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NFL Salary Cap and Minimum Salary Scale |
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NFL Salary Cap and Minimum Salary Scale |
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Rookie salary pool
Changes made by 2006 CBA extension
Per Jerry McDonald in his "Inside the Oakland Raiders" blog (see "Hall, Walker costly against '09 cap," 11/14/08): "The 2009 cap has not been set, but was $116 million in 2008 and has risen $7 million in each of the last two years."
Salary cap figures were adjusted once calculations on contract clauses from 2007 like incentives had been finalized in February. The league-wide 2008 cap is set at $116.729 million per club. The 2007 cap was $109.0 million per team, a whopping increase of about 20% over the 2005 cap of $85.5 million. Without the extension negotiated in March, 2006 (see link above), the cap would have risen to $94.5 million for 2006, then ceased to exist beginning in 2007.
For precise 2008 per-club figures, see TEAM-BY-TEAM ADJUSTED CAP NUMBERS. "Per club?" you ask. "Huh?" Yes, there is actually such a creature as the adjusted per-club salary cap, and this article will tell you all about it. 
Or, if you just want the skinny, Oakland's is $121,070,000.
Here's an excellent article (dated 6/23/06) on one way in which some NFL clubs are putting the huge 2006 salary cap increase to use: Teams using cap room for early extensions.
Here are two further pertinent articles, each dated 12/7/06:
NFL salary cap expected to go up $7 million each of next two years (Associated Press); and
NFL salary cap rising by $7 million for 2008 season (ESPN.com).
Acting NFLPA executive director Richard Berthelsen, the players' longtime counsel, told the union's executive board on 1/29/09 that "the salary cap for 2009 will be $123 million, up from $116 million. The minimum salary for a 10-year veteran will be $845,000, while the rookie minimum will be $310,000."
The salary cap is the absolute maximum each club may spend on player salaries in a capped year. For 2005, that had amounted to 65.5 percent of league-wide "Designated Gross Revenues" (divided by 32 teams from 2004) made up of pre-season, regular season, and post-season gate receipts and radio and television rights. (In 2003, the percentage was 64.25%, and in 2004 it rose slightly to 64.75% of said revenues.)
With the extension to the Collective Bargaining Agreement ("CBA") which was approved by the owners in early March, 2006, the formula changed to 59.5% of "total football revenues." This latter phrase is considerably broader than the old language, which was essentially limited to radio-television money and ticket sales; now almost all revenue of any kind which a team generates is counted. The new CBA was approved by the owners on a 30-2 vote (Buffalo and Cincinnati were the teams voting against it) and resulted in an immediate cap increase of $7.5 million (to $102 million) over what it would have been under the prior CBA.
Another interesting new twist in the new CBA was that the 2007 cap was already set at $109 million—in effect, negotiated in advance in 2006 rather than waiting for auditors to calculate it the following year. This allowed teams to plan their personnel moves farther ahead, with a higher degree of certainty.
Along with other changes wrought by the 2006 extensiom, the CBA also included a higher minimum salary cap. Thus, for 2007, the maximum for each team to spend was $109 million. But teams were also required to spend a minimum of 85.2 percent of the cap, which is just a little under $92.9 million. As Jason Cole noted in a Yahoo! Sports article on Feb. 24, 2007, teams couldn't bow out of the increased spending completely. San Francisco, for instance, wasn't able to sit on its $35 million; instead, it was forced to spend at least $22 million of that.
The salary cap remains in effect at all times, although certain exceptions make it appear as though it's not being applied at times.
A team may not exceed this cap with the salaries of players that are under contract and on their roster. If a team does exceed the salary cap at any time, the NFL can waive players from the team, starting with those earning the lowest salaries, until the team's payroll has fallen under the cap. In addition, the NFL may fine a team up to $1 million per day for exceeding the cap.
As of March, 2008, teams must spend at least $100 million each year under the cap rules. The number rises each year under the CBA just as the cap does.
Only players under contract count toward the salary cap. Free agents do not count toward the cap until they sign a contract with the team.
Often it may appear that the cap is not in effect. How, for example, can teams have as many as 80 or more players on the roster (in training camp and during the off-season) yet not exceed the cap? Here's the explanation.
From February 24 to the day before the season begins, a club's top 51 salaried players count towards the cap, plus pro-rated signing bonuses, incentives, etc., but not base salaries of other players on the roster up to 80. Thereafter, not all salaries on a club's roster count toward the cap.
