Armchair GM: The Julius Peppers situation

A lot has been written about the Julius Peppers situation already, and a lot of people have chimed in with their opinions on whether he'll stay or go.  But at the end of the day, only two voices will be heard, Owner Jerry Richardson, and Peppers himself.  Still, there's plenty for GM Marty Hurney to think about.

In simple terms, Hurney can offer Peppers a long term contract as a carrot and use the franchise tag as a stick.  But that depends on Richardson, and whether he's willing to pay the $20 million cost the franchise tag brings.  If he is, then the course of action is simple.  If he isn't, it's also simple.  As far as the options a GM has and the decisions to weigh, this one is pretty cut and dry.

But it remains puzzling.  Why hasn't it been resolved?  Why is Peppers' agent in the media talking about him playing elsewhere next year?  Why is Hurney so quiet?  Using the information at hand through newspaper accounts and player interviews, let's break down the situation as best we can, and see if there's insight there.

Peppers has talked about his situation, and his message is as consistent as his play on the field.  On the one hand, he wants to be the highest paid defensive player in the league.  On the other, when he's offered that contract he says he doesn't deserve it, so he won't sign.  Then he makes a comment about it only barely being enough to make him the highest paid defensive player.

He wants to leave, he wants a long term contract, he wants to play linebacker, etc.  It's doubtful that anyone really knows what he wants, and he doesn't make it easy for people to understand.  But for all that was said and done last season, he was in Training Camp on time and put forth a strong effort all season.

So what's the problem here?  You almost get the sense that if the Panthers offered a similar contract to the one they did at the end of the 2008 season, Peppers would sign.  And in an uncapped year, if they franchised him he would only cost $3 million more than he did in 2010, which isn't as big as it sounds given the total revenue stream.

Then why wouldn't Richardson pay for Peppers, and why hasn't Hurney offered him a long-term contract?  The answers may lie in what's unfolding as far as NFL labor relations are concerned.  2010 is the last year under the current Collective Bargaining Agreement, and they're playing without the Salary Cap negotiated in 2006.

And that makes a potentially huge difference as far as how the money shakes out, both in the short term and the long.

Jerry Richardson is front and center among the owners in negotiations.  He's got more inside knowledge than anyone in the game, and enough smarts to keep it all to himself.  People don't become self-made billionaires because they're reckless with their investments.  And he knows first-hand what devoting too many resources to pay for one player can do to a team (see Gilbert, Shawn).

In 2006 the CBA increased the Salary Cap from $85.5 million per team in 2005 to $123 million per team in 2009.  At the same time, that decreased profits for the average team from 10% to 4%.  It may have made sense at the time, given how the economy was rolling along, but in May 2009 the owners looked at their bottom lines and unanimously decided to exercise an escape clause that will force the players to renegotiate.

The owners want a rookie wage scale, and they want revenue sharing to drop to 51% from it's current take of 60%.  That would mean about a 20% reduction in the salary cap.  If that was in place, you can imagine the damage a contract like the one Peppers wants could do to a team.

Sure, those contracts may be protected by a grandfather clause, but that's speculation.  A lot of people think that the Owners may sacrifie some demands to get other concessions, which is more speculation.  One thing is for certain, Jerry Richardson has a very good idea of exactly how things will shake out.  And he's also thinking about 2012, 2013, 2016, etc.

Now look at what Peppers has, or what he doesn't.  He has no contract, and hence no guaranteed money.  If there's a lockout in 2011 he won't have a paycheck.  That may not matter to him, given what he already has.  But no matter how much you have it's still hard to shrug your shoulders at the loss of $10-15 million, which is what he'll likely make if he has a guaranteed contract.

If he gets a contract it will probably be in the $15 million per year range with $45-50 guaranteed, which would put him where he wants to be in relation to the rest of the league.  But, if he gets franchised, he'll face negotiating for a new contract in 2012.

If the Owners win a complete victory, then his $15 million per year hopes will immediately become $12 million per year, and he'll have to get it from a club that's not trying to dig itself out of a huge salary cap hole already (which most clubs will be in).

And Peppers has to consider that he probably has only three or four good years left, where his play will command the sort of salary he wants.  That's not to say he won't be in the league longer, but it won't be long before he's clearly on the downside of his career.

If he wants to get paid, it needs to be now.  It needs to be this year, because there probably won't be a next, and if he waits until 2012 people will question the wisdom of giving him a long term deal with a lot of guaranteed money.

All of this is evident to any fan who reads the newspapers.  And we're not even armed with all the facts.  So what do you do if you're Marty Hurney?  Think of the standard negotiation strategies:
  • If both sides have high bargaining power and a high stake in the outcome, then you work hand-in-hand for a win/win solution.
  • If you have high bargaining power and low stakes, then you work for a win/win, but you can steamroll negotiations if you want.
  • If you have high stakes and low bargaining power, then you work for the win/win, but in the end you do what you have to do to get the deal.
  • If you have low stakes and low bargaining power, then you work for the win/win but in the end you walk away before making a sacrifice.

The Panthers have a lot of leverage.  They have the Franchise tag, and they write the checks.  They also have the league on their side in the form of the lockout threat.  If they lose Peppers there are some decent UFA DEs that could be brought in for a year (Richard Seymour, Aaron Kampman, to name two), and they have some talent on the bench.

The only thing that gives them high stakes is if Richardson wants Peppers to finish his career in Carolina, but at the end of the day he's just one player and Richardson is smarter than that.  So while he's important, it's not vital that he retire a Panther.

The verdict?  The Panthers have a lot of bargaining power, and medium stakes.  If Richardson is completely on board with losing Peppers, the stakes are low.

Peppers has some bargaining power, but only in the form of what amounts to pocket change for a billionaire without a salary cap.

He can threaten to sit out, but that would really harm his long term career prospects and it would ring hollow given his actions of last year.

He's got no other options right now, unless he can convince another club to sign him away if the Panthers franchise him.  That action would cost someone $20 million and two number one picks.

And based on the current rules, he can't go on a job hunt.  The most he can do is put the word out on the street that he may be available, if any team out there wants to spend the money.  He's got a little bargaining power, but not much, and is at the worst point of his career for this work stoppage to happen.  The stakes are high for Pep.

So think of all that.  It may be wrong in spots, but it's probably close to what's going on in the mind of Hurney.

If you're the GM, what do you do?  Do you call Peppers and tell him how important he is to the club?  Why increase his bargaining power like that?

Should he offer a contract now?  Why bother, what does he gain from that?

Should he announce the intention to tag?  Again, what's the point?  Better to keep his mouth shut, which is what he's been doing.  Let Peppers try and stir up interest, maybe we get long term help or maybe we keep him for another year.

The best course of action is to be quiet, which is what he's been doing.  And it doesn't mean a thing.

Stay tuned...

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