FanPost

Understanding the Salary Cap

 It seems no one wanted to answer my questions or you are just as much in the dark as I am. I decided to get smarter on the Salary Cap mechanics and pass along some of the high points to league financing. This information is based on the old CBA so it may have some new changes in the current contract. For my purposes it helps me understand how we signed so many FA's with only an estimated $12 Mil of cap space this year.

Important Points:

  • NFL contracts are not guaranteed, a team can cut a player during his contract and the remainder of that contract does not count against the cap!
  • Signing Bonuses: The bonus money is prorated against the cap over the life of the contract. If the player is cut before the end of the contract period, the remaining balance of the bonus goes against the current years cap.
  • A team can structure a contract so that it is back loaded, in other words the bonus and yearly salary increases are moved to the final years in order to lower the current cap space. You can only put this off for so long because eventually you will have to take the cap hit.
  • Rookies with no years of experience can be signed at the league minimum, for 2011 that rate was set at $340,000.00

Another interesting Tid-Bit is "Franchise Tags"

  • Exclusive franchise tag means the player is given a guaranteed one year contract worth the average of the five largest NFL contracts at that player's position. The player cannot negotiate with other teams.
  • Non Exclusive franchise tag: The player is free to negotiate with other teams, but the original team is compensated with two first round draft picks if the player signs with another team.
  • Transition layer tag: Attached to an upcoming free agent, the team is allowed to match any offer from another team. If the player's current team matches that offer the player must sign with it.
  • The moral of the story is that I can see how we have so many FA and rookie signings. With some number crunching and working the contracts it is easily possible to increase your cap space. I'm assuming Bell's contract was restructured to move his bonus and heavy payments to the out years. Plus if the rookies perform well they are a bargain.

The Details if you are really interested:

Salary cap is determined by taking total league revenue and dividing it by 32 teams. Or in other words for any given year the projected revenues are divided by 32 and multiplied by the CBA agreed upon percentage to arrive at the "Players Share Total Revenue". This amount minus projected league wide benefits equals the amount available for player salaries.

References:  http://www.examiner.com/sports-business-in-national/sports-business-101-how-does-the-nfl-salary-cap-work

http://www.askthecommish.com/salarycap/faq.asp

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