Denver Broncos head coach Josh McDaniels shouldn’t be surprised that the future of his job is the subject of speculative press reports, considering his performance so far this season. After all, the team has gone 4-13 since opening the 2009 season at 6-0. After the Broncos’ embarrassing 24-16 loss to the less-than-mediocre San Francisco 49ers yesterday, speculation has run rampant about whether the brash young head coach should be fired. But, as ESPN notes, McDaniels can thank former Broncos head coach Mike Shanahan for his job security. Shanahan was fired with three years left on a $21 million contract, and McDaniels would have to be paid through 2012, so there’s no way the team would opt to pay three head coaches in 2011.

Still, McDaniels has a lot of explaining to do. Although quarterback Kyle Orton is putting up Pro Bowl numbers–2,509 yards and 12 touchdowns through eight games—the rest of McDaniels’ plan is failing to materialize.

The Broncos showed flashes of putting it all together yesterday, but penalties forced Denver to give back two touchdowns (one on a beautifully executed flea flicker and another on a 78-yard kickoff return by Eddie Royal), notes The Denver Post.

Whatever the reason for the loss, the Broncos sit at 2-6 and at the bottom of the AFC West, with very little hope of making it to the playoffs. It’s the team’s worst start since 1999, the year after John Elway retired. Mile High Report identifies areas for improvement this year, regardless of playoff chances, including establishing some semblance of a running game, playing more aggressively on offense and defense, and cutting down on penalties. Luckily, the Broncos have two weeks until the next game—against Kansas City—giving them a chance to work through some of the more serious flaws.