What We Learned in 2018: Finding Value in Kansas City and Patrick Mahomes

Patrick Mahomes II seems like a down-to-earth fellow, but on the field, the young quarterback has been deified, and rightfully so. His 2018 performance was historically great for anyone, let alone a first-year starter. Mahomes became just the third player to throw 50 touchdown passes in a single season, after Brady and Manning, guys whose greatness has made the use of first names obsolete. He also became the seventh player to throw for over 5000 yards, and he did so without the benefit of a Calvin Johnson-style possession receiver (who carried a young Matthew Stafford over 5000 yards in his age-23 season). Look, if you’re reading this article, I probably don’t have to convince you that Patrick Mahomes looked extremely impressive. And, if you do need convincing, stop reading now, go watch this video, and come back.

As amazing as Mahomes was in 2018, the dirty secret is that, at least from a roster construction perspective, his superstar level play was not what made him so valuable, and in order to understand how this is the case, we need to turn to Major League Baseball for answers. In the MLB, where there is more of a cost-cutting culture, the concept of “surplus value” has become a buzzword. The basic idea here is that market forces determine how much players should get paid based on their performance. Therefore, someone who is signed for less money than they’d be worth as a free agent is said to have surplus value. (An interesting distinction is that baseball contracts are guaranteed, while NFL contracts are not, so any football player with negative surplus value is just going to get cut).

One way to get players with surplus value is to recognize market inefficiencies or undervalued players, but since all 32 teams are competing for the hearts of the same players, it’s fairly difficult to find quality players that aren’t recognized as such by the competition. Luckily, the other way to accrue surplus value is far easier: draft good players! After Sam Bradford’s 2010 rookie contract 6-year, $78MM (with $50MM guaranteed), the NFL instituted an artificial cap for rookie contracts. By comparison, Baker Mayfield, also a first overall pick, is set to make just over $32MM over the course of his contract.

So how about Patrick Mahomes, the best QB in the NFL in 2018? He’s guaranteed about $16MM over the next four years. Sixteen million! To you and me, that sounds like a lot of money. To NFL players? Please. Mahomes wouldn’t have even been the highest paid kicker in 2018. In fact, according to Spotrac, he’d only have been the ninth wealthiest kicker of the year. The best quarterbacking performance the NFL has seen since Tom Brady’s 2007 was rewarded with the salary of a quality special teams player.

But, there’s another crucial difference between the NFL and MLB when it comes to surplus value. In baseball, there’s far less revenue sharing, and without a salary cap, teams can simply pocket the savings produced by signing players for sub-market value contracts. In football, most teams attempt to have payrolls approach the salary cap, meaning that a dollar saved on one player is usually spent on another. In other words, because Patrick Mahomes was signed for such a (relatively) inexpensive amount, they had the financial flexibility to be able to surround him with talent.

By contrast, consider the financial situation of the Green Bay Packers. The City of Green Bay employs arguably the best quarterback in today’s NFL in Aaron Rodgers, but because Rodgers makes 13.5% of their total payroll, they were forced to skimp at other positions. Only four teams spent less on running backs in 2018, and only two spent less on defense. Aaron Rodgers is a generation talent, but he can’t do much to help the 11th lowest paid D-Line get to the QB, or the 6th lowest paid secondary to cover Adam Thielen and Stefon Diggs. Kansas City, and other teams that employ young quarterbacks like Los Angeles and Cleveland, simply do not have to deal with this problem. They get top-shelf production from their quarterbacks for well prices.

Young, talented quarterbacks on artificially suppressed contracts are unquestionably the most valuable commodities in the NFL. It’s true that drafting quality players does require some luck, there’s a real argument to be made that more teams should throw caution to the wind. Consider the Bears, who invested 2017’s third overall pick on Mitch Trubisky. The Cleveland native hasn’t exactly lived up to the lofty expectations implicit in a top three pick, but he’s cost controlled, meaning Chicago could extend Khalil Mack and invest in their secondary. Trubisky played just well enough to help the Bears win the NFC North, but his biggest contribution was simply being a low-cost player.

I wouldn’t dare say the same about Mahomes, given just how productive he was in 2018. But, by spending the 5th fewest dollars on the QB position, they were able to employ, for instance, the league’s most expensive crew of linebackers, the 10th most expensive O-Line. They were able to take a flyer on Sammy Watkins, whose comeback year provided Mahomes with a quality possession receiver. They could afford to have one of the most expensive tight ends in Travis Kelce. The Chiefs were fantastic because Pat Mahomes was fantastic, but even if he’d struggled more, Kansas City would still have been good because of Mahomes’s inexpensive rookie deal.

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