NFL Salary Cap - 09/14/06 01:11 PM
The NFL Salary Cap as we know it came about through the NFL's Collective Bargaining Agreement (CBA) back in 1993. The CBA was an agreement between the NFL Players Association (NFLPA) and the NFL owners to reach an equitable agreement in terms of the sharing of the pie, if you will.
Basically, through the CBA the parties have realized that the goal of the players and the management should be the same—increasing the revenue pie instead of fighting over the existing amount—and the NFL has tailored the CBA to achieve that end.
The NFLPA was rewarded with the concept of Free Agency, whereby players have the freedom to market their skills after a specific period of service. As a system of checks and balances, the owners sought a means of cutting back on the escalation of the players' salaries. This is accomplished by -- you guessed it -- the NFL Salary Cap.
Compromise is an abundant theme found throughout the CBA. The Free Agency system is slightly limited by the team’s ability to protect certain athletes (franchise and transition players) from leaving by paying a salary equal to an average of the top players at his position. On the other hand, the salary cap is flexible by allowing owners to pay signing bonuses up front that exceed the cap, but the amounts are amortized over the life of the contract. More important is the agreement that the cap, which is defined as a percentage of revenues, will grow as team and league revenues grow. This aligns the goals of labor and management because as teams make more money, so do the players.
The NFL Salary Cap has been in existence since 1994, and it will continue to rear its head at least through 2006. In June 2001, the NFL Management Council and the NFLPA agreed on the 4th extension to the original CBA. This most recent extension (through 2006) was ratified in October 2001.
http://www.askthecommish.com/Articles/Capanomics1.htm
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Some Important Features of the CBA Extension
1. Extended Years
The CBA is extended through 2007. The 2004-2006 League Years will be Capped Years, and the 2007 League Year will be an Uncapped Year. Existing signing bonus proration rules will continue to apply with maximum proration as follows:
2002 2003 2004 2005 2006 2007
7........ 7..... 6...... 5..... 4..... U
2. Salary Cap Percentages
The Salary Cap percentage shall be as follows:
old new
2002 63.5% 64%
2003 64% 64.25%
2004 NA 64.75%
2005 NA 65.5%
2006 NA 64.5%
3. Minimum Salaries
Minimum salaries will no longer be increased each year by the percentage increase in DGR to a maximum of 10%. Instead, Paragraph 5 Minimum Salaries are set at the following specific amounts for the years indicated ($ in 000's):
Credited Seasons 2002 2003 2004 2005 2006 2007
0 225 225 230 230 235 235
1 300 300 305 305 310 310
2 375 375 380 380 385 385
3 450 450 455 455 460 460
4-6 525 530 535 540 545 545
7-9 650 655 660 665 670 670
10+ 750 755 760 765 770 770
Minimum Salaries for the lesser part of split contracts shall be revised as follows:
Credited Seasons 2002 2003 2004 2005 2006 2007
0 130 130 135 135 140 140
1 145 145 150 150 155 155
2 160 160 165 165 170 170
3 200 200 205 205 210 210
4-6 225 225 230 230 235 235
7-9 250 250 255 255 260 260
10+ 275 275 280 280 285 285
4. Minimum Salary Benefits
Operation of Benefit
We are implementing a new system to make it less costly to retain older veterans at the minimum salary. Under this new system, the Salary Cap count for a player with four or more Credited Seasons who signs a qualifying contract (collectively, "qualifying players") will be the same as the count for a player with 3 Credited Seasons.
The difference between the Salary Cap count for a qualifying contract and the stated minimum for the qualifying player's years of service will be counted as a Player Benefit. For example, in the 2002 League Year, a qualifying player with 5 Credited Seasons will receive a Minimum Salary of $525,000; however, only $450,000 will count against his club's Team Salary. The difference of $75,000 will be counted as a Player Benefit and be paid out of the League-wide benefit pool. Similarly, a qualifying player with 12 Credited Seasons will receive a Minimum Salary of $750,000; however, only $450,000 will count against his club's Team Salary. The difference of $300,000 will be counted as a Player Benefit and be paid out of the League-wide benefit pool. As a result, the 10-year veteran making $750,000 will cost the club the same as the three-year veteran making $450,000.
For players with 4 or more Credited Seasons, split contracts, if they otherwise qualify, may be qualifying contracts. For such contracts, the reduced Cap count will equal either the difference between the player's minimum salary and the full minimum salary for players with 3 Credited Seasons (if the player is on an Active/Inactive List) or the difference between the player's split minimum salary and the split minimum for players with 3 Credited Seasons (if the player is not on an Active/Inactive List).
Entering Player Pool
We are no longer increasing the rookie pool each year by the percentage increase in DGR to a maximum of 10%. Instead, we are keeping it the same for 2002 and 2003, and increasing it by the DGR percentage to a maximum of 5% in 2004 through 2007 as follows:
2002 - flat
2003 - flat
2004 - 5% maximum
2005 - 5% maximum
2006 - 5% maximum
2007 - 5% maximum
Franchise Players
Beginning in the 2002 League Year, teams will have a window beginning the day after the last day of the Franchise Player designation period and ending at 4:00 p.m. New York time on the fourteenth day following the start of the League Year during which, if the team signs its Franchise Player to a multi-year contract, the team may nonetheless retain its Franchise Player designation rights the following year. (By way of clarification, if the League Year begins on March 1, the window will end at 4:00 p.m. New York time on March 15.) If a multi-year contract is not signed during the window period, the current rules continue to apply without prejudice or inference being drawn from this modification in the CBA.
