What To Make Of Julius Peppers’ Contract

ALLGBP.com All Green Bay Packers All the Time
The poster boy of why total contract value is overrated.

For all you Packers fans that were hoping for a big name free agent splash, Ted Thompson would like to introduce you to one Julius Peppers, a guy you might have seen around on the Bears and the Panthers before.  Some of you (including a fair proportion of our dear commentors) will never be happy because Peppers has never played in a 3-4 scheme, no one really knows exactly what his role will be outside of rushing the passer, has a long injury history and he’s 34 with a motor that’s starting to get cold (you do know that experienced and old usually go hand in hand right?).  Well if you want to know what the Packers are going to do with Peppers, this isn’t the article for you. What this article will be looking into is not how Peppers will fit on the field, but how Peppers fits in the Packers salary cap.

As I’ve mentioned before in my previous article, the media and fans often fixate on the total value of the contract, which is probably the least important piece of information.  One only has to remember how Donovan McNabb’s 5-year $88 million contract with the Redskins turned out to be more $3.75 million which he actually earned.  Ironically, this is also probably the best example to use for Pepper’s contract with the Packers.

Julius Pepper signs 3-year, $30 million contract with the Packers (courtesy of Over The Cap)

2014: $1 million base salary, $2.5 million prorated signing bonus

2015: $8.5 million base salary, $2.5 million prorated signing bonus, $1 million roster/workout bonus

2016: $7 million base salary, $2.5 million prorated signing bonus, $1 million roster/workout bonus

Highlighted in bold are the real important numbers, which are values that Peppers has a good shot of actually receiving, namely Pepper’s signing bonus, which is guaranteed and the first year of his base salary which he will almost certainly earn.  That aside, everything else depends on Peppers making the team.  Most importantly, notice the jump in his base salary from 2014 to 2015, a staggering difference of $7.5 million.  Essentially what this means is that Peppers has one year to prove to the Packers front office he’s worth keeping in 2015.  If Peppers shows he’s run out of gas, can’t make the transition to a predominantly 3-4 defense, can’t stay healthy and on the field, the Packers can cut Peppers and only pay him $5 million after the end of 2014 season.  It’s also possible that the Packers included offset language in their contract, meaning if Peppers is released and then signs for another team, Peppers loses the same amount of money he gained with the other team from the Packers.  Again, keep in mind that the Packers have the leverage throughout the lifespan of contract; the Packer front office can ask Peppers to take a pay cut or a pay cut for a small increase in guaranteed money (which is what they did with AJ Hawk) and Peppers has to listen (As opposed to Aaron Rodgers, where cutting him would not save any money since Rodgers still has a lot of guaranteed money coming in).  Overall, Julius Peppers can reasonably expect to earn at minimum $8.5 million. 

Compare this Demarcus Ware’s contract that he signed with the Denver Broncos.  Peppers and Ware are comparable in the sense that they are older, experienced pass rushers who at one point in time were considered some of the best at getting at the quarterback.  On the facade, both received 3-year contracts worth $30 million, but look at how different the splits are.

Demarcus Ware signs 3-year, $30 million contract with the Broncos (courtesy of Over the Cap)

2014: $3 million base salary, $1.6 million prorated signing bonus, $5 million roster bonus

2015: $7 million base salary, $1.6 million prorated signing bonus

2016: $7 million base salary, $1.6 million prorated signing bonus, $3 million roster bonus

Again highlighted in bold is the money that Ware can reasonably expect to see.  Again, Ware will almost certainly be on the Broncos in 2014, his signing bonus is fully guaranteed and his 2014 roster bonus will also almost certainly be earned.  Ware also has to prove to the Broncos’ front office he’s worth keeping in 2015, but the important point is that Ware already won multiple concessions in his first year that covers the risk of being cut after one year.  Overall, Demarcus Ware can reasonably expect to earn at minimum $12.5 million.