To get around the cap, teams typically structure their player contracts in such a way that much of the money is designated as "signing" or "roster" bonuses, or "incentive clauses." A signing bonus or roster bonus does count toward the cap but is prorated over the length of the contract, even though the entire bonus has been paid in cash "up front" to the player. When you read about a player and team agreeing to restructure a contract, it virtually always means that the player has agreed to convert at least a good part of his coming season's base salary into a signing bonus.
Incentive clauses are often made easy to reach as an indirect means of playing a player more while keeping his "base salary" low. Too easy to reach, however, and they're likely to be considered salary by the NFL, which must approve all contracts. (Incentives adjudged likely to be earned are counted against the cap.) For instance, if Drew Bledsoe, who was (before his retirement, and while he was still starting) big and known for being immobile, had had an incentive clause paying him $1 million for each game he started, the NFL would almost certainly rule that such payments are salary rather than genuine incentives, since Bledsoe had been a starter for many years. But a clause paying Bledsoe a bonus if he rushed for 500 yards would be legitimate, since he was known for his lack of mobility.
We've oversimplified somewhat the preceding discussion of incentives, actually. When contracts are scrutinized and approved by the NFL office at the time of signing, all incentive provisions are classified into one of two categories. So-called likely to be earned incentives (LTBEs) are then charged against the current year's cap and are carried over to the ensuing year when not earned. Conversely, so-called not likely to be earned incentives (NLTBEs) are not charged against the current year's cap; then, if earned, they are charged to the following year. Thus these various incentives result in per-team adjustments to the salary cap which are calculated each spring after auditors decide (in February) which incentives were reached the previous season. What a headache!
There are many additional rules, some of them highly technical. An example is the so-called "Deion Sanders rule" that was enacted after Dallas owner Jerry Jones gave Sanders a (then-)astronomical $13 million signing bonus, combined with base salaries of the then-minimum salary of $178,000 for the first three years. The new rule states that the first three years of any player's salary must equal the prorated amount of the signing bonus. The intent is to restrict circumvention of the salary cap.
Here's another little-known technicality. Those "likely to be earned" incentives mentioned above? Well, when they're not reached, they become cap credits the following year, which can mean a hidden bonanza for an underachieving franchise. A team that plays poorly, and which writes incentives into many of its player contracts, may actually reap a reward the year after. Case in point: the 2004 Vikings, who were an astounding $33 million under the cap. In actuality, the Vikings' cap was almost $95 million—the official cap for 2004 was $80.582 million—because Minnesota got more than $14 million in cap credits that year for "likely to be earned" incentives that weren't earned by their players in 2003.
Player benefits currently are $12,156,000 per club above the salary cap number.
Past salary cap amounts were as follows:
Year Salary Cap (per club) 2005 $86,000,000
(approx.)2004 $80,582,000 2003 $75,007,000 2002 $71,100,000 2001 $67,400,000 2000 $62,172,000 1999 $58,353,000 1998 $52,388,000 1997 $41,450,000 1996 $40,777,000 1995 $37,100,000 1994 $34,600,000
The minimum salary structure for 2008 is as follows:
Years Salary Rookies and first-year players $295,000 Second-year players $370,000 Third-year $445,000 Fourth-year $520,000 Fifth- through seventh-year $605,000 Eighth- through tenth-year $730,000 Eleventh-year and longer $830,000
Finally, there is a rule promulgated by the league, designated "Cap Relief For Veterans," which allows teams to sign players with four or more years of experience to one-year contracts for the veteran minimum salary and have those contracts count for only $445,000 under the cap (reduced from $460,000 to $425,000 by the 2006 extension agreement, then increased to $435,000 for 2007 and $445,000 for 2008). The Raiders have themselves made liberal use of this provision in the past with important reserves such as, e.g., T Chad Slaughter, G Corey Hulsey, and even some borderline starters (SS Derrick Gibson in 2006) signed to one-year contracts. (Although with Lane Kiffin's general emphasis on youth among the new personnel, there may be fewer instances of such veterans signing the one-year deals.) Suppose that a ten-year veteran signs a one-year deal for the veteran minimum. He will receive $830,000 (minimum salary for the eleventh year), but the team that signs him only has to pay him and count $445,000 against its team salary cap; a league-wide fund makes up the difference. Any player receiving this benefit is limited to a maximum signing bonus of $40,000.
Sources: NFL.com, USA Today, ESPN.com, AsktheCommish.com, Yahoo! Sports, ProFootballTalk.com ("Rumor Mill"), SportingNews.com
Last updated Monday, November 17, 2008
