Analyzing the Collective Bargaining Agreement:
The Important Clauses and What They Mean

INFO: The following clauses are taken from pages 63-87 of the CBA.

Article XXIV: Guaranteed Leage-Wide Salary, Salary Cap, and Minimum Team Salary:
Section 6: Computation of Team Salary:
(b) Tenders
(i) Drafted Rookie's Salaries shall be tendered automatically at the Rookie Minimum Active List Salary as of the day of the Draft and shall be included in Team Salary until (1) the player is signed, (2) the Team's rights are relinquished through waivers, or (3) the Tuesday following the tenth week of the regular season (if the player is unsigned).

Analysis: When a player is drafted he automatically counts against the cap for the rookie minimum until he signs an actual contract. This normally wouldn't matter anyway because it is highly unlikely that a rookie minimum contract would make it into the top 51.

(c) Practice Squad Contracts
Any Practice Squad contract Salaries shall be included in Team Salary except to the extent otherwise provided in Article XXXIV, Section 5.

Analysis: During the regular season all players on the practice squad count against the cap.

Section 7: Valuation of Player Contracts
(a) Paragraph 5
(i) The highest applicable Salary set forth in Paragraph 5 of the NFL Player Contract shall be included in Team Salary in the year earned, except that, between march 1 and the first day of the regular playing season, only the following amounts from paragraph 5 shall be included for players whose Player Contracts are not among the Team's 51 highest valued Player Contracts, tenders and Offer Sheets (as determined under the Section 7):
(1) Any amount that exceed the Minimum Active/Inactive List Salary for Undrafted Rookie Free Agents and:
(2) Any amount that exceeds twice applicable Minimum Active/Inactive List Salary for all other players.

Analysis: From the beginning of free agency until final cuts are made, only the players with the top 51 highest cap values count against the cap. However, any bonuses that an undrafted rookie gets would count in the normal way. Additionally, if a player is not among the top 51 but makes more than twice the minimum salary, the amount by which it is over would count against the cap.

(b) Signing Bonuses
(i) Proration. The total amount of any signing bonus shall be prorated over the term of the Player Contract (on a straight-line basis, unless subject to acceleration or some other treatment as provided in this Agreement), with a maximum proration of six years, in determining Team and Player Salary, except that:

Analysis: This is what enables teams to manipulate the salary cap in so many ways. In terms of cap hit, signing bonuses are spread out evenly over the length of the contract, up to 6 years.

(4) For any multiyear Player Contract entered into in a Capped Year prior to the last Capped Year that extends into any Uncapped Year, if (i) the sum of the player's Paragraph 5 Salary, roster bonuses that are based upon the player making any of the Club's roster categories without limitation, and reporting bonuses during all Capped Years of the Contract (but, if there ar fewer that three remaining Capped Years, during the first three years of the Contract) is in the aggregate less than (ii) the portion of the Contract's signing bonus that would be allocated to those League Years if the signing bonus were prorated equally over the term of the Contract, then: the difference between the amounts calculated pursuant to (ii) and (i) of this sentance, up to 50% of the portion of the signing bonus that would otherwise be allocated to the Uncapped Years (the "Difference"), shall be deducted in equal portions from those Uncapped Years and reallocated in equal portions over the Capped Years of the Contract (or, if there are fewer than three Capped Years within the term of the Contract, over the first three years of the Contract). For purposes of the Subsection only, a renegotiation shall be treated as if it is an entirely new Player Contract.

Analysis: This is the Deion Sanders Rule. My explanation can be found here.

(8) Any signing bonus given in connection with a contract extension entered into before the expiration of the player's existing contract will be prorated over the remaining years of the unexpired contract together with its extension.

Analysis: The proration for an extension starts in the year the extension was signed, not the first extra year added on to the contract.

(ii) Acceleration
(1) For any player removed from the Team's roster, or whose Contract is assigned to another Club via waivers or trade, on or before June 1 in any league Year prior to the Final Capped Year, or at any time during the Final Capped Year, and unamortized signing bonus amounts will be included in Team Salary for such League Year except that for each League Year preceding the Final Capped Year, each Club may designate up to two Player Contracts that, if terminated on or prior to June 1 and if not renegotiated after the last regular season game of the prior League Year, shall be treated (except to the extent prescribed by Section 7(d)(iii) below) as if terminated on June 2, i.e., the Salary Cap charge for each such contract will remain in the Club's Team Salary until June 2, at which time its Paragraph 5 Salary and any unearned LTBE incentives will no longer be counted and any unamortized signing bonus will be treated as set forth in Subsection (2) below.
(2) For any player removed from the Team's roster or whose Contract is assigned via waivers or trade after June 1, except in the Final Capped Year, any unamortized signing bonus amounts for future years will be included fully in Team Salary at the start of the next League Year.

Analysis: If a player is cut or traded before June 1st, then the prorations for every year of his contract not yet completed "accelerate" into the current year. This is also known as "dead money". If the player is cut or traded after June 1st, then only that current year's proration becomes dead money, while the proration from all future years accelerates into the next year. Each year, a team can select two players who will be cut before June 1st but will be treated as though they were cut after June 1st in terms of the salary cap. The only difference is that in reality the player is a free agent without having to wait until June.

