to win another title or two before Mahomes' cap hits cause their roster to thin out a bit. The cap can be manipulated of course, but only so much. Sacrifices will be made, likely revolving around the middle third of the roster, decreasing depth. Being a consistent title contender at that point will be far from a certainty.

  3. The over/under of the amount of times this deal will be altered prior to its 2031 expiration should be set at about 3.5, (either re-structures or extensions).

  4. While locking Mahomes in for the next 12 seasons should be viewed as an absolute win for the Chiefs and their fans, the assumption that it somehow guarantees the team several more Super Bowl appearances and/or titles is a flawed one. The Patriots have broken peoples' brains and made it seem like creating an NFL "Dynasty" is somehow a simple achievement, when in reality, New England's 20 year run is an outlier, unlikely to ever be replicated. Case in point: Aaron Rodgers won his first Super Bowl in February 2011 and, nearly a decade later, hasn't been back since. Superb Quarterback play is often the biggest factor in making a Super Bowl run, yes (at least 90% of the time), but there are many other variables at play that shouldn't be so easily forgotten.

Well, there you have it, folks! Those are my drawn out thoughts on Patrick Mahomes, his soon to be overflowing bank account and all of the future fancy dinners that he's sure to ruin by asking the waiter or waitress to bring a bottle of Hunt's over to the table for his Filet Mignon. There really aren't any "winners" or "losers" here, at least not yet. I can't stand when people declare their opinion to be the clear outcome of a draft, free agent signing, trade, etc. within hours of said event occurring. All we can really do is sit and watch how things unfold. With Patrick Mahomes slowly becoming the new face of the National Football League, it's fairly obvious that we'll all be watching from afar to see just how this next decade plays out.

- Mark


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