Thursday, February 01, 2007

NFL Salary Cap 101

What is NFL Salary Cap for 2007? $109,000,000

How is the Amount of the Cap Determined? The percentages of the league's expanded revenue pool that the players are to receive as compensation are set at 57 percent in the 2006 and 2007 seasons, 57.5 percent in 2008 and 2009 and 58 percent in 2010 and 2011. The 2012 season would be played without a salary cap. (not likely, sure negotiations will set a new deal before then)

Ok so there been a lot of talk about restructuring salaries. The friggin' Redskins do it every year, what the hell is restructuring?
The most common form of restructuring is to reduce the base salary in the year of the restructure and use the difference (or some other agreed amount) as a new signing (or restructure) bonus. If a player restructures his contract and gets a new signing bonus, the new signing bonus is prorated over the remaining years of the original contract and also over the extension. The allocation of the original signing bonus remains unchanged.

What are the NFL Vet Minimum Salaries?
In 2007 the minimum salary for rookie or first-year players is $285,000; second year is $360,000; third year is $435,000; fourth year is $510,000; fifth-year through seventh year is $595,000; eighth year through 10th year is $720,000; and 11th year and longer is $820,000.

How do Signing Bonuses Affect the Cap (on a per year basis)? The amount of the signing bonus is prorated evenly over the life of the contract or to the CBA limit (in 2007 that is 6 years). So if a player signs a 6 year contract that includes a $6m signing bonus, $1m of the signing bonus will be allocated against the teams salary cap each contract year for accounting purposes.

How do you calculate a Player's Cap Figure?
A players' cap figure is made up of base salary, prorated signing bonus, any likely to be earned incentives, any unlikely to be earned incentives from the previous year that were in fact earned, any roster, reporting, workout or prorated option bonuses, and any prorated restructure bonuses. The only other possible charge is from the “Deion Sanders Rule”. That enough for ya....the three basic component: base salary, signing bonus, and applicable roster bonuses/incentives

Ok brainiac so WTF is the Deion Rule? Ha ha, here is the simplest definition I found: In any contract that extends into an uncapped year (2012 and beyond are uncapped at the present time), the player's combined salary, roster bonuses and reporting bonuses in all capped years (i.e. 2007-2011) must be equal to or greater than the combined prorated signing bonus allocations in the uncapped years. If the latter is greater a cap debit is applied to the players salary cap number pertaining to the difference prorated over the capped years, then credited back to the players cap number in the uncapped year(s). Don't ask me wtf that means.

What the hell is the "Rule of 51"? Well it means that not every member of the 53-man roster counts against the cap. Between the start of a league year (around March 1) and opening day only the 51 highest paid players count against the Salary Cap, even though the team could have up to 80 players on the roster at times. This lets teams have mini-camps and training camps, etc.

However - From opening day until the end of the season all players on the roster (including injured reserve) and practice squad count against the cap.

Finally, what is the significance of the June 1st Deadline?

If a player is released before June 1 all current and future prorated signing bonuses, and any other guaranteed monies that might have been part of his contract, count against the teams Salary Cap in that year.

If the player is released after June 1 then the unallocated signing bonus portion of the contract is split over two years. In the current year, that years proration counts against the Salary Cap while all future years prorated signing bonus figures count against the Salary Cap the following year.

EXCEPTION: Before the start of the league year, a team can designate two players who will be destined for June 1 releases to spread out remaining signing bonus acceleration into the next year. To do this, teams must carry those players' cap numbers until June 1, but release them before March so they can hit free agency. After June 1, the team gets to remove the salary and take the remaining cap hit in the following year.

If a player is traded, irrespective of the date, all current and future prorated signing bonuses, and any other guaranteed monies that might have been part of his contract, count against the teams Salary Cap in that year.

Want even more byzantine rules and explanations? Check out these links
The Warpath's Salary FAQ (gag, cough, a redskins fan site);
Caponomics Part II (from the Football Outsiders)

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