Analyzing Josh Allen's Contract Extension

Michael Ginnitti
Michael Ginnitti, Managing Editor & NFL/MLB ExpertAugust 07, 2021
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Total & Practical Value

Josh Allen’s $258M new money extension with the Buffalo Bills is the second largest contract in NFL history (Mahomes, $450M). The total contract now sits at $264M over the next 8 years. However practically speaking (based on guarantees and dead cap structure), this is a 5 year, $164.5M contract, with $150M of that guaranteed.

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Watch a Video Breakdown of the Contract

 

Guarantees

Allen’s $100M un upfront guarantees is $5M more than anyone has received in NFL history (Dak Prescott, $95M). The structure of this $100M is even more impressive though, with guarantees pushing into 2024, the fourth year of the contract.

Allen’s 2021, 2022, & 2023 base salaries (combined $32.52M) are fully guaranteed, as are his $2.6M roster bonus this year, $42.4M option bonus next year, & $6M 2024 roster bonus. Factoring in his $16.5M signing bonus gets us to the $100M mark.

Next March, $10M of his 2024 salary fully guarantees, bringing us to $110M in practical guarantees.

In March of 2023, another $13.5M of his 2024 salary locks in, as does $16.5M of his 2024 roster bonus - $140M practically guaranteed.

$10.5M of his 2025 salary becomes fully guaranteed on the 5th league day of 2024, bringing us to the $150M mark, over the course of the next 5 seasons.

 

Cash Flow

As we saw with Patrick Mahomes’ deal, the upfront cash flow for Josh Allen isn’t historic by any means. Allen sees $20M in 2021 (up from $3.5M), $47M in 2022 (up from $23M), & $28M in 2023, combining for $95M over the first three years of the contract. This ranks 6th among active contracts, $31M less than Dak Prescott’s $126M.

In terms of practical matters, the first 5 years of the contract can cash Allen $164.5M, or a practical AAV just under $33M. Other notable Practical AAVs: Carson Wentz ($26M), Jared Goff ($27M), Deshaun Watson ($28M), Patrick Mahomes ($28.3M)

 

Cap Structure

The 6 new years of this contract allowed for plenty of flexibility with the cap initially, and room to restructure as needed.

2021: $10.2M (+$3.3M)
2022: $16.3M (-$6.7M)
2023: $39.7M
2024: $41.7M
2025: $51.2M
2026: $47M
2027: $40M
2028: $41.5M

As in Mahomes’ deal, Allen has given his team considerable cap discounts in the first three years of this contract - most likely aligning with their window of contention. The salary cap hits don’t surpass $40M until 2024, when the league cap should be north of $230M thanks to billions of network money and a revived in-season revenue stream. The $51M+ charge in 2025 could be cause for concern, but that’s also a very realistic line of demarcation for this contract, either as an out for the Bills, or a good time to restructure for Allen (29 years old that season).

 

Concluding Thoughts

$150M of practical guarantees was always going to be the prime number for this contract - regardless of whether Baker Mayfield and/or Lamar Jackson’s contracts were established yet. But the way this contract gets to that number ($100M upfront, $140M by 2023), and with $165M of cash to be made over the course of that time period (2021-2025), this appears to be an exceptionally strong contract for Josh Allen.

While the signing/option bonus structure built into this contract isn’t my absolute favorite method, it’s hard to get around it with so much cash expected in the first 3-4 years of this mega quarterback deals. But the fact remains that the Bills have $58.9M of bonus proration on this contract, and there’s nothing they can do about that (see Carson Wentz & the Eagles).

This contract gives both sides exactly what they wanted. From the Bills standpoint, Buffalo gets to reward their homegrown QB with a top of the market, historic contract while keeping themselves open to extending their own, and/or adding a significant piece in each of the next two offseasons. Josh Allen gets at least $125M out of this contract over the next 4 seasons, regardless of injury, or lack of production, and the structure of his deal allows his team to remain in legitimate contention.

If all goes well, these two sides will be ripping this contract up in 2025, and doing it all over again - bigger and better.

View the Full Contract Breakdown
Watch a Video Breakdown of the Contract


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