Player contracts and compensation

NFL players are all members of a union called the National Football League Players Association (NFLPA). The NFLPA negotiates the general minimum contract for all players in the league. This contract is called the Collective Bargaining Agreement (CBA), and it is the central document that governs the negotiation of individual player contracts for all of the league's players. The current CBA has been in place since 1993, and was amended in 1998 and again in 2006. The NFL has not had any labor-related work stoppages since the 1987 season, which is much longer than Major League Baseball, the NBA or the NHL. The current CBA expires at the end of the 2012 season.^[22]

Players are tiered into three different levels with regards to their rights to negotiate for contracts:

• Players who have been drafted (see below), and have not yet played in their first year, may only negotiate with the team that drafted them.^[22] If terms cannot be agreed upon, the players' only recourse is to refuse to play ("sit out") until terms can be reached. Players often use the threat of sitting out as a means to force the hands of the teams that drafted them. For example, John Elway was drafted by the Baltimore Colts in 1983 but refused to play for them. He had a fallback option of baseball, as he had played in the New York Yankees organization for two summers while at Stanford. The Colts traded his rights to the Denver Broncos and Elway agreed to play.^[23] Bo Jackson sat out an entire year in 1986, choosing to play baseball in the Kansas City Royals organization (and ultimately for the Royals themselves) rather than play for the Tampa Bay Buccaneers, the team that had drafted him. He reentered the draft the following year, and was drafted and subsequently signed with the Los Angeles Raiders.^[24]
• Players that have played between 3–5 full seasons in the league, and whose contract has expired are considered "Restricted Free Agents" (see below). They have limited rights to negotiate with any club.^[22]
• Players that have played 5 or more full seasons in the league, and whose contract has expired, are considered "Unrestricted Free Agents"(see below) and have unlimited rights to negotiate with any club. Teams may name a single player in any given year as a "Franchise Player"(see below), which eliminates much of that player's negotiation rights. This is a limited right of the team, however, and affects only a small handful of players each year.^[22]

Among the items covered in the CBA are:

• The league minimum salary
• The salary cap
• The annual collegiate draft
• Rules regarding "free agency"
• Waiver rules

 Salaries

A player's salary, as defined by the CBA, includes any "compensation in money, property, investments, loans or anything else of value to which an NFL player may be awarded" excluding such benefits as insurance and pension. A salary can include an annual pay and a one-time "signing bonus" which is paid in full when the player signs his contract. For the purposes of the salary cap (see below), the signing bonus is prorated over the life of the contract rather than to the year in which the signing bonus is paid.^[25]

Player contracts are not guaranteed; teams are only required to pay on the contract as long as the player remains a member of the team. If the player is cut, or quits, for any reason, the balance of the contract is voided and the player receives no further compensation.^[26]

Among other things, the CBA establishes a minimum salary for its players,^[26] which is stepped-up as a player's years of experience increase. Players and their agents may negotiate with clubs for higher salaries, and frequently do. As of the 2005 NFL season, the highest paid player was Atlanta Falