Alex Smith's Contract: How much is it really worth?

SAN FRANCISCO, CA - JANUARY 22: Alex Smith #11 of the San Francisco 49ers runs the ball.against Chase Blackburn #93 of the New York Giants during the second half of the NFC Championship Game against the New York Giants at Candlestick Park on January 22, 2012 in San Francisco, California. (Photo by Thearon W. Henderson/Getty Images)

Alex Smith recently signed a three year deal with the 49ers. There are some conflicting reports out there as to how the contract is actually broken down. These are valid concerns, because the way the contract is structure can seriously affect the job security of Alex Smith.

Most everybody reporting on the deal are saying that it's a 3 year deal worth $24 million (up to $33 million if Alex Smith hits all of his incentives), with $16.5 million in guaranteed money. Where the conflicting reports come in is how that guaranteed money is split up.

According to Matt Maiocco it's a three year deal, but $7.5 million of the $16.5 million is actually a roster bonus due on April 1, 2013, with an additional $1 million in guaranteed base salary (never mind that the math there doesn't add up).

Jason LaConfora is reporting that it's a three year deal, and that the 2013 number is actually a $1 million roster bonus with a $7.5 million guaranteed base salary.

ESPN is reporting the same details, but doesn't break down the $16.5 million guaranteed

Mike Florio of ProFootball Talk reports almost the same numbers as LaConfora, differing only on the amount of money in incentives (which could come from a difference in likely to be earned incentives vs total incentives).

Based on the different reports, here's what I think the contract numbers actually look like.

2012: $5 million base salary (fully guaranteed), $3 million roster bonus, $1.25 million in likely to be earned incentives, $1.75 million in unlikely to be earned incentives
2013: $7.5 million base salary (fully guaranteed), $1 million roster bonus, $1.25 million in likely to be earned incentives, $1.75 million in unlikely to be earned incentives
2014: $7.5 million base salary (not guaranteed), $1.25 million in likely to be earned incentives, $1.75 million in unlikely to be earned incentives

Cap Numbers

To know the cap numbers you need to know the following things:

1.) Bonuses are pro-rated over the life of the contract. These include signing bonuses, roster bonuses, workout bonuses, and any other bonuses. Alex Smith's $3 million roster bonus for 2012 will count for $1 million against the cap each year of his contract.

2.) If an incentive is designated as a likely to be earned incentive it gets counted in the salary cap number for that year. A LTBE incentive is designated as such in the contract. For example Alex Smith might have an incentive that says he'll throw for 2800 yards. Since he threw for 3100 yards last season that would be a LTBE incentive.

3.) An unlikely to be earned incentive is applied to the salary cap in the year following that in which it's earned. Alex Smith might have an incentive for throwing for 4,000 yards. If he does, that incentive would count against the 2013 cap.

4.) If a player is cut or retires any pro-rated money left on the contract gets applied to that season's salary cap.

5.) If a player is traded the team to which he's traded assumes both the contract and any salary cap hit for previous contracts.

This is how Alex Smith's cap numbers look assuming he hits all of his incentives:

2012: $7.25 million ($5 million base salary + $1 million of the roster bonus split over three years + $1.25 in LTBE incentives)
2013: $11.75 million ($7.5 million salary + $500k in roster bonus + $1 million roster bonus + $1.25 in likely to be earned incentives + $1.75 in unlikely to be earned incentives)
2014: $11.75 million ($7.5 million salary + $500k in roster bonus + $1 million roster bonus + $1.25 in likely to be earned incentives + $1.75 in unlikely to be earned incentives)

Here's the cap number for Alex Smith for each year if he gets cut by the 49ers. I'm not including any incentives in these figures because if he's hitting them he's exceedingly unlikely to be cut.

If he's cut after the 2012 season he'll count $2 million against the salary cap. This is the remainder of the roster bonus paid in 2012. Of course the 49ers would still be on the hook for his $7.5 million fully guaranteed salary, but it would be a minimal cap impact.

If he's cut after the 2013 season the salary cap figure would be $1.5 million.

Each of the reports has some little quirks, so let's take a look at each one.

