Josh Allen contract highlights the flaws of the "new-money" fiction

This is one of those stories that roughly two percent of you will care about. That two percent will find it fascinating.

For years, we've pointed out the fiction that is the "new-money" analysis for contracts. (To the dismay of plenty of agents.) The approach, pushed by agents and accepted without scrutiny by the insiders to whom the agents spoon feed scoops and signings, transmogrifies new contracts into something they're not — all in the name of making the new contract look better.

Here's how it works. Whenever a player who has one or more years left on his contract gets a new deal that lasts longer than the current one, it's called an extension. It's not an extension. It's a new contract.

There are no extensions, in the technical or literal sense, of NFL contracts. In every case, the old contract gets torn up and disregarded. A new contract takes its place.

I know this assertion will be met with aggressive disagreement from some (especially in the cesspool now known as X, as in "X marks the spot of the cesspool"). The truth, based on hundreds of contracts I've seen over the past 25 years, is that there are no extensions. All contracts are new contracts that wipe out the old contracts.

Calling a new contract an "extension" bolsters the phony-baloney view that the "new money" added to the prior deal has meaning. Here's an example, in the simplest possible terms.

Player A has a contract with two years left, at $5 million per year. That's $10 million in what eventually will be called "old money." He gets a new contract that covers four years, at $10 million per year. It's now a four-year, $40 million contract with a $10 million annual average, right?

Wrong. The "new money" is the $40 million he's due to make now minus the $10 million he was supposed to earn. (That's $30 million for the math-impaired, like me.) And since the deal is two years longer, there are two new years. So with an extra $30 million on a deal that has two new years, the "new-money" average is $15 million per year. Which looks a lot better, obviously, than $10 million per year.

The problem is that contracts are reported, and thus ranked, based on new money. Cowboys quarterback Dak Prescott signed in September 2024 a new contract with four new years and $240 million in "new money." So the "new-money" average is $60 million per year. But it was really a five-year, $269 million contract, since he was due to make $29 million in the final year of his existing contract. The average of the new deal is $53.8 million per year.

Enter Josh Allen. He has a new six-year contract, with a total value of $330 million. The average is $55 million from signing.

But Prescott's deal is listed on the APY rankings as having a $60 million annual value, and Allen's is listed as having a $55 million annual value. That's not an apples-to-apples comparison. Allen's deal is worth $55 million per year from signing; Prescotts is worth $53.8 million per year from signing.

The "new-money" fiction pushes Prescott to $60 million per year. As Charles Robinson of Yahoo Sports has noticed, the "new-money" average for Allen is higher. Much higher. Much, much higher. It's more than $87 million per year.

Here's our full breakdown of the Josh Allen deal. At $55 million per year over six year he's getting a $65.445 million boost over what he was supposed to make over the next four years, and $110 million for the final two. That works out to "new money" of $175.446 million. So with two new years and $175.446 million, that's a "new-money" average of $87.723 million.

It's jaw-dropping. But it hardly means that Allen should now be listed as having an $87.723 million per year contract. However, if we're going to say Prescott is making $60 million per year in "new money," we also need to say Allen is making $87.723 million.

Here's the far better approach: Kill the "new-money" bullshit. A new contract is worth whatever the new contract is worth. Old contract is gone, new contract takes its place.

That's how the Bills will surely try to explain this one. They tore up the remaining four years of Allen's deal, and they replaced it with a brand-new, six-year contract. And that would make sense, if that wasn't the same thing that happens for EVERY new contract with a longer duration than the one it replaced.

The same thing happened with Deshaun Watson's contract in 2022. He was due to make, as noted by Joel Corry of CBS Sports, $136 million over the four years left on his deal with the Texans. After the Browns traded for Watson, they replaced the existing contract with a five-year, $230 million deal. That's $94 million in new money with one new year on the deal — which translates to a new-money average of $94 million.

For some reason, certain contracts get excluded from the "new-money" analysis. Why? Because they cause the "new-money" fiction to collapse upon itself.

As it should.

So if Dak Prescott is making $60 million per year, then Allen is making $87.723 million per year — and Watson is making $94 million. If that sounds wrong, it should. And it's because the "new-money" average is bogus. Instead, when it leads to extreme and outrageous results, it conveniently gets ignored.

Please, NFL, NFLPA, agents, reporters, and fans, let's ditch the "new-money" analysis. If not, let's fully embrace it. Including those situations (like Allen's and Watson's) where the numbers prove how meaningless the entire exercise is.