NFLPA

For most NFL players, their salary is their biggest form of compensation. As part of the collective bargaining agreement, the NFLPA implements something called a salary cap. A salary cap is a limit on how much a team can spend on a particular player’s salary or on a team’s entire salary. Salary, according to the agreement, is money, property, investments, loans, and anything else of value to an NFL player (both rookies, veterans, and players with terminated contracts) but not including benefits (CBA). It also can cover any payments made by third parties or club affiliates even if the money is for non-football services

A player’s base salary is the money earned while playing during the regular NFL season. The collective bargaining agreement (CBA) covers the minimum levels of pay, but not the maximums. The CBA calculated the salary cap in literal financial terms: “Player cost amount for that League Year less projected benefits for that league year, divided by the number of clubs in the league that league year, adjusted by any applicable true up…” (CBA). In 2013 the minimum pay for a rookie was $405,000 and for a player who was active for at least 10 seasons, it was $940,000. Being an active player basically means they were on the “active” roster during the season for at least three games and they earn credit towards being an “experienced player”. When a player is on the IR list (injured reserve), then their salary can be reduced. This is useful when recruiting a player who will be injured for some or all of the season. A player cannot earn credit towards an “experienced player” salary while they are on the IR list. Sometimes veteran players will get around the salary cap by signing a qualifying contract. This means they are paid at...

... middle of paper ...

... year is because they fall in the category as something that is likely to happen again. However, the team cannot apply a bonus if the event is unlikely to be completed again.

Finally we come to the prorated bonus which the public knows as a “signing bonus”. It is a bonus that is considered “paid” when a contract is accepted, but in actuality it is paid out over time. This bonus can be compared to a depreciation model. The bonus is typically worded as “x amount of money” for “y amount of years”. This is because a players potential is only considered to last for a certain amount of time. Therefore the bonus is paid out in equal amounts for the “Y” amount of time, even if the player plays beyond that certain amount. An option bonus can be incurred during a second or even third year to extend the bonus.

Works Cited

http://overthecap.com/a-guide-to-the-nfl-salary-cap/