Details of T.J. Watt’s reported Steelers contract show a good deal for both sides

The Pittsburgh Steelers and All-Pro outside linebacker T.J. Watt reportedly came to an agreement on a contract Thursday afternoon. The reported numbers were a four-year extension for just over $112 million.

While many in Steelers’ Nation were rejoicing over keeping Watt, the exact breakdown of the contract is something which many were curious about.

Apparently, Mike Florio of profootballtalk.com had an inside source for the numbers of Watt’s contract. Here’s how the contract breaks down according to Florio:

PFT has obtained the full details regarding the Watt deal. Here they are, per a source with knowledge of them.

1. Signing Bonus: $35.0 million.

2. 2021 Base Salary: $1.0 million, fully guaranteed.

3. 2022 Base Salary: $24.0 million, fully guaranteed.

4. 2023 Base Salary: $20.0 million, fully guaranteed.

5. 2024 Base Salary: $21.05 million.

6. 2025 Base Salary: $21.05 million.

The deal averages $28 million per year in new money, $1 million more than the previous high-water mark set by Chargers defensive end Joey Bosa. It also becomes the largest full guarantee for a defensive player in NFL history, at $80 million.

If adding up these numbers, the total comes to $122.1 million over the next five years. This works out exactly as expected from the report where the extension was worth just over $112 million and the fact Watt was due $10.089 million this season.

The other thing of note is Watt’s contract is guaranteed for the next three seasons. This appeared to be a sticking point in negotiations as the Steelers traditionally do not offer guaranteed contracts beyond the first year. By breaking their previous rule, it will be interesting to see if the Steelers treat Watt as an exception or if this is how they will now conduct business.

While this information is great for Steelers fans, one of the questions they will have is how this contract affects the salary cap. The first reminder is how the signing bonus works. Being spread out over the life of a contract for up to five years, the signing bonus will count $7 million each of the next five seasons. When adding this number to each of those reported, here is the projected salary cap numbers for T.J. Watt over the next five years:

2021: $8 million
2022: $31 million
2023: $27 million
2024: $28.05 million
2025: $28.05 million

The most notable thing with this contract is how the Steelers actually saved $2 million on the 2021 salary cap if this report is accurate. Exactly what the Steelers would do with this money remains to be seen. It is noteworthy that any salary cap savings they don’t use in 2021 will roll over to next year.

The biggest salary cap year on Watt’s contract is 2022 at $31 million. It will be interesting to see how the Steelers will play with Watt contract as they currently have some salary cap space next year but also will need to add more players to the roster. If more space is needed, the Steelers could do a restructure for Watt and convert as much as just shy of $30 million into a signing bonus. If they do so, it would reduce the salary cap hit by more than $22 million but would add another $7.5 million to each of the three remaining years on Watt’s deal.

In looking at these numbers, I believe this is not only a great deal for Watt, but also a pretty good deal for the Steelers. Ultimately time will tell if Watt’s production falls above or below his pay grade. But for now, Steelers fan should be ecstatic that Watt is under contract through 2025, that his extension was that of the highest paid defensive player in the NFL, and the Steelers should be able to handle the salary cap implications in the coming years.