Alex Smith returns to 49ers

SANTA CLARA, Calif. -- No hard feelings on Alex Smith's part that the San Francisco 49ers pursued Peyton Manning.

In the end, Smith is right back where he expected to be all along -- with the only franchise he ever has known.

The free agent quarterback signed his three-year deal with the 49ers on Wednesday. It will pay him $8 million per season with $16.5 million guaranteed, according to a person with knowledge of the contract.

The person, who spoke on condition of anonymity Wednesday because the contract details weren't made public, said Smith's deal can pay him up to $33 million.

Smith signed at team headquarters a day after Manning was formally introduced in Denver after the 49ers pursued the four-time NFL MVP. San Francisco coach Jim Harbaugh worked out Manning at Duke last week.

"Not offended at all. I would have relished the opportunity to compete for the starting quarterback job with Peyton Manning," Smith said. "I feel I've been through way worse than this. Free agency is always going to be a little crazy, maybe this year more than most. You get to a point you stop worrying about that stuff."

The 27-year-old Smith met with Miami on Sunday but ultimately decided to stay put with the storied franchise that drafted him first overall in 2005. Smith said his talks with the Dolphins during a 5½-hour meeting "seemed serious at the time."

Smith said Harbaugh and general manager Trent Baalke came to see him to inform the quarterback they were going to pursue Manning.

"Obviously it was a little unexpected, but that's part of the deal. This is free agency and this is the NFL, and those things happen," Smith said.

Everybody involved seemed relieved Wednesday to move ahead with preparations for 2012. The 49ers last week added wide receivers Randy Moss and Mario Manningham -- and Smith is eager to get to work with them soon.

"Thanks for choosing the 49ers Alex. Sorry it was a tough week," 49ers CEO Jed York said Wednesday on Twitter.

Smith had a breakthrough season last year, throwing for 3,150 yards and 17 touchdowns to help San Francisco reach the NFC title game.

Both sides made it clear after the Niners' 20-17 overtime loss to the eventual Super Bowl champion New York Giants in the NFC championship game that they planned to work out a new deal.

It just took a little while longer than expected after Manning briefly entered the picture.

"We are pleased that Alex has chosen to continue his career as a 49er," Baalke said. "His contributions were instrumental to our success in 2011, and we look forward to the continued growth of our offense under his leadership."

Smith and Harbaugh built a strong working relationship in a matter of months, and Smith has long said he understands the business side of the NFL. So, it shouldn't take long for Harbaugh and Smith to start looking forward to making another special run in 2012.

"It's a very strong relationship," Harbaugh told reporters while leaving team headquarters Tuesday, noting nothing had changed in Smith being "our guy."

Smith reiterated that Wednesday.

"As good as they've always been and getting better," he said of his dealings with Harbaugh. "The thing from Day 1, when I first met coach Harbaugh, is he's always been up front and always been honest with me. He's continued to do that during this entire process. That's one of the reasons I love playing for him, so no question. Now, obviously looking forward to having an offseason with him."

Last spring, Harbaugh handed over his playbook to Smith during a brief lifting of the lockout -- a show of confidence in the QB even though he wasn't under contract. Smith wound up re-signing for $4.9 million, then earned a $1 million bonus for making the playoffs as the 49ers ended an eight-year stretch without a postseason berth or winning record.

Now, he is getting some job security and a nice raise to boot.

"Really, the money wasn't the issue. Money is great for security but I'm not a guy who has a bunch of flashy cars," Smith said.

York had said the team's three-year offer still stood despite the pursuit of Manning, and it was just up to Smith to sign. The quarterback said he didn't have a problem that his agency, CAA Sports, was also negotiating and representing Manning.

"I'm glad that this is finally done. For me this was the plan all along," Smith said. "Since the season ended I wanted to be back here. It dragged out a little bit but I'm glad it's over. Glad it's done. Glad to get back to work."

Long booed by his home fans at Candlestick Park, Smith had only five interceptions last year as San Francisco went 13-3 to win its first division title since 2002. That was a remarkable turnaround under first-year coach and 15-year NFL quarterback Harbaugh -- the NFL coach of the year -- who declared his confidence in Smith as a winner from Day 1 when Harbaugh was hired away from Stanford in January 2011.

San Francisco went 6-2 on the road and won four of those games in comeback fashion -- and Smith rallied his team from behind five times in all, not to mention a 36-32 victory against the favored Saints in the NFC divisional playoffs. Smith completed a 14-yard touchdown pass to Davis with 9 seconds left to seal it after Drew Brees had put his team ahead.

Smith said he was ready to battle Manning for the No. 1 job in training camp if it came to that.

"I know that this is my job. I feel like I've earned it," Smith said. "I've earned the right to compete for it. I've always welcomed competition and will continue to welcome it."