The Kansas City Chiefs didn’t select quarterback Aaron Murray in the fifth round of the 2014 draft to sit on the bench behind Alex Smith for five years. Neither did they draft Murray to take over for Smith next season instead of giving Smith a contract extension.
It may seem counterintuitive, but the selection of Murray should accelerate the Chiefs’ desire to sign Smith to an extension. It doesn’t matter if the team decides to go with high-risk rookie Murray over high-priced veteran Chase Daniel as the primary backup to Smith in this case.
Signing Smith to an extension now gives the Chiefs the ability to move on from him a year earlier than if they drag out the process and save money in the process. Smith will feel secure in his job until the Chiefs decide to pull the rug out from under him.
The 49ers used the exact same method with Smith to great effect.
If Murray develops under head coach Andy Reid’s tutelage, they will be able to make him the starter a couple years from now. As a fifth-round pick, Murray is going to need that time to get seasoning on the bench.
What are the Odds?
There’s always the chance that Murray doesn’t amount to anything. Fifth-round picks sometimes don’t even make the final 53-man roster. A contract extension for Smith buys the Chiefs time in case Murray isn’t the guy, and they have to dip back into the draft well to find their starting quarterback.
In his 14 years as head coach of the Philadelphia Eagles, Chiefs head coach Andy Reid drafted three quarterbacks in the fourth round or lower, and two of them never started a game. The other was A.J. Feeley, the default pick if you go over the pick timer in any reputable fantasy football league snake draft.
Since becoming a college scouting director of the Green Bay Packers in 1997, Chiefs general manager John Dorsey has been involved in the drafting of seven quarterbacks in the fifth round or later. Only one—Matt Hasselbeck—turned into a long-term starter.
Reid also played a large role in drafting Hasselbeck in 1998 as he and Dorsey were both with the Packers. Hasselbeck is the only other quarterback besides Murray with a link to both Reid and Dorsey.
Still, the two have combined for one hit in 10 attempts at finding a late-round quarterback. Feeley and quarterback Matt Flynn were not total flops, but they weren’t direct hits either. Murray is also the shortest quarterback either Reid or Dorsey has ever drafted.
It’s not a good enough hit percentage for the Chiefs to gamble on not giving Smith an extension. By waiting until next year, the team would likely have to slap him with the franchise tag unless Murray was poised to start.
Since the Chiefs can’t be certain Murray would be ready by the time Smith’s deal expires, they must pursue an extension with Smith before the start of the 2014 season.
Smith’s Contract Terms and Structure
Quarterback contracts are notoriously difficult to handle because they often have the upper hand in negotiations. By drafting Murray, the Chiefs are at least sending a message to Smith’s agent that they are preparing to move on without him if he plays hardball.
The hope is that calmer heads prevail, and the team can come to some sort of agreement that makes sense for both sides. The Chiefs will want to be able to get out of the deal in Year 3 or at any point after that. Smith will want a contract more commensurate with his performance.
By comparing the contract data at Spotrac and the top 18 veteran quarterbacks in adjusted net yards per pass attempt (ANY/A) via Pro Football Reference, we should be able to approximate how much Smith deserves. The guarantee and average per year can then be broken up over four or five years.
Since ANY/A regresses in near linear fashion, we can simply sort to get pay-performance curves. Quarterbacks above the trend line are overpaid in 2014 relative to their 2013 performance, while the quarterbacks under it are underpaid.
The results show that Smith is one of the most underpaid quarterbacks in the league. Smith merits roughly $29 million in guaranteed money and an average salary of about $16 million per year.
There are hundreds of ways to set up a contract extension to fit these parameters, but the ideal for both sides may be a five-year contract worth about $82 million with $29 million in guaranteed money. In this sample contract, there are base salaries of $16 million after Year 1 to give the Chiefs cap flexibility.
The Chiefs could then guarantee a certain amount of the base salaries each year with triggers along the way. For example, 2015’s guarantee could trigger on the third day of the league year, so the Chiefs would have to make a decision on his status at that time.
|Year||Base||Guaranteed Base||Signing Bonus||Cap Hit||Dead||Cap Savings|
Credit: Chris Hansen
This contract also includes a $10 million signing bonus to go along with $19 million in guaranteed base salaries for our total of $29 million.
In 2016, the Chiefs could get out of the contract for $9 million in dead money, but they would also save $9 million against the cap. The Chiefs could then spread the dead money out over two years at their option.
It’s not ideal, but it’s easy to plan for something like this. Increases in the salary cap might even make it go unnoticed.
In Years 4 and 5, the cap hit goes down enough to make the contract easy to terminate. The alternative is franchising Smith in 2015 for north of the $16.192 million the tag would have cost teams in 2014 per NFL.com.
The franchise tag is now computed on a rolling five-year average of the amount of the cap consumed. That means the six big deals that quarterbacks have signed over the last two years will be reaching their pricey midpoint.
What should the Chiefs do with Alex Smith?
Even if the franchise tag stays the same in 2015, the Chiefs would be paying roughly $24 million over the next two years for Smith. For about the same price over that span, the Chiefs can secure Smith’s services until Murray or another quarterback is ready.
If Murray is ready, they will not have a huge problem moving on from Smith in 2016. If not, the Chiefs still have a decent quarterback while they look for or develop one.
Not working something out with Smith would mean the Chiefs would have to negotiate off the franchise tag or with the threat of it. This happened with the Baltimore Ravens and Joe Flacco in 2013 and the Chicago Bears with Jay Cutler in 2014. If you noticed in the performance pay graph above, Flacco and Cutler’s pay are both way out of line with their production.
Waiting means paying more than the Chiefs would otherwise need to pay plus likely pushing out any transition to a new starting quarterback as soon as 2016. Not tagging Smith at all is an option, but the Chiefs would have to be sure either Murray was ready or they could get a better option.
Before Murray, the Chiefs didn’t have any reason to move up Smith’s timeline. Now they do and likely had it planned this way all along.