Now some of this might be explained by the fact that Ware is younger than Peppers, has experience in both a 3-4 and 4-3 defense and has roughly the same amount of sacks with 3 less years in the NFL.  But really, neither Ware nor Peppers is a sure deal at this point in their careers; both have been injured and had to take heavily incentive ladened contracts and have to prove their worth.  I would argue that in this situation guaranteed money is not the most important (as I argued it was with Sam Shields), it’s the value of the 1st year of the contract, which is the only year that either player can be fairly certain to be on their respective teams.  In that regard the Broncos significantly overpaid for Ware, paying him $9.6 million compared to $3.5 million that the Packers will pay Julius Peppers.  The Broncos are in a win now mode with Peyton Manning nearing the end of his career and with the signings of TJ Ward and Aqib Talib in the next couple of years the Broncos will be forced to go into salary cap slashing/ rebuilding mode and Ware is likely going to be one of the first players cut given his age and large salary in 2015 and 2016.

In conclusion, a lot of thought goes into a contract and usually it’s more nuanced than just the total money.  For Sam Shields, the Packers crafted a contract that has the flexibility to pay him at market value regardless of what type of player he becomes.  For Julius Peppers, the Packers crafted a contract that asks him to prove he still has something in the tank right away.

 

 

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Thomas Hobbes is a staff writer for Jersey Al’s AllGreenBayPackers.com.

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  • Big T

    Every contract should be incentive heavy. I bet everyone posting on here would love to go to work knowing that they are getting 1.5 million/yr. whether they actually work or not. And if you actually do your job you can make 8.5 million/yr. Is it just me or have NFL players become diva’s. If you don’t play we won’t pay.

    • Nopainnogain

      would you turn down a fully guaranteed contract if it was offered to you? everyone, regardless of profession tries to get as much as the job market will offer them. It’s supple and demand. These teams are competing for free agents. Offering a player more guarantees than another team can win that free agent’s services. Are teams just supposed to collude and violate the CBA by all agreeing not to offer any guaranteed $$ to players?

      • Big T

        In the real world loyalty means something… It is not always about money my friend. Supply and demand work well for economics but not so well for life decisions.

        • Sven

          These guys face the real risk of serious and long term injury. If a player is injured he should still be paid. I am OK with the money they make. The teams weigh the value and choose their investments.

        • Nopainnogain

          lol, people in the ‘real world’ are not any more or less loyal than football players. people are people. what is wrong with players trying to get their market value if that is what they wish? there is nothing unethical about that.

          • Big T

            I don’t care if they get market value. It is when they get the money and stop playing at the level they are capable of… dogging it… that is b.s.

            • Nopainnogain

              there are plenty of other reasons that could be responsible for a down-year. I highly doubt whether anybody on this site has the capability to detect when a player’s overall effort throughout the year has been abnormal. especially since most here have GB tunnel vision and don’t look at any other teams/players to get an accurate feel for a position

              • Thomas Hobbes

                I think more observant fans would be able to tell if they were paying attention, like everyone this year knew something was going on with Raji.

              • Stroh

                Thomas. Something was going on w/ Raji all right. He was being forced to play out of position for a 3rd yr and he hated it, not too mention he wasn’t good at it. He’ll be much happier playing his natural NT position.

                At least he was a team player and kept quiet about it, even tho he was clearly not happy about it.

            • 1stngoal

              Remember, the flip-side to this equation is that after the guaranteed money, the owners hold all the leverage. The payouts of most of these large, headline-grabbing contracts are never fully realized. The players either re-negotiate to a lower number or are cut outright. BJ Raji is a great example of a player who decided to dog it in a contract year, and cost himself some major coin because of it. Remember loyalty works both ways…

              • http://GV889@aol.com Jerry

                Stroh you’re a proponent of the Raji playing out of position school of thought. I’am not disagreeing with you as a matter of fact I’am kinda thinking the same way.. My question to you is do you think if BJ returns to his 2010 form will he resign with the Packers or does he want out of Green Bay?

              • Stroh

                Jerry. If Raji plays anywhere close to his ’10 form or is at least a very good NT, which IMO is very possible and maybe even likely, the Packers would almost certainly bring him back. I don’t think it was ever a case of Raji wanting out of GB. As a matter of fact, I read that he was only interested in coming back to GB if he was going to be at NT.