This is the meat of what Maiocco says about the Alex Smith deal:

On the surface, the contract looks as if it contains $16.5 million in guaranteed money. But Smith's second-year base salary of $7.5 million is fully guaranteed only if Smith remains on the 49ers' roster on April 1, 2013.

Smith received no signing bonus, but his $5 million base salary and $3 million roster bonus for 2012 are guaranteed. Also, $1 million of his second-year salary is fully guaranteed.

In figuring Smith's cap figure, likely-to-be-earned incentives of $1.25 million count each of the three seasons because Smith would have reached those incentives with his performance from last season.

I find myself disagreeing with this report for several reasons:

1.) He's the only one reporting the second year salary as a roster bonus

2.) No other contract that I've seen discussed has referred to a roster bonus as a salary. If a salary for a player is based on them being on the roster on a specific date it's nearly always referred to as a roster bonus, with the base salary discussed as a separate number.

3.) The proposed structure of this contract is a bit confusing. According to this contract the 49ers would pay Alex Smith $8 million in 2012, but if they released him before April 1, 2013 they would still owe him $1 million in guaranteed base salary? Now I know that teams like to do all sorts of weird things to manipulate the salary cap, and this might be one of those things, but releasing a player to avoid a roster bonus but still paying him a guaranteed salary simply doesn't make sense.

Here's what the other reports have to say about the contract structure.

Mike Florio

In the case of 49ers quarterback Alex Smith, some reports have pegged the deal as carrying $16.5 million in guaranteed money, and a maximum value of $33 million.

Unfortunately for Smith, it doesn't.

Per a source with direct knowledge of the real numbers, here's what Smith will receive:

1. No signing bonus.

2. $5 million base salary in 2012, fully guaranteed.

3. $3 million non-guaranteed roster bonus in 2012.

4. $7.5 million base salary in 2013, fully guaranteed.

5. $1 million non-guaranteed roster bonus in 2013.

6. $7.5 million non-guaranteed base salary in 2014.

7. Incentives worth up to $1.25 million annually.

So that's $12.5 million in fully guaranteed money. The $16.5 million figure likely comes from the assumption that the roster bonuses will be paid in 2012 and 2013. But that doesn't make them guaranteed.

The difference in incentives is likely the difference between likely to be earned incentives and unlikely to be earned, since Maiocco is reporting the likely to be earned incentives at $1.25 million per year (which is important to know for cap reasons).

Jason LaConfora

Niners QB Alex Smith‘s three-year deal does not include a signing bonus and is worth $8 million in 2012 - with a $5 million fully guaranteed base salary, a $3 million roster bonus and another $1.25 million in incentives.

In 2013, he has a guaranteed salary of $7.5 million, with a $1 million roster bonus and another $1.25 million in incentives.

His 2014 base of $7.5 million is not guaranteed. He has another $1.25 million available in incentives in 2014 as well.

This agrees pretty well with what Mike Florio is saying.

ESPN

In the end, Smith is right back where he expected to be all along -- with the only franchise he ever has known.

The free agent quarterback signed his three-year deal with the 49ers on Wednesday. It will pay him $8 million per season with $16.5 million guaranteed, according to a person with knowledge of the contract.

The person, who spoke on condition of anonymity Wednesday because the contract details weren't made public, said Smith's deal can pay him up to $33 million.

No break down of how the numbers work on this one, other than three years, up to $33 million, with $16.5 million guaranteed.

So, two of the reports say Alex Smith can earn up to $33 million over the course of the contract (Maiocco, ESPN). Two of the reports say that it's not quite that much (Jason LaConfora, Mike Florio). All of the reports say $16.5 million guaranteed. One report says only $9 million fully guaranteed, with $7.5 million in roster bonus (Maiocco), two say $16.5 million fully guaranteed (LaConfora, Mike Florio), and one doesn't say how it's broken down (ESPN).

Since Matt Maiocco is the only reporter I can find who is claiming that the $7.5 million figure for 2013 is a roster bonus and not a guaranteed salary I have to conclude that he's mis-understood the contract.

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