Peppers Contract: Actually, Not That Bad!

This past weekend, I posted my best guesstimates of what Julius Peppers contract might actually look like with the numbers that I had seen floating around the web. The purpose behind that article (and this one) was to take a look at what potential implications this deal might have on years going forward.

While I was somewhat close on the total amount per year, I was way off on how the deal was structured. One of the reasons that I was so off-based, is that I was still under the impression that a signing bonus (while paid upfront) would be prorated over the life of a contract. As was the case under the Collective Bargaining Agreement.

Since a new one has yet to be agreed upon, the league is operating under the Final League Year of the current CBA. Besides the lack of Salary Cap and Floor this year, it also appears that signing bonuses can be paid upfront, without being prorated over the life of the contract (link). This is what the Bears have done with the contract of our new defensive end.

Jump with me to take a revised look at Peppers ACTUAL contract and what implications it might have on the future of the Chicago Bears...

First, let's look at how Peppers contract is actually broken down:

2010: $900,000 base salary, $6.5m signing bonus, $12.5m roster bonus, and $100,000 workout bonus ($20m total)
2011: $900,000 base salary, $10.5m roster bonus, and $100,000 workout bonus ($11.5m total)
2012: $8.9m base salary, and $100,000 workout bonus ($9m total)
---- these first three years, our $40.5m, are guaranteed ----

2013: $12.9m base salary, and $100,000 workout bonus ($13m total)
2014: $13.9m base salary, and $100,000 workout bonus ($14m total)
2015: $16.5m base salary ($16.5m total)

The total of all the figures above equal out to $84m. Leaving a remainder $7m, of the potential $91.5m, for other bonuses - such as sacks, Pro Bowls and Defensive Player of the Years awards.

So, what implications might this beefy contract have on the Bears, should the deal go awry?

Not much. While the first three years are "guaranteed" (we'll get into this in a minute), it's really not that bad if you look at it from an aerial view. It's actually quite good. Here are the key points of why I applaud the Bears for their work on this contract:

1.) $20m out the total $84m (approximately 24%) of the six year contract will be paid in the un-Capped year of 2010. Thus, eliminating larger hits in future, possibly Capped, seasons.

2.) On average, Peppers will be making $12.8m per year over the last five years of his contract. In comparison, Albert Haynesworth averages $14.28m per year from the deal he signed last year. And Jared Allen (who the Vikings had to give up a 1st round pick for) averages $12.21m from the deal that he signed back in '08. And both Haynesworth and Allen have signing bonuses that have to be prorated over the course of the contract. Meaning, cutting them has future cap implications.

3.) Peppers is currently 30 years old. However, the Bears protected themselves by giving Peppers an escalating base salary. If his play deteriorates as his body does, then cutting him outright (post 2012) will have ZERO Cap implications since only guaranteed money, such as a "signing bonus," counts against Cap charges. That is, of course, going under the assumption that a new CBA is agreed upon that's on par with the previous one.

Also, according to this article, the Bears have protected themselves even further:

Mike Florio of PFT did a nice job of ferreting out the details as he followed up on some work by Peter King, revealing that Peppers gets $20 MM  up front and guaranteed.  The "guaranteed" dollars for the next two years — totalling $22 MM — are guaranteed for injury only up to a certain date each off-season, allowing the Bears to cut Peppers if they feel his skills are not worthy.

The Angelo/Smith management or the new group can decide on Peppers’s future after 2010 and each year thereafter, and Peppers also has reason to bust his butt, rather than rest on a pile of cash.

I said in my write-up after the signing, that some of the numbers put me on edge. However, this deal looks extremely favorable for both Peppers and the Bears.

Great job by the Lovie and Jerry for landing the premier defensive end on the market. Even better job by Cliff Stein for his work on the contract.