Julius Peppers: Cut or Pay Cut?
The topic of the young 2014 Chicago Bears off season has been, Julius Peppers. In 2010, former General Manager Jerry Angelo used the un-capped year to splurge on what was the season’s biggest and most expensive acquisition. What has been an excellent investment, has now, sadly come to an end.
With Peppers counting for $18,183,333 against the 2014 cap, current General Manager Phil Emery is faced with a tough decision. There is $8,366,668 that is counted as “dead money” if he is cut in 2014.
Dead money is defined as a “pro-rated signing bonus”.
What exactly does this mean? It is time to break down the positives and negatives of a pay cut or a cut from the roster.
In the scenario scenario of a pay cut, Peppers would not only receive a base salary but his $4.2 in guaranteed/ dead money. Market value has yet to be determined but with a strong and deep crop of veterans that are 30-years-old or older, Peppers will have a watered down value.
A good estimate for his market value going into the Free Agency period, would probably be somewhere around the $3 million range. If he was to stay with the Bears, he will ultimately have to sign for $4 million or less to make it worth it for the team to keep him.
A pay cut would essentially have to be at least the same price as his dead money ($8.3 million) but preferably it would need to be less.
The second scenario, while hard to swallow, would undoubtedly make the most financial sense. While Peppers could count as $18.1 million again this year’s cap, if not addressed. The extra $8.3 million, labeled as “dead money”, has already been paid to Peppers via the pro-rated signing bonus but the figure is used here to guard against a void in contract. The dead money would stay at $4.2 million if retained but would move to $8.3 million if he is cut. This would total a cap savings of $9.8 million.
The Bears have two different options they can use while cutting Peppers. Both having their perks, one helps more this year, while the other gives the team more flexibility next year.
First, the team can eat the $8.3 million in dead money this year. The total cap savings would save $9.8 million this year, which would also leave the dead money figure of $3.2 million in place for 2015. Depending on Emery’s plans for this year, this might be the best scenario to save the most amount of money, before or as Free Agency starts.
The second option would be the Bears would use the “June 1st designation” to create more cap space, this year. The issue with the June 1st designation is that it won’t release the contract’s savings until June 1st. Each team can use this designation twice a year. While the official numbers wouldn’t come off the books until June 1st, the team would cut the dead money number in half. It would allow them to eat just $4.15 million, much like if the team kept him. While saving a total of $13.8 million and possibly preparing for a bigger splash in the second wave of Free Agency would be nice, the $13.8 million figure could not be used until June 1st. $4.15 million of the dead money figure would also transfer over to the 2015 cap number, which would in turn cause that number to go up to $7.3 million.
Both have their positives and negatives but the flexibility of an extra $4.15 million to add to this year’s cap number will likely not be worth waiting until June 1st.
As reported last week by NFL Network‘s Albert Breer, the 2014 salary cap could be up to $130 million. With the team being $6.1 million under the originally projected $126.3 cap number, the extra $13.9 million could be the difference between a noticeable improvement, to one of the league’s worst defensive unit.
With a typical draft class counting as $5 million against the cap and most teams going into the season with $3 million in emergency money, even at the top of the reported $130 million cap, the team would only have $2.1 million above that mark.
It would be fully expected at this point that Emery will look to created a larger amount of cap space.
With that being said, a general cut seems like the most logical choice.
This would allow for a more than double in cap space with one move. Although, this move would be the most ideal for the near future, Emery could also elect to save the $13.9 million but would be forced to construct major back loading of any big figure contract that may be signed.
Other Options to Create Cap Space
While cutting Peppers could save up to $13.9 million in cap space, Emery will still have the option with four other candidates to save more money.
Michael Bush: Cutting Bush would allow the team to save $1.85 million in cap space or use a June 1st designation to create an extra million in cap space.
Earl Bennett: Cutting Bennett would save $2.5 million with no dead money attached. Also saves an extra $2.6 million in 2015.
Adam Podlesh: Arguably the worst punter in the league in 2013, being cut saves $1 million this year and another $1.9 million in the next year.
Eric Weems: Cutting loose the special teamer would net the Bears $1.1 million in savings.
The team could save a total of $18.6 million with those five cuts. While some may stay, it should be fully expected for Emery to head into the Free Agency period with a minimum of $20 million.
The team could also opt to use the “Automatic Conversion” clause in Jay Cutler and Tim Jenning’s contracts. This option will let them allocated a certain amount of money from this year’s cap hit and turn it into a future bonus that can be spread out to lessen the hit.
This would be essentially a borrowing tool they could use to get more now and pay it back later. This clause is best described as a “pay as you go” type deal.
The Bears will not have much cap space on paper but they will have enough space to get started and can create more as they move along in the hectic offseason.