News & Analysis

Houston Texans QB Deshaun Watson agrees to 4-year, $160M extension

Dec 1, 2019; Houston, TX, USA; Houston Texans quarterback Deshaun Watson (4) celebrates after throwing a touchdown against the New England Patriots in the second half at NRG Stadium. Mandatory Credit: Thomas B. Shea-USA TODAY Sports

Deshaun Watson has agreed to a four-year extension with the Houston Texans that includes $39 million in new-money average per year with a $27 million signing bonus, as first reported by John McClain of the Houston Chronicle.

Watson had two years remaining on his rookie contract if you include the 2021 fifth-year option, which was valued at $17,540,000. In total, he had $18,717,124 in new cash remaining through the 2021 season if you include his $1.17 million 2020 base salary. He is now under contract through the 2025 season, bringing his deal to six total years.

Breaking down the contract

Adam Schefter later reported that Watson’s contract was worth a total of $177,540,000. This is clearly Schefter adding $160 million in new money over four years ($40 million per year) plus the fifth-year option amount of $17,540,000. In all likelihood, the true new-money average is $39 million, but some escalators or incentives perhaps could push it higher, as we saw in the Patrick Mahomes deal.

We will now, of course, see these two deals compared to one another, as these two star quarterbacks went 10th and 12th overall, respectively, in the 2017 NFL Draft. The number you are going to see is $45 million in new-money average per year for Mahomes and $39/$40 million for Watson, but this is why NFL contracts and the way they are reported can’t always be trusted. 

Mahomes also had a fifth-year option remaining on his deal in addition to the upcoming 2020 season; he then added 10 years onto that. But as we all know, NFL contracts rarely last that long. Mahomes’ extension can effectively be broken up into two separate five-year deals. Over the first five years of Mahomes’ extension (2022-2026), the new-money average per year is just under $40 million, at $39.55 million. The average over the final five years (2027-2031) is just above $50 million, at $50.45 million.

The way Mahomes’ deal is structured, the first true “out” — if you can call it that for a contract this big for a player this good — is in 2025. This is the first year where it could be rational for the Kansas City Chiefs to move on from the contract, or perhaps Mahomes could trigger an out and look for a new deal. The 2025 season will also be the final year of Watson’s extension.

At the end of the day, two transcendent talents signed record-breaking contracts and are set to light up the NFL for years to come without the worry of a contract on their mind. Their respective front offices are going to have a heck of a time continuing to surround them with talent, but that’s not their problem. We hear a lot about the Chiefs and their big contracts, but the Texans have invested heavily in the defense and offensive line around Watson, as well. 

This list doesn’t include J.J. Watt, who is one of the higher-paid defensive linemen in the NFL, or running back David Johnson, whom the Texans traded for this offseason.

There’s a solid window in these next few years as Tom Brady, Drew Brees, Philip Rivers and Ben Roethlisberger play their final seasons and the list of good NFL quarterbacks shrinks. Of course, there is always talent coming up from the college ranks, but a lack of elder statesmen, and mediocre results from the highly touted 2018 draft class, may have created a temporary shortage. Nevertheless, the top of the quarterback market continues to grow in perpetuity year after year.

Contract extensions are, by their nature, about projecting future performance based on past evidence, and the Texans are clearly projecting Watson to be among the very best quarterbacks in football over the life of the deal.

It’s easy to see why they are confident in that, given what we have seen from him so far.

Watson is worth the money

Over the past two seasons, only Patrick Mahomes and Drew Brees have more single-game performances with a PFF grade of 80.0 or above.

In terms of a week-to-week baseline, Watson is up there with the best quarterbacks in the league. The only thing separating him from the likes of Mahomes is the occasional poor game that drags his overall PFF grade down over a season, which is something that Mahomes is yet to have.

NFL Quarterbacks: Most single-game PFF grades above 80.0 alongside the number of single-game grades below 60.0 (regular season only, 2018-19)
Rank  Name Team PFF grades above 80.0 PFF grades below 60.0
1 Drew Brees Saints 14 2
2 Patrick Mahomes Chiefs 13 2
3 Deshaun Watson Texans 12 7
4 Tom Brady Patriots 10 4
5 Philip Rivers Chargers 10 5
6 Kirk Cousins Vikings 10 7
7 Lamar Jackson Ravens 10 12
8 Russell Wilson Seahawks 9 4
9 Aaron Rodgers Packers 8 4
10 Andrew Luck Colts 8 1

That trend isn’t without precedent — Russell Wilson used to suffer from similar uncharacteristically poor games — but the Texans are clearly banking on him being able to remove those poor performances from his game.

Whether they are right or not, Watson has more than enough truly elite play to warrant a monster contract, and we made the case recently that the loss of DeAndre Hopkins may actually encourage him to become a better quarterback.

The former 12th overall pick has increased his PFF grade in every single season of his NFL career, going from 68.1 as a rookie to 80.9 in 2017 to 82.7 this past year. Over all three years, he ranks 13th among 44 qualifying quarterbacks in PFF passing grade from a clean pocket — one of the most stable metrics for QBs year over year — and only Wilson (81.0) has recorded a higher passer rating under pressure than Watson's mark of 79.8.

Watson also shows the qualities of a great quarterback by often saving his best play for the most disadvantageous situations. Over the last two seasons, he ranks fourth in PFF passing grade (86.2) when his team is trailing, and he ranks third (84.1) in the fourth quarter and overtime. 

The Texans have locked down the face of their franchise, a player who has already proved that he can be an elite quarterback, but they’ve given him a contract that suggests they believe he can get even better.

There’s plenty of evidence to suggest they’re right.

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