                If you read more than just these fan blogs its clear Raji wanted to be playing NT.

                Demovsky… “•It allows the Packers to move Raji back to his natural position, nose tackle.” And “The Packers’ decision to move Raji back to the nose tackle likely was one of the reasons he was willing to return to Green Bay.” “While Raji’s productivity wasn’t there last season, what helped him to return was the fact that he never publicly complained about his role.”

                Wilde IIRC, had much the same thing to say. Couldn’t find the article however. Raji is a NT and he needs and Wants to play NT, which is something I’ve been saying for over a year now. I think the Packers will do everything they can to get the most out of Raji and then will re-sign him for another 4 yrs. There is absolutely no evidence that he wanted out of GB, but that he wanted to play NT, not be an ill-fitted DE

              • Stroh

                Found this by Silverstien on JS Online.

                “One of the seeling points for Raji is that he would be able to return to being a full time NT as he was in ’10 when he was difficult for teams to deal with because of his combination of size and speed/quickness.” “Playing straight on the nose can result in more double teams, but it also provides opportunities for Raji to pass rush against a center and Raji feels there aren’t many centers that can block him one on one.”

                Its only on these fan blogs where there was any mention of Raji really wanting out of GB. To borrow from the author “I think more observant fans would be able to tell if they were paying attention” that Raji was miscast, unhappy and out of position at DE!

              • http://GV889@aol.com Jerry

                Stroh,Thanks for clearing that up! I gave you two thumbs up for your insightful posts, which seems to explain Raji’s lack of effectiveness the past two seasons.Looks like BJ Raji was taking one for the team.

              • Stroh

                Jerry. Your welcome. Always interested in having insightful dialogue w/ other Packer fans. Too many spend all their time only on these comment sites and don’t get the full story, develop their own theories and bash a player. I read and comment on this and another site, but I also read Packer coverage from the newpapers that cover the Packers as well as the natl media sites.

                I want the full story, not an abridged one.

              • http://GV889@aol.com Jerry

                Stroh I live in the NYC area and I rely on Al’s site and The GB Press gazette and The Milwaukee JS…If your a Packer fan who’s not from the Wisconsin area it’s a little bit of a chore trying to find detailed inside info on the Packers organization.But it’s a labor of love!

              • Stroh

                Jerry. I check the same sites. I was born and lived in GB till bout 16 yrs ago. Live in Phx AZ area now. Gotta use all the tools to find the real info. These sites are fun to comment, but aren’t always the best most informed sites. Check out ESPNWisconsin and the Packers blog at ESPN (they are different) for even more info.

        • Since ’61

          Big T, the NFL is all about the money. The teams are not loyal to players and the players are not loyal to the teams. Every player should make as much as they can for as long as they can from whoever will pay them the most. BTW, many, not all, life decisions are based on money as well. Where you live, the house you buy, the college you pay for, etc… are usually financial decisions. In business it is strictly economics, always is and will be. People are paid, including football players, in proportion to the amount of revenue they can generate. Great players put people in the seats and cover the bills, older players with diminishing skills are gone. Same as in any other business. Loyalty is for family and close friends and of course Packers fans. Thanks, Since ’61

        • Thomas Hobbes

          I would say that loyalty does mean something in the NFL but people will try to maximize their money as well. There are plenty of players who don’t take market value contracts and give a home discount to their original teams. Also the more money you make the more loyalty you will normally give.

    • Thomas Hobbes

      The more in demand you are as an economic entity the more money you are typically guaranteed. If a Fortune 500 company is looking for a new CEO, you can expect a signing bonus, stock options, company car and all sorts of perks because your skills are in demand. If you work in mcdonalds, none of your salary is guaranteed and you could be “cut” at anytime. The NFL is the same, there aren’t enough people on this world that are good NFL players and as such they get benefits in their salary.

  • packett

    What chance do you think he is retained the second year at $12m hit? Seems to me this is basically a one-year contract dressed up for the media. I hope not, but he’d have to make a big impact for them to pay $12M for year two, not? I would have liked to see an under-the-radar DE or DT signed for a longer term. That is when you get good value FA that can learn and get incorporated in the system (seems to me). Hope TT goes for DT in rd 2-3 after ILB and FS.