(3) In the event that a player who has had a signing bonus allocated over the years of his Player Contract is traded, or whose Contract is assigned to another team pursuant to the NFL's waiver procedure, the Team Salary of the player's new team will not include any portion of the signing bonus.

Analysis: When a player is traded or waived, the dead money is charged against his old team's salary cap, not his new team's.

(4) Any contract year that the player has the right to terminate based upon a contingency shall count as a contract year for purposes or proration until the contingency is fulfilled, at which teme any amounts attributed to such year shall be accelerated and included immediately in Team Salary.

Analysis: When a player voids a future year or years of his contract, the prorations from those years voided accelerate into the year in which the void was accomplished.

(5) The unamortized portion of any signing bonus contained in an NFL Player Contract that is renegotiated to reduce the number of years of such Player Contract shall be included, to the extent attributable to such reduced year or years, in Team Salary at the time of the renegotiation.

Analysis: If a contract is renegotiated to become shorter, the prorations form the years that were knocked off accelerate into the year in which the renegotiation was signed.

(iv) Amounts Treated as Signing Bonuses. For purposes of determining Team Salary under the foregoing, the term "signing bonus" shall include:
(1) Any amount specifically described in a Player Contract as a signing bonus;
(3) Any consideration, when paid, or guaranteed, for option years, contract extensions, contract modifications, or individually negotiated rights of first refusal;
(4) Any option buyout amount, when paid or guaranteed;

Analysis: Option bonuses and buyout bonuses or prorated like a signing bonus.

(5) The difference between the Salary in the second contract year and the first contract year when Salary in the second contract year is less than half the Salary called for in the first year of such Contract;

Analysis: When it says "salary", roster bonuses are included. Teams get around this by putting in bogus LTBE incentives in the second year of the contract to make the salary half of the first.

(7) Any roster bonus in the season of signing when a contract is signed after the last preseason game;

Analysis: Therefore, there is no such thing as a roster bonus after the start of the regular season. Base salary would have to be increased if a team wanted to use of cap room without prorating anything.

(18) Any increase in a playe's Salary for the current League Year, if the NFL Management Council does not receive notice of the salary terms of such an executed extended or renegotiated contract prior to 4:00 p.m. (New York Time) on the Monday of the tenth week of the regular season.

Analysis: The deadline for adding non-prorated salary to a player's contract is monday of week 10. After that, any increase in salary gets prorated as though it is a signing bonus.

(v) Credit for Signing Bonuses Refunded. In the event that a Team receives a refund from the player of any previously paid portion of a signing bonus, or the Team fails to pay any previously allocated portion of a signing bonus, such amount as has previously been included in Team Salary shall be added to the Team's Salary Cap for the next League Year.

Analysis: If a player has to repay a portion of a signing bonus the amount of which that has already been counted against the cap is credited to the team's salary cap the next year.

(c) Incentives
(i) Any and all incentive amounts, including but not limited to performance bonuses, shall be included in Team Salary if they are "likely to be earned" during such League Year based upon the player's and/or Team's performance during the prior year.

Analysis: If the requirements for an incentive were accomplished the previous year, the incentive is considered "likely to be earned." LTBE incentives are automatically counted against the salary cap in full.

(ii) At the end of the season, if performance bonuses actually earned resulted in a Tearm's paying Salary in excess of the Salary Cap, then the amount by which the Team exceeded the Salary Cap as a result of such actually paid performance bonuses shall be subtracted from the Tearm's Salary Cap for the next Lague Year.
(iii) At the end of a season, if performance bonuses previously included in a Tearm's Team Salary but not actually earned exceed performance bonuses actually earned but not previously included in Tearm Salary, an amount shall be added to the Team's Salary Cap for the next League Year equaling the amount, if any, by which such overage exceeds the Team's Room under the Salary Cap at the end of a season.

Analysis: At the end of a season, an adjustment for a team's salary cap the next year is determined based upon incentives that were or were not earned. If more LTBE incentives were not actually earned than NLTBE incentives that were actually earned, then the team receives a positive adjustment to its salary cap the next year. If the opposite occurs, a negative adjustment will be made. Since the basic rule of the salary cap is that every applicabale dollar paid to a player will be counted against the cap at some point (no more, no less), an adjustment must be made to reflect what money was actually earned and what wasn't. This principle can be manipulted to a team's benefit using the clause below.

(xii) Any renegotiated contract will be revalued at the time of the renegotiation. Thus, if at the time of the renegotiation, the conditions for an incentive bonus have already been satisfied, that bonus will be deemed "likely to be earned." Any new or altered incentive bonuses renegotiated in a preexisting contract after the start of the regular season in which they may be earned automatically will be deemed "likely to be earned" during that season.

Analysis: Any incentive added during the regular season is automatically considered LTBE. This, along with the clause above, allow teams to move excess salary cap room from one year to the next. The team can add a rediculous incentive, but it is still considered LTBE because it was added during the regular season. Since the incentive will not be earned, a positive adjustment will be made the next year. In effect, the team is using up the rest of its cap room one year to "transfer" it to the next year.

 

 

Home | Current Year | Next Year Estimate | Articles | Archives | Links
© 2008 Bryce Johnston
Contact: eaglescap@yahoo.com
  Site Designed by: Xtinct Designs