Jason La Canfora tweeted a couple of hours ago that the Niners "have offer on table to Smith and hope to get him signed sooner rather than later". There is little chance that Smith will play anywhere other than with the Niners next season. In the remaining days (hours?) before Smith actually inks the contract, I thought that it may be worthwhile to speculate about the terms of the contract. More after the jump.Baalke made a significant investment in trading up in the second round to draft Colin Kaepernick. To maximize the chance of a good return on this investment, the coaching staff will have to carefully develop and evaluate Kaep even as the latter competes with Smith for the starting job. The Niners must believe that they are in a very good position with respect to the QB position. It is likely that Alex has not reached his ceiling yet. With the addition of an improved receiving corps, and with an improved grasp of Harbaugh's version of a QB-friendly West Coast offense, his confidence will grow. By the same token, Kaep's full readiness as a starter will be delayed as long as Alex starts. However, the opportunity to hone one's craft as a backup QB for the first three years in a good offensive system is a rare one, as Aaron Rodgers has observed.
Barring any serious injury, and based on Alex's trajectory, I'd guess that he would be able to beat out Kaep in a QB competition for the next two seasons. However, I do not expect the Niners to offer just a 2-3 year contract. They may offer a five-year contract that is laden with incentives, especially in the last three years, where his salary will vary over a significant range based on whether he can retain his starting position.How much money will the Niners offer Alex? Unlike some other teams that have overpaid in signing their own players to new contracts in the last week or two, the Niners will not break the bank for even the starting QB. The Niners front office believes in cost control through value pricing.
So an appropriate question is how much is Alex's services worth? In the free agent market, Alex has been perceived by some as middling QB "with a plus arm, excellent accuracy and underrated athletic ability". Jason, a Jet's fan who maintains the site that tracks salary cap of the Jets, posted an interesting analysis of the performance-to-salary relationship for the starting and backup QBs. The conclusion from his chart is that Alex provided good value for money last season, even after one accounts for the fact that he made $6.5M after maxing out his incentives. Assuming a 25-30% improved in Smith's performance (mostly in increased TDs and yards completed), he would still be a good deal at $10M per year for the next two years. (There are other, more obscure ways, to evaluate the cost of QB performance that the readers may want to consult).
In conclusion, my guess is that the Niners will offer Alex a 5 year deal in the vicinity of $55M, with about $18M guaranteed, the latter structured with requisite cap-friendliness, especially for this season. Marathe will cook up a head-spinning array of performance-based incentives for the entire length of the contract, but especially for the last three years. If Alex continues to get better every season, manages to stay healthy, and fends off Kaep, the Niners win. If Alex levels off and Kaep blossoms early, then the Niners still wins.
What do you think Alex's contract will be?