Most agents tend to characterize new contracts as “extensions,” even though there are no true extensions in the NFL. The old contract goes away, and a new one takes its place.
The player doesn’t have to wait for the new deal to kick in. The new deal starts now, usually with a signing bonus.
By focusing on the new years, agents calculate the “new money.” And the new-money average is always higher than the total value of the deal from signing.
If, for example, a player has one year left on a current deal at $1 million and he gets a three-year, $30 million “extension,” he has a four-year, $31 million deal. The new-money value is $10 million per year. The real value — the value from signing — is $7.75 million per year.
The new-money analysis is used because it makes the numbers bigger, and the contract seemingly better. Those who get the text messages from the agents with the news of the new deal, including the new-money average, pass that information along without mentioning what the new contract actually is worth.
Sometimes, there’s a new contract that exposes the flaw in the new-money analysis. The new Patrick Mahomes deal, for example, adds two years and $239.05 million in new money. Under the new-money analysis, his new-money APY is $119.525 million — nearly twice the prior high-water mark of $60 million per year.
Mahomes isn’t the first player whose new contract leads to new years and new money that generate a ridiculously high new-money APY. Bills quarterback Josh Allen’s contract from 2025 was reported as a six-year, $330 million deal, for an average of $55 million per year. The new-money APY, given what he was due to make on his prior four-year deal, is close to $90 million.
Also, Deshaun Watson’s five-year, $230 million deal with the Browns was signed while he had four years left on his prior deal with the Texans. The new-money average (on the one extra year) was likewise in the range of $90 million.
Then there’s the last deal (for now) that Aaron Donald did with the Rams. The team tore up the existing three years and replaced it with a three-year deal at a higher total payout. In that case, the new-money APY is, technically, infinity.
The extreme examples expose the logical hole in the new-money analysis. The reality is that the old deal is gone and a new deal has taken its place. Almost always, the average payout from the signing of the new deal is much lower than the new-money APY.
Which, again, is why agents use new-money APY. And the teams willingly allow it. If the bigger number makes the player feel better about the contract he has signed than the smaller (and truer) number would, that’s a win for the organization.