8. Minimum Team Salary
In the 2002 League Year and thereafter, the Minimum Team Salary will be 56%, meaning that each team must spend at least 56% of league-wide DGR divided by the 32 teams.
http://nflpa.org/members/main.asp?subPage=CBA+Extension+Features
Basically, through the CBA the parties have realized that the goal of the players and the management should be the same—increasing the revenue pie instead of fighting over the existing amount—and the NFL has tailored the CBA to achieve that end.
The NFLPA was rewarded with the concept of Free Agency, whereby players have the freedom to market their skills after a specific period of service. As a system of checks and balances, the owners sought a means of cutting back on the escalation of the players' salaries. This is accomplished by -- you guessed it -- the NFL Salary Cap.
Compromise is an abundant theme found throughout the CBA. The Free Agency system is slightly limited by the team’s ability to protect certain athletes (franchise and transition players) from leaving by paying a salary equal to an average of the top players at his position. On the other hand, the salary cap is flexible by allowing owners to pay signing bonuses up front that exceed the cap, but the amounts are amortized over the life of the contract. More important is the agreement that the cap, which is defined as a percentage of revenues, will grow as team and league revenues grow. This aligns the goals of labor and management because as teams make more money, so do the players.
The NFL Salary Cap has been in existence since 1994, and it will continue to rear its head at least through 2006. In June 2001, the NFL Management Council and the NFLPA agreed on the 4th extension to the original CBA. This most recent extension (through 2006) was ratified in October 2001.
http:/
-------------------------------------------------------------------------------------
Some Important Features of the CBA Extension
1. Extended Years
The CBA is extended through 2007. The 2004-2006 League Years will be Capped Years, and the 2007 League Year will be an Uncapped Year. Existing signing bonus proration rules will continue to apply with maximum proration as follows:
2002 2003 2004 2005 2006 2007
7........ 7..... 6...... 5..... 4..... U
2. Salary Cap Percentages
The Salary Cap percentage shall be as follows:
old new
2002 63.5% 64%
2003 64% 64.25%
2004 NA 64.75%
2005 NA 65.5%
2006 NA 64.5%
3. Minimum Salaries
Minimum salaries will no longer be increased each year by the percentage increase in DGR to a maximum of 10%. Instead, Paragraph 5 Minimum Salaries are set at the following specific amounts for the years indicated ($ in 000's):
Credited Seasons 2002 2003 2004 2005 2006 2007
0 225 225 230 230 235 235
1 300 300 305 305 310 310
2 375 375 380 380 385 385
3 450 450 455 455 460 460
4-6 525 530 535 540 545 545
7-9 650 655 660 665 670 670
10+ 750 755 760 765 770 770
Minimum Salaries for the lesser part of split contracts shall be revised as follows:
Credited Seasons 2002 2003 2004 2005 2006 2007
0 130 130 135 135 140 140
1 145 145 150 150 155 155
2 160 160 165 165 170 170
3 200 200 205 205 210 210
4-6 225 225 230 230 235 235
7-9 250 250 255 255 260 260
10+ 275 275 280 280 285 285
4. Minimum Salary Benefits
Operation of Benefit
We are implementing a new system to make it less costly to retain older veterans at the minimum salary. Under this new system, the Salary Cap count for a player with four or more Credited Seasons who signs a qualifying contract (collectively, "qualifying players") will be the same as the count for a player with 3 Credited Seasons.
The difference between the Salary Cap count for a qualifying contract and the stated minimum for the qualifying player's years of service will be counted as a Player Benefit. For example, in the 2002 League Year, a qualifying player with 5 Credited Seasons will receive a Minimum Salary of $525,000; however, only $450,000 will count against his club's Team Salary. The difference of $75,000 will be counted as a Player Benefit and be paid out of the League-wide benefit pool. Similarly, a qualifying player with 12 Credited Seasons will receive a Minimum Salary of $750,000; however, only $450,000 will count against his club's Team Salary. The difference of $300,000 will be counted as a Player Benefit and be paid out of the League-wide benefit pool. As a result, the 10-year veteran making $750,000 will cost the club the same as the three-year veteran making $450,000.
For players with 4 or more Credited Seasons, split contracts, if they otherwise qualify, may be qualifying contracts. For such contracts, the reduced Cap count will equal either the difference between the player's minimum salary and the full minimum salary for players with 3 Credited Seasons (if the player is on an Active/Inactive List) or the difference between the player's split minimum salary and the split minimum for players with 3 Credited Seasons (if the player is not on an Active/Inactive List).
Entering Player Pool
We are no longer increasing the rookie pool each year by the percentage increase in DGR to a maximum of 10%. Instead, we are keeping it the same for 2002 and 2003, and increasing it by the DGR percentage to a maximum of 5% in 2004 through 2007 as follows:
2002 - flat
2003 - flat
2004 - 5% maximum
2005 - 5% maximum
2006 - 5% maximum
2007 - 5% maximum
Franchise Players
Beginning in the 2002 League Year, teams will have a window beginning the day after the last day of the Franchise Player designation period and ending at 4:00 p.m. New York time on the fourteenth day following the start of the League Year during which, if the team signs its Franchise Player to a multi-year contract, the team may nonetheless retain its Franchise Player designation rights the following year. (By way of clarification, if the League Year begins on March 1, the window will end at 4:00 p.m. New York time on March 15.) If a multi-year contract is not signed during the window period, the current rules continue to apply without prejudice or inference being drawn from this modification in the CBA.
8. Minimum Team Salary
In the 2002 League Year and thereafter, the Minimum Team Salary will be 56%, meaning that each team must spend at least 56% of league-wide DGR divided by the 32 teams.
http:/