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Salary Cap Information
Origin:
In 1994, the owners' and players' associations
of the National Football League approved a new collective-bargaining agreement.
This agreement included a salary cap designed to keep player salaries from
increasing at the rate they were at the time. The salary cap is essentially a
set amount of money that each of the NFL's 31 teams is allowed to spend on
player salaries for any given year. For the 2001 season, that amount was
approximately $67.4-million, or 63% of the League's defined gross revenues (DGR)
from last year divided by the 31 NFL teams.
The actual Mathematical Calculation:
(Projected DGR x CBA Percentage ) = Players Share of DGR
Players Share minus Projected League wide Benefits = Amount Available for Player
Salaries
Amount Available for Player Salaries / Number of Teams = Unadjusted Salary Cap
per Team
The CBA Percentages were agreed upon in the 1998 CBA as follows:
1998-2001 63%
2002 63.5%
2003 64%
2004 Uncapped Final League Year.
At first glance, that amount of money may seem a lot. When you factor in an
average of 57 players on an NFL roster during the season, that amounts to a
salary of around $1.18 – million per player. Again, a lot of money —
however, each team usually has a few big-money players, like a star quarterback
or running back. Let's suppose a team has two star players, each with a salary
of $8-million per year. This cuts the cap room to $51.4-million for 55 players,
cutting the average salary of the remaining players by $245,000 each. (By
comparison, the 2000-2001 NBA average salary was approx. $4.2 million per
player.)
Definition of the 'cap' – The cap is the absolute maximum amount of
salary that each club may pay or be obligated to pay or provide to players.
Divide 64 percent of league-wide "Defined Gross Revenue" (DGR) by all
clubs DGR consist of television, radio & gate receipts (preseason, regular-
season & postseason).
2002 Salary Cap projection – $71,700,000
Uncapped Years Free Agency is six years.
Capped Years Free Agency is four years.
Top 51 Rule –
Top 51 player contracts, tenders, qualifying offers and offer sheets.
All prorated Signing Bonus, Likely To Be Earned (LTBE) incentives and
miscellaneous amounts from remaining players on 80-man roster.
Any earned incentives, prorated Signing Bonus and miscellaneous amounts (Signing
Bonus acceleration) from terminated players.
All Paragraph 5 (base salary contract amount) in excess of A/I salary for not
drafted rookie free agents In effect from first day of the League Year until
prior to start of regular season.
What is excluded?
Paragraph 5 from players whose Cap counts for current year are not within club's
51 player contract, tenders, qualifying offer and offer sheets.
Signing Bonus/Pro-ration Signing Bonus (Acceleration)
Usually a lump sum payment upon signing, but may be deferred.
For Cap purposes, the signing bonus is charged equally over the term of contract
Maximum pro-ration for signed contracts in 2002 is 7-year.
Removal from roster on or before June 1, acceleration in current League Year
Removal from roster after June 1, acceleration in next League Year.
Acceleration is immediate if: 1. Players is traded to another club2. Player
achieves conditions to void future years3. Playerâs contract is renegotiated to
reduce the number of years.
June 1 Rule
Players released before June 1 any prorated amounts accelerate into current
League Year Players released after June 1 any prorated amounts accelerate into
next League Year Trades always accelerate in current League Year Rookie
Pool/Rookie 25 Percent Rule Rookie Cap within the Salary Cap Includes only
players who have never signed an NFL Contract.
Each club is allocated a different amount based on the number, round and
position in the clubâs selection in the College Draft Twenty-Five Percent
Rule, no contract signed by a Rookie may provide for an annual increase in
Salary more than 25 percent of the contract, first League Year Salary, unless
such Player contract provides for salary equal to the then-applicable Minimum
Salary for each League Year of the contract.
Incentives
Likely To Be Earned (LTBE) include but are not limited to performance and honors
incentives, roster bonuses, reporting bonuses and off-season workout bonuses.
To determine whether a performance or honors incentive is LTBE, you review the
players and clubâs prior year performance. For example, John Doe will earn a
$50,000 incentive if he scores 10 or more touchdowns during the 2002 regular
season, if he scored 10 or more touchdowns in 2001 then the incentive is LTBE in
2002 (counts against the cap for 2002). If he had 9 or fewer touchdowns in 2001
then the clause is not likely and will not count against the cap.
There are different rules for rookie incentives based on the round the player is
selected Voids/Buybacks If players right to void and/or club's right to Buyback
are based upon NOT-LTBE buyback will be treated as Signing Bonus Initial
prorated portion hits the club's Cap at the time of the Buyback, the rest is
prorated over remaining term of the contract
Once a player achieves the void incentive, prorated Signing Bonus from voided
years accelerates immediately into current League Year.
If acceleration from the void wipes out Cap Room club was saving to exercise an
option/buyback then player becomes free.
Roster Categories
Active/Inactive (53)
Game Day (45, plus third-string QB)
Practice Squad (5)
Injured Reserve (?) n
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