    • Anonymous

      If Peppers stays a second year they can renegotiate the salary to reduce the cap hit if needed.

      The contract has almost no effect on whether or not Peppers plays in GB in 2015 — what Peppers fdoes on the field will either justify paying him, or not. The way the Packers use Pepeers will either make him happy to stay, or not.

      Whatever happens, the cap hit this year is minimal and the cap hit in 2015 is negotiable.

  • jOE

    No reason we couldn’t renegotiate his contract for next year if he is good but not great.

  • Sven

    Seems like a great signing to me. He can offer a lot in the locker room and on the field.

  • Geronimo

    If we have $14 million left and Ted’s going to sign the rest of last years roster…..Kuhn, Flynn, Jordy (a must) and Cobb (ditto) that leaves the rest for rookie signings. Translation….by adding Peppers and rolling the draft dice, this team is set to beat the best?

    • Thomas Hobbes

      I don’t think Thompson takes any player to specifically beat another team (for example there are rumors that Thompson drafted Justin Harrell to counter Adrian Peterson, which is absurd). I think he has a idea of what team would likely beat most other teams and he tries to find players that fit his vision

  • Tarynfor12

    If Peppers can get the other DL guys and a couple of hoped to be OLB’s to step up to a level of average to above average,which has been a chore,less Daniels,it would make it easier for Peppers being a one year deal.If those in question are still on the questionable list,Peppers may very well be around to help transition those we draft now.

    • Thomas Hobbes

      Unless you mean players Thompson has already drafted. Thompson has quite of investment in the defensive front 7 at this point in places peppers could realistically fit. At olb they have Matthews, Perry and Neal and at DE they have Jones, Worthy and Daniels.

  • Nopainnogain

    I was never super interested in bringing Peppers in, but the price is very good. If he manages turn it around dramatically, we can keep him for 2 more years. If he struggles, or we could really use the $$ elsewhere (like for Cobb’s extension), we can drop him and immediately clear a decent amount off the cap. Flexibility is nice

    • KW

      You have to remember that JP isn’t being brought in to be THE big dog … he’s there to be a book-end to CM3 and rush the QB. He’s not being expected to do anything else and I think it was a good pick-up by TT. The Bears didn’t cut JP because he was old and starting to suck … they did it because they overpaid him .. never renegotiated his contract .. and needed more cap space. I think the guy wants to play for the love of the game and a chance at a ring, unlike Jared Allen who only wants to play if they pay what HE says he’s worth.

      • Thomas Hobbes

        I’d hold back on that assessment, do the packers think he’s a olb? Are they only going to use him as a nickel de? Will be next to or opposite of Matthews? We’ll have to wait till training camp to really find out

        • Stroh

          Have to wait till the regular season more likely. The Packers won’t be giving out any secrets about how they intend to use the pieces they have until the games matter. I expect nothing out of Peppers but playing 34 DE in the preseason. If your able to attend practices you might see some wrinkles, but not in preseason games.

      • Nopainnogain

        I know a large contributing factor for his cutting was his high salary, but I don’t think that is the only reason. Many have said his skills and performance have declined. Amongst 4-3 DE’s PFF graded Peppers 36th-best last year and 22nd-best at pass rush. He is 34 years old and going to transfer to a new scheme. I’m not going to set my expectations too high. Saturday was another aging player w/ a big name and his fell off a cliff when GB signed him.

