Prior to the deal, Watt was signed through 2015, with salaries of ~$900K this year and ~$10M the next, with the 2015 salary (the fifth-year option) only guaranteed for injury.
At the time of signing, $20.9M was fully guaranteed, and by next week, another $10M will be fully guaranteed.
Come the fifth day of the 2016 league year, his 2016 and 2017 salaries ($10.5M each year) will become fully guaranteed.
For now, that $21M is only guaranteed for injury, but is included in mainstream reporting as a guarantee.
In essence, Watt currently has a two-year deal for $31.9M, and then the Texans hold an option to extend him for $21M over two years come March 2016.
Beyond that, Houston holds four consecutive one-year options.
So that's $30M in new full guarantees for a player already under contract for two seasons.
As Jason Fitzgerald notes, this is a contract normally given veteran free agents, and resets the bar for other players.
For our purposes, the player to keep in mind is Von Miller, and as he made clear on Wednesday, Denver's young superstar has been paying attention to Watt's situation.
Watt's extension doesn't change that in any way.
About all Von can do is express his unhappiness and hold out at some point.
But, if Denver wants to keep their best defender happy, they're going to have to give him something very close to what Houston gave Watt.
And as we mentioned on Tuesday morning, the specter of a one-year suspension for Von doesn't factor.
We all know the Broncos will protect themselves from such a possibility. Even if they were to give him a significant signing bonus (which they never do anymore), there will be stipulations that allow for them to recoup it in the case of a ban.
If Von is ever suspended again, he will not count against the cap during that period - just like Matt Prater and Wes Welker for the next five weeks (four games).