According to Marca, Real Madrid are now considering their options about Pepe's contract situation. The central defender will become a free agent in 2016 if he doesn't sign a contract extension, and while he certainly deserves one, Los Blancos are also aware of how this would affect Varane's potential.
Pepe is now an undisputed starter for Carlo Ancelotti. Alongside Sergio Ramos, the Portuguese center back has regained his best form after a tough 2012-2013 campaign under José Mourinho. That same 2013 summer, Pepe appeared to be on his way out of the club, but his good behavior during the pre-season with Carlo Ancelotti earned him a spot on the roster. That, and Varane's slow recovery, gave him the starting role he still has, as Varane has failed to make as big of an impact.
Pepe, 32 next February, is not getting any younger, but his form hasn't dropped one bit. Therefore, it would be reasonable to extend his contract and then make him the third option behind Ramos and Varane as soon as he shows signs of decline.
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