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Football 101:Salary Cap, Free Agency and Franchise Tags

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Posted 12-18-2008 at 08:46 AM by hagan714

The NFL salary cap is calculated by the current CBA to be 59.5% of the total projected league revenue for the upcoming year. This number, divided by the number of teams, determines an individual team's maximum salary cap. For 2008, this was approximately $116 million per team. For 2009, a minimum 6% increase raised this number to at least $123 million. For all of you nerds out there, here is the actual mathematical calculation:

Projected revenue x CBA Percentage = Players Share Total Revenue

Players Share minus Projected League wide Benefits =
Amount Available for Player Salaries

Amount Available for Player Salaries / Number of Teams =
Unadjusted Salary Cap per Team

Playing around with the Cap


Remember the not all of the salaries listed count against the cap. Teams and players often find creative ways to fit salaries under the salary cap. Early in the salary cap era, "signing bonuses" were used to give players a large chunk of money up front, and thus not count in the salary for the bulk of the contract. This led to a rule whereby all signing bonus are pro-rated equally for each year of the contract. Thus if a player receives a $10 million signing bonus for a 5 year contract, $2 million per year would count against the salary cap for the life of the contract, even though the full $10 million was paid up front during the first year of the contract.

Player contracts tend to be "back-loaded". This means that the contract is not divided equally among the time period it covers. Instead, the player earns progressively more and more each year. For instance, a player signing a 4-year deal worth $10 million may get paid $1 million the first year, $2 million the second year, $3 million the third year, and $4 million the fourth year. If a team cuts this player after the first year, the final three years do not count against the cap. Any signing bonus, however, ceases to be pro-rated, and the entire balance of the bonus counts against the cap in the upcoming season.

"30% Rule". The "30% Rule" governs veteran contracts that are entered into in a capped year and extend into the final year of the CBA. The rule states that these contracts cannot have an annual increase of more than 30% of the salary, excluding amounts treated as a signing bonus, provided for in the FINAL CAPPED YEAR.

Roster Adjustment

Only the top 51 player salaries for a team count against the salary cap in the offseason. During the season, all player salaries count toward the cap.

Free Agent

A Free Agent is "a player who is not under contract and is free to negotiate and sign a Player Contract with any NFL Club, without Draft Choice Compensation or any Right of First Refusal." So UFA is free to sign with the highest bidder (or the team of their choice) without that team having to give the original team any kind of compensation. When a player with five or more accrued seasons (or with four or more accrued seasons in any Capped Year) reaches the end of his player contract, he becomes an UFA.

"Exclusive" or "Non-Exclusive" Franchise player


Something that even some of the most knowledgeable sports fans do not realize is that a team has the option of designating a Franchise player with one of two tags: "Exclusive" or "Non-Exclusive".

Any Club that designates a Franchise Player as "Exclusive" shall be the only Club with which that Franchise Player may negotiate or sign a contract. In order to designate an UFA or RFA as an Exclusive Franchise Player, the team must tender the player a one year contract that is the minimum of the average of the five largest salaries (as calculated at the end of the free agency signing period) for players at the position at which he played the most games during the prior year, or 120% of his prior year salary, whichever is greater.

If the team elects to name the player "non-exclusive" then the player shall be permitted to negotiate a contract with any Club as if he were an UFA; however, Draft Choice Compensation of TWO first round draft selections shall be awarded to the prior club in the event that he signs with the new club. For Non-Exlusive Franchise Players, the team must tender the player a one year contract that is the minimum of the average of the five largest PRIOR-YEAR salaries for players at the position at which he played the most games in the prior year, or 120% of his prior year salary, whichever is greater.

If the player elects to play with the prior club (the team that designated him with the Franchise tag) and does not negotiate another contract with that team, then the one year salary is guaranteed. Also, if the prior club elects to withdraw the qualifying offer, the player becomes an UFA.

Each Club can also designate one UFA or RFA as a Transition Player. Additionally, (in the final year of the CBA) each club may, in lieu of designating a Franchise Player, designate an additional Transition Player during the same designation period as the Franchise Player designation period. Whew! What that means is that a team may elect to tag two players with the Transition tag or one Transition Player and one Franchise Player in the final capped year. Any Club that designates a Transition Player shall receive the Rights of First Refusal. In order to designate an UFA or RFA as a Transition Player, the team must tender the player a one year contract for the average of the ten largest prior year salaries for players at the position at which he played the most games during the prior year, or 120% of his prior year salary, whichever is greater.

RFA

A RFA is "any Veteran player with three or more accrued seasons, but less than five accrued seasons (or less than four accrued seasons in any capped year)... At the expiration of his last Player Contract during such period... [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 any such player, subject to... certain restrictions." The restrictions are the fun part.

The player's original team maintains the First Refusal Right if the team tenders a contracts of one year at :

$850,000 for players with three seasons
$925,000 with four seasons

A team maintains the Right of First Refusal and Draft Selection at the Player’s Original Draft Round if the team tenders an offer of one year at the same amount(s) listed above OR at least 110% of the player’s prior year’s salary -- whichever is greater.

The team maintains the Right of First Refusal and Second Round Draft Selection if the team tenders an offer of one year at $1.3 million OR at least 110% of the player’s prior year’s salary -- whichever is greater -- for players with three accrued seasons, and $1.492 million for players with four accrued seasons in uncapped years.

The player's original team maintains the Right of First Refusal and First Round Draft Selection if the team tenders an offer of one year at $1.85 million OR at least 110% of the player’s prior year’s salary -- whichever is greater. For players with four accrued seasons in uncapped years, that figure is $1.975 million.

The player's original team maintains the Right of First Refusal and First Round Draft Selection and Third Round Draft Selection if the team tenders an offer of one year at $2,350,000 OR at least 110% of the player's prior year’s salary -- whichever is greater. For players with four accrued seasons in uncapped years, the tender is $2,475,000.

In the event a Prior Club withdraws its Qualifying Offer, the RFA immediately becomes an UFA.

There is one other kind of free agent, which isn't really very "free" at all. That is the Exclusive Rights Free Agent (ERFA). Such a player has no more than two accrued seasons in the NFL and may only sign with his prior team, provided, of course, that the team extends a minimum qualifying offer to the player.

Minimum Salary
In 2006 each team had to pay a guaranteed Minimum Team Salary of 84% of the Salary Cap. Each year that percentage goes up by 1.2%, which means that it is 85.2% this season. However, the Minimum Team Salary cannot extend beyond 90% of the Salary Cap. Any shortfall in the Minimum Team Salary at the end of a league year has to be paid, on or before April 15 of the next league year, by the team(s) having such shortfall, directly to the players who were on that team's roster at any time during the season.


http://en.wikipedia.org/wiki/National_Football_League
Ask The Commish.com - Salary Cap FAQ
Posted in Sports, NFL
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  1. Old Comment
    SmashMouth's Avatar
    I like that minimum Salary idea .... any way to give some of that extra back to the fans?
    permalink
    Posted 12-28-2008 at 12:29 PM by SmashMouth SmashMouth is offline

 
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