Kansas City Chiefs’ general manager John Dorsey and head coach Andy Reid made the decision to trade two first-round picks for Alex Smith last year, knowing that his contract would expire at the end of the 2014 season. That also knew that if things went according to plan, Smith was going to want a lucrative contract extension.
At the time of the trade, Smith admitted to Danny Parkins of 610 AM in Kansas City that he felt he had to earn a contract extension. Both the Chiefs and Smith needed to see if the marriage was going to work before either side pursued an extension.
The time has come. The time is now. Alex D. Smith wants his contract extension.
An extension also makes sense for the Chiefs, but only for a reasonable price. The problem is that Smith reportedly wants to be paid a lot more than the Chiefs should be willing to spend.
According to Jason Cole of the National Football Post, in January, Smith wanted a contract that was north of Chicago Bears quarterback Jay Cutler’s deal, which came in at seven years and $126.7 million. Then, on Thursday, Ian Rapoport of NFL.com reported that Smith was still pushing to be paid like a top-tier quarterback, which implies that his demands probably haven’t dropped.
For that price, the Chiefs will not care if Smith goes somewhere else. And if they simply give him the franchise tag after this season, they will have time to find a replacement franchise passer.
The Chiefs are in a tricky spot with Smith for a few reasons. The franchise tag isn’t a good option due to the price tag, but even worse is not having a decent quarterback or overpaying for one for multiple years instead of just one.
It makes sense for the Chiefs to complete a deal with Smith this offseason, because it would push up the timeline for when they could get out of the deal without huge salary-cap ramifications. Trying to do a deal next year complicates that, and the franchise tag would give Smith more leverage in negotiations.
The overarching theme is that Smith is a good quarterback, but the Chiefs shouldn’t commit a lot of money or years to him because he’s not a great one. Given Reid’s track record of developing quarterbacks, it wouldn’t make sense to overcommit to Smith over the long term just because he is the best option the team has right now.
If Smith insists on being paid like an elite quarterback, the Chiefs would be better off scrambling to find his replacement over the next couple of years. The franchise tag would then only be used to buy the Chiefs extra time.
A legitimate obstacle to a deal is a lack of comparable contracts. There is no secondary-quarterback market; quarterbacks are paid as if they are elite, or they aren’t paid at all. The Chiefs and Smith need to find a middle ground.
Smith has rarely, if ever, played like an elite quarterback. With the exception of wins—a team statistic—Smith’s current pay is nearly in-line with his production.
Smith’s DYAR and DVOA (via Football Outsiders), QBR (via ESPN), Pro Football Focus grade (subscription required) and adjusted net yards per pass attempt (via Pro-Football-Reference.com) all paint the same picture: he is roughly a top-15 quarterback. Smith cracked the top 10 in 2012 by some measurements, which may be the top edge of his value.
Knowing what kind of quarterback Smith is, it would be crazy to give him a contract more lucrative than Cutler's, whose deal is the sixth highest in the league in terms of average salary per year and the third highest in terms of total guaranteed money. Paying Smith a salary that is more commensurate with his production is the only way the Chiefs will be able to surround him with enough talent to win consistently.
Smith has proven repeatedly that he doesn’t lose games for his team. There’s value in that beyond his raw statistics, so paying him at the top end of his value could make sense. Beyond that, however, the Chiefs are getting diminishing returns. The last thing any team can afford is an albatross of a contract for a middling quarterback.
What might a reasonable contract look like?
The 10th-highest yearly average in the league belongs to Philip Rivers at $15.3 million, and the 10th-highest amount of guaranteed money belongs to Eli Manning at $35 million. A five-year deal worth $75 million or a six-year deal worth $90 million with up to $40 million guaranteed within the first three years seems high, but it would actually make sense for both sides.
Smith would be paid like a top-10 quarterback until Rivers, Cam Newton, Ben Roethlisberger and Eli Manning all get new deals prior to or immediately after the 2015 season, when each of their respective contracts expire. By Year 2 of the deal, Smith’s contract ranking would be roughly where the advanced stats have pegged him.
As the salary cap rises and other quarterbacks get new deals, the above contract will not significantly hurt the Chiefs’ ability to put players around Smith. That will be key, because Smith has proven he can’t carry the offense by himself.
However, in order to give Smith that kind of deal without pushing the cap hit down the road, the Chiefs will need salary cap space. Lack of space means that the team will have to use singing bonuses and option bonuses that are prorated, pushing cap hits into future years.
If the Chiefs want to pay as they go with Smith, that would mean adding roughly $7 million to Smith’s 2014 compensation. That means the Chiefs will need to clear at least $4 million in additional cap space.
It’s not easy to clear that kind of cap space, but the Chiefs do have one avenue they could take: safety Eric Berry can be cut after June 1, and it would save the Chiefs $7.25 million in 2014 and $7.5 million in 2015, according to Joel Corry (h/t Terez Paylor of the Kansas City Star). That would give the Chiefs enough flexibility after Smith's extension for the rest of the season.
Whatever the Chiefs do, they should make sure they have an out in the contract from Year 4 of the deal onward in case Smith declines or a better option comes along. A pay-as-you-go contract structure would allow the Chiefs that freedom, but it won't possible without first making a corresponding cost-cutting move.
All contract information courtesy of Spotrac.com.