  • KW

    Thomas Hobbes “.. has a long injury history and he’s 34 with a motor that’s starting to get cold..” Seriously?  
    2009 .. broke his hand Week 9.. but continued to play with a cast
    2011 .. played much of the season with a sprained MCL in his left knee that he injured in week 5
    2012 .. Peppers played with planta fasciitis and was STILL able to record 11.5 sacks

    2010 // 43 solo tackles, 11 assisted tackles, 8 sacks, 3 forced fumbles, 2 interceptions, 9 passes defensed, 5 stuffs, and 1 blocked kick

    2011 // 33 solo tackles, 4 assisted tackles, 11 sacks, 3 forced fumbles, 2 fumble recoveries, 4 passes defensed, 6 stuffs and 2 blocked kicks

    2012 // 32 solo tackles, 7 assisted tackles, 11.5 sacks, 1 forced fumble, 4 fumble recoveries, 2 passes defensed, 3 stuffs, and 1 blocked kick

    2013 // 31 solo tackles, 15 assisted tackles, 7 sacks, 2 forced fumbles, 1 fumble recovery, 1 interception, 3 passes defensed, 2 stuffs, and 1 defensive touchdown.

    I’d have to say, “Yeah, I’ll concede that MAYBE he’s slowing-down a little … but he’s still better than half the guys you could bring in! But he’s the book-end to CM3, NOT a single player expected to make all the difference.” JMHO

    • Thomas Hobbes

      As a packers fan have you feared peppers in the last couple years when played against the packers? I would say I wasn’t that concerned over the last couple years. He’s getting older and older players have to deal more with injuries

      • Stroh

        As a Packer Fan… You damn right I’ve been concerned about Peppers the past few years. Have you seen his numbers against the Packers in just the past 2 seasons? I think more observant fans would be able to tell if they were paying attention that Peppers has lit up the Packers… to the tune of

        5.5 sacks, 2 Passes Defensed, 1 INT, 1 FF in just the past 2 years!

        He may not be as consistent as he once was, but clearly when he makes up his mind he can still dominate.

  • Archie

    So you are telling me Peppers is a one year rent-a-cop at the tail end of his career. And Raji is on a one year contract (or less) to prove that he really isn’t as bad as he looked in his injury free contract year. And Guion is a mental midget that the Vikings were tired of spoon feeding. And these three guys were TT’s answer to the defensive problems of the last few years? Really? You couldn’t make this stuff up.

    For the sake of Packer fans everywhere, I hope TT hits on a couple of defensive studs in this draft. Hageman does not seem like a TT type pick because of the motor issue. Nix would be more of the 3 HIPPO defense that we supposedly are trying to phase out. Truitt is a classic 3-4 DE type and Ealy is a more dynamic pass rusher who probably projects to OLB in a 3-4. These are probably the four top DL that the pack will be picking from at 21. If TT doesn’t like any of them, and if both top S are gone, he will be forced to pick LB or CB or go to offense. Ebron won’t be there so on offense he would be looking at a WR which would excite me but with our defense being what it is and with TT being a draft for need type in the early rounds, I have to think he will draft defense. There will be several good options at CB, including one of my favorites, Verrett. At LB, Mack and Barr will be long gone. So TT most likely will be looking at Mosely and Shazier. Shazier would seem to project well to ILB. Mosely is the odds on choice for the Pack but to me, he does not look like a first round player on tape. He is already dropping in most mocks, now barely making the end of R1 in many mocks.

    All of this tells me the value for the Pack in this draft most likely will be at CB. If TT could pick up a valuable draft pick for trading down 10 or so spots, I’d be all for that too. R2 and R3 are loaded with solid prospects. I don’t think the signing of Peppers, Raji or Guion should have any effect on whether the Pack drafts a DL in R1 of this draft. Ealy could be quite exciting. He was double teamed and run away from all year last season and still put up very good numbers. He is athletic, fluid and strong. So my guess is it will be Ealy, a CB, a WR or a trade-down. Could he trade up a few spots to get one of the top 2 S? Yes.

    • 1stngoal

      Great post Archie, +1.

  • http://www.lyrictrumpet.com Bearmeat

    Do you realize how annoying you can be Archie?

