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Salary Cap 101

By Tom Marino
Scout.com
Posted Feb 8, 2007

OK students, take your seats and welcome to Salary Cap 101. Over the next few weeks I, and the staff at Scout.com, will try and explain the NFL free agency system to you, the elite football fan.

Tom Marino is a veteran of 35 years in the player personnel field, most recently with the St. Louis Rams. He has worked in three professional leagues (NFL, USFL, and WFL), and among his many accomplishments, is credited with the discovery of Eric Swann, the first non-collegiate player since 1946 to be selected in the 1st round of the NFL college draft.

OK students, take your seats and welcome to Salary Cap 101. Over the next few weeks I, and the staff at Scout.com, will try and explain the NFL free agency system to you, the elite football fan.

As I'm sure you are already aware, this is a graduate level course, totally befitting Scout.com subscribers. This semester, we will evaluate both the unrestricted free agents (UFA's) and the restricted free agents (RFA's), assess individual team needs, review last years' free agency signings, discuss each teams current cap situation, and for the first time ever, rate both the NFL Pro Scouting Departments and Salary Cap administrators.

Before doing so it is important for you to have a basic understanding of the new "Collective Bargaining Agreement" (CBA), a parting gift from Paul Tagliabue, along with some very important dates. OK, I know what you are thinking right now…… "BORRING," and to tell you the truth, in many ways I agree with your initial reaction, but the process of choosing players via free agency, is not as simple as just determining if their Free Agent offensive tackle is better than the current player at that position for your team.

So bear with me and let's get through with process as painless as possible. In no time we'll get to the fun stuff; giving our opinions and deciding who just might be that one Free Agent that can put your favorite team over the top!

For starters next season's Salary Cap figure is a whopping $109, 000,000.00 up seven million dollars over the 2006 cap figure!!! Not quite what a football scout or sports writer makes, but closing the gap very quickly…

There are three distinct types of Free agents in professional football and they are as follows:

1) Exclusive Rights

2) Restricted

3) Unrestricted

And within these categories there are two very important subsets:

1) Transitional

2) Franchise

Today, let us address the Exclusive Rights Free Agents and both the Transitional and Franchise designation.

EXCLUSIVE RIGHTS FREE AGENTS: Exclusive rights free agents (EFA) are players with two or fewer years of experience who have no outside negotiating power. His rights belong to his club, provided that club makes him a minimum qualifying offer, which varies based on tenure. An EFA player may not speak with other teams, and has no other NFL options open to him other than dealing with his previous club unless he is waived.

Negotiating Rights of Players with Less Than Three Accrued Seasons: Any veteran with less than three Accrued Seasons whose contract has expired may negotiate or sign a Player Contract only with his Prior Club, if on or before March 1 his Prior Club tenders the player a one year Player Contract with a paragraph 5 * salary of at least the Minimum Active/Inactive List Salary applicable to that player.

If the Prior Club has not by that date made the Required Tender or later withdraws such tender, the player shall be completely free to negotiate and sign a Player Contract with any Club, and any Club shall be completely free to negotiate and sign a player contract with such player, without any penalty or restriction, including, but not limited to, Draft Choice Compensation between Clubs or First Refusal Rights of any kind, or any signing period.

* Any reference to the term "Paragraph 5" in the CBA has to do with the player's base compensation.

Any questions class, opinions? OK then, lets move on to the next topic.

TRANSITION PLAYERS:

His club must offer a minimum of the average of the top 10 salaries of last season at the player's position or 120 percent of the player's previous year's salary, whichever is greater. A transition player designation gives the club a first-refusal right to match within seven days an offer sheet given to the player by another club after his contract expires. If the club matches, it retains the player. If it does not match, it receives no compensation.

All right, I don't want to overload you today, so why don't we get to one more topic, and we'll pick it up tomorrow at the same time.

FRANCHISE PLAYERS:

A club can designate one (1) franchise player in any given year. The salary level offer by a player's old club determines what type of franchise player he is. An "exclusive" franchise player, not free to sign with another club, is offered a minimum of the average of the top five salaries at the player's position or 120 percent of the player's previous year's salary, again whichever is greater.

If the player is offered a minimum of the average of the top five salaries of last season at his position, he becomes a "non-exclusive" franchise player and can negotiate with other clubs. His old club can match a new club's offer, or receive two first-round draft choices if it decides not to match.

A club decides to withdraw its franchise or transition designations on a player they can not use them on other players in the same year: A club can withdraw its franchise or transition designations and the player then automatically becomes an unrestricted free agent either immediately or when his contract expires.

The club cannot name a new transition player (two allowed in 1993, one in 1994 and one in the final year of the CBA). It can name a new franchise player the next year. A club can, though, designate a transition player in lieu of a franchise player at any time.

Well class you did a great job today, but attendance tomorrow is mandatory! In fact, I would go as far as to say if you don't attend tomorrow's lecture on Restricted Free Agents, I don't see any way you can possibly pass this course! And fans from Oakland and Detroit, please remember to bring a pencil and notebook tomorrow.

It's no wonder you're in the predicament that you're in today!

And one final note; don't despair; we haven't forgotten about the college draft and the upcoming Indy combine, not by a long shot. Scout.com personnel will be at the scene giving you the exclusive daily updates from the Indianapolis workouts and subsequent school workouts.

# # #

The Cleveland Browns took a major step forward with the hiring of former Chargers standouts Wes Chandler as their receiver coach. Chandler, who has previously coached professionally with the Cowboys and Vikings, is not only one of the most astute individuals and a real class act, but also one of the great teachers in the game today.

# # #

Material from personal interviews, wire services, other writers, and league and teams sources was used in this report.

Clear as mud

I have a question about the salary cap that hopefully somebody might be able to answer. Since we are still in the fiscal year 2006, and we always keep some room to hire an emergency player in case of injury. I am sure that we still have SOME room under the cap for this year. Would we be able to restructure a player(s) contract to give them more money under the fiscal year 2006 cap, while freeing up a little more room for the 2007 cap? I have not seen it done, and I don't know why. If someone could shed some light on the subject, I would appreciate it.

I believe they do it when they can.
I think they did this when they signed Andre Davis to his contract extension. Don't quote me on this, but I think they used some of the money they had left in the current year for his signing bonus so it wouldn't count against the following years cap.

Correct (kinda), that is what we did with AD and Bodden last year.... it's too late to do it this year. The signing bonus still prorates over the length ofthe contract... but we got one year's worth out of the way by getting it in under 2005. If it was a roster bonus, then it would have all been under the 2005 cap. Year/Season specific bonuses are fully accounted for in a single year (roster, incentive, etc..). Signing bonuses are always done over the course ofthe contract.

Either we weren't able to reach an agreement with any of the guys before the end of the season or there just weren't any we were interested enough in to do this with this year.

Thanks for the responces. I appreciate the added understanding. I was under the impression that the fiscal year ends the day before free agency begins. But what was said would explain why no "restructuring" is going on right now. Again, thank you all very much!