Forget The Chiefs' Contracts, Pay Attention To This Number

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Welcome to the part of the season that features the elements that football fans everywhere adore the most — cryptic statements and accounting.

We know that the Chiefs are trying to extend both QB Alex Smith and OLB Justin Houston. We hear that those talks are close and far away. The team used draft picks on both positions, despite being solid on paper in both places moving into the 2014 season.

If you believe that Smith is descended from George Washington and can never tell a lie, then you believe that he hasn’t given the situation “a thought.” If that’s the case, he truly is the only one.

Mandatory Credit: Andrew Weber-USA TODAY Sports

I actually think the Houston situation is more interesting in many ways. And, for the reasons I outlined last week, I think his extension should be the focus for now. For those that interpreted that to mean that I’d rather have Houston in red than Smith, that’s not my point. I want them both, but I think the Chiefs have better leverage over Houston and can sign him more easily, because, like Smith’s protege Colin Kaepernick, he’s only made a few million so far in his career with his 3rd-round-pick contract and he has a lot of injury risk going into 2014.

The team is set to pay Houston just $1.4 million for the year. Any reasonable offer sheet he signs now will probably result in him cashing in $10 million or more this year in salary and bonuses — that’s more than double what he’s made so far since being drafted.

Smith on the other hand, has already banked over $50 million from past contracts and is due $7.5 million this year. In the worst case scenario where he gets seriously injured or has a catastrophic year, he’s still going to walk away an extremely rich man, regardless of whether he agrees to an extension or not.

Is your head spinning from all the numbers yet? Well, here are some more.

The Chiefs currently just have $3.5 million in cap space for the 2014 season to work with. Without Smith or Houston on the roster, the Chiefs’ payroll still jumps by about $5 million to $132.8 million in spending in 2015.

So where are the Chiefs going to get the money to re-sign these guys? Well, that’s why the most important number in all of this discussion is the number we don’t currently know — the 2015 salary cap.

This year, the cap jumped a historic $10 million to $133 million per team. Will it jump another $10 million or more? PFT reported in March that at the time, none of the teams saw the last big bump coming:

The full truth as to the bump, annually negotiated by the NFL and NFLPA, never will be known.  The teams, however, didn’t anticipate it.  Last October, owners were told that the cap would increase by only $3.3 million, to $126.3 million.  More recently, the number was pegged increasing by $128.3 million.

As one source explained it to PFT, that’s the number most if not all owners used when establishing their budgets for the upcoming free-agency period.  It means that most if not all General Managers will have to persuade their owners to increase the budget in light of the increased cap room.

It appears the league is keeping its formula for this under wraps, but PFT pointed out that in 2014 it appeared to be pretty simple. Through TV contracts and the like, the league’s revenue went up by about $640 million during the previous year. Under the latest collective bargaining agreement, the player’s union and the teams are supposed to split that 50-50. Guess what? The 2013-2014 salary cap bump amounted to a $320 million aggregate increase in the salary cap.

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Tags: Alex Smith Justin Houston Salary Cap

  • berttheclock

    2016 should be interesting. Should the Comcast-Time-Warner merger go through, this will place Comcast TW in a much more favorable spot to bid against Direc TV for the NFL Sunday Package and their bid could be a blockbuster pouring even more money into the NFL.

  • Stacy D. Smith

    Cuts can free up a lot of space for the Chiefs next season.
    Here’s a list of the amounts Kansas City could save by removing these players from their roster:
    Hali, $9m
    Flowers, $7.5m
    S. Smith, $5m
    Devito, $4m
    Avery, $3.5m
    Daniel, $3.5m

    • NicholasAlanClayton

      Flowers seems like a no-brainer right now, possibly Daniel depending on how the QB situation shakes out. Hali is overpaid at this point, but having a deep bench of premium pass rushers is delicious.

      • berttheclock

        So, would you invite Quentin Groves to KC?

    • area

      There is some room to roam there, but where are the replacement players coming from?
      Daniel is as good as gone sooner than later in my opinion.
      Replace Flowers AND Smith? With Parker and Owens and maybe an unknown? This one concerns me.
      Hali? Love him, but he is getting older and expensive.
      Avery will probably catch a ride with Daniel, if Avery doesn’t drop it.
      I think DeVito sticks, but we’ll see.
      16 million between Daniel, Avery, Hali…unless I miss my mark, and that is always a possibility.

      • Stacy D. Smith

        I was just listing the players who we’d get the biggest cap relief from cutting. I don’t have an opinion yet about who I’d walk.

  • Danny W

    I don’t care what they earn as long as it doesn’t hurt the team. Hell go with no cap.

    • Blaize Richardson

      If there was no cap, the New York Jets would become the New York Yankees and the Kansas City Chiefs would become the Kansas City Royals.

  • Lyle Graversen

    This was a great read. I really enjoyed it. Thanks for taking the time to put it together. Always nice to read something a little different than the other draft/OTAs/QB posts.

    • berttheclock

      I agree with the amount of effort placed on this thread. However, I never tire reading threads about what is happening with the OTAs. I do tire very quickly about contract extensions concerning our outstanding leader at QB. That is strictly a Tom Condon/John Dorsey deal and no matter what any one of us believes is, either, due or not due, matters not one twit.

  • tomflex

    The salary cap is wonderful no one can argue that but we all know it is not perfect. I say “we know” because our lovable Chiefs are burdened each year by that imperfection. The problem put simply is veteran players will very often take less money to stay with a prime large market team. The reason is because the financial opportunities in those markets far out weigh the smaller paycheck.
    Bottom line……For the Chiefs to maintain equality in player talent they must pay more……or….go in the direction they seem to be going. Keep filling the team with talented young players and be smarter when it comes to signing veterans long term. Sad as it may seem to some…goodbye will be a term used much more often then in years past.

    • berttheclock

      There is a great deal of financial success in Seattle. However, after winning the SB, the Seahawks lost 6 starters to free agency including Walter Thurmond, their top nickle back and Golden Tate, who had said he would have considered taking less money to stay in Seattle. They, also, released Red Bryant and Chris Clemons, two important defensive linemen, who both jumped to the Jags. With the cap, the most important job for any GM is to find gems in the lower portion of the draft or UDFAs. This means they will receive less money, but, provide quality on the roster. This really separates the great GMs from the lesser ones who can only find quality on occasion at the top.

      • area

        Agreed. More often than not victorious teams find themselves victims of their own success.

  • Chiroubles

    Wow- great article Nick- keep up the good work….