New Patrick Mahomes deal exposes the flaw in the new-money analysis
NBC Sports • • sports
Key Points:
- NFL contracts labeled as "extensions" are actually new deals that replace the old contract entirely, starting immediately, often with a signing bonus.
- Agents focus on "new money" averages, which calculate the contract value based only on the new years added, making the average annual value (APY) appear higher than the true average from signing.
- High-profile contracts like those of Patrick Mahomes, Josh Allen, and Deshaun Watson have showcased inflated new-money APYs, sometimes nearly double or more than the real average annual value.
- The new-money APY method can be misleading, as it ignores the total contract value and duration, but it is used by agents and accepted by teams because it presents a more favorable financial picture to players.
- Ultimately, the true contract value is the average payout from the signing date over the entire contract length, which is almost always lower than the new-money APY touted by agents.