  • Shavager

    C’MON PACKERS FANS–use a little “common sense”–Julius Peppers is an IMMEDIATE upgrade over Pickett and CJ Wilson, COMBINED! ALL NFL contracts should be structured with incentives in mind–how many times have you seen THAT particular player have a great season in his contract year and then fade out the following year after he gets that big money? Chris Johnson is one name that pops up, for the Packers, Morgan Burnette and Brad Jones, are two names that immediately comes to mind. TThompson had some 19 players going into FA, he’s NOT gonna resign all of them nor will he be able to replace them all in the draft. Free agents–whether street FA’s or UDFA’s, will make up a large number of those 80 players competing in camp, at this point Thompson chose to go after two opponents FA’s at team friendly price to help this erratic defense probably at the cost of Pickett and Wilson, possibly Johnny Jolly. Sitting on a defense that has not been successful in protecting leads is a LOSING concept, Thompson is trying make changes on the cheap while still controlling cap numbers and available money to resign WR’s Nelson and Cobb.

    • Thomas Hobbes

      I’m not sure what this even means, your comment about peppers being better than Wilson and Pickett combined is like saying Ryan leaf is a better qb than jerry rice and Walter Peyton combined. Peppers is a pass rushing de, Pickett is a run stuffing nt and Wilson is a run stuffing de. They all play different roles. If you are saying that peppers is a better pass rusher than picket and Wilson, well duh. If you are saying that peppers is a better run defender than Pickett and Wilson I’d have my doubts

      • Stroh

        I don’t think he was saying anything like you think. Pickett is being replaced by Raji for all intents and purposes. Who would you rather have? Wilson or Peppers? which one helps the Packers Defense the most? I think more observant fans would be able to tell if they were paying attention would say that Wilson was never a particularly helpful DE for the Packers and Peppers signing has the potential to help the Defense immensely.

        Last year Pickett, Raji and Wilson combined for over appox 13M in cap space, this year between Peppers and Raji its much less. I would say that’s a win. Even if you include Peppers total cap hit and guarantees its about the same.

        Its not too difficult to see the Packer D w/o Peppers wasn’t very good, its just as easy to see that w/ Peppers the D could improve immediately and greatly.
        Guion is insurance for Jolly. If Jolly is able to return then whichever is better gets the roster spot. Jolly isn’t going to get a contract offer till he passes a physical.

  • Shavager

    C’MON PACKERS FANS–use a little “common sense”–Julius Peppers is an IMMEDIATE upgrade over Pickett and CJ Wilson, COMBINED! ALL NFL contracts should be structured with incentives in mind–how many times have you seen THAT particular player have a great season in his contract year and then fade out the following year after he gets that big money? Chris Johnson is one name that pops up, for the Packers, Morgan Burnette and Brad Jones, are two names that immediately comes to mind. TThompson had some 19 players going into FA, he’s NOT gonna resign all of them nor will he be able to replace them all in the draft. Free agents–whether street FA’s or UDFA’s, will make up a large number of those 80 players competing in camp, at this point Thompson chose to go after two opponents FA’s at team friendly price to help this erratic defense probably at the cost of Pickett and Wilson, possibly Johnny Jolly. Sitting on a defense that has not been successful in protecting leads is a LOSING concept, Thompson is trying make changes on the cheap while still controlling cap numbers and available money to resign WR’s Nelson and Cobb.

    • Nopainnogain

      you’ll never acquire or retain any free agents if you refuse to include guaranteed $$ in contracts.

  • Shavager

    C’MON PACKERS FANS–use a little “common sense”–Julius Peppers is an IMMEDIATE upgrade over Pickett and CJ Wilson, COMBINED! ALL NFL contracts should be structured with incentives in mind–how many times have you seen THAT particular player have a great season in his contract year and then fade out the following year after he gets that big money? Chris Johnson is one name that pops up, for the Packers, Morgan Burnette and Brad Jones, are two names that immediately comes to mind. TThompson had some 19 players going into FA, he’s NOT gonna resign all of them nor will he be able to replace them all in the draft. Free agents–whether street FA’s or UDFA’s, will make up a large number of those 80 players competing in camp, at this point Thompson chose to go after two opponents FA’s at team friendly price to help this erratic defense probably at the cost of Pickett and Wilson, possibly Johnny Jolly. Sitting on a defense that has not been successful in protecting leads is a LOSING concept, Thompson is trying make changes on the cheap while still controlling cap numbers and available money to resign WR’s Nelson and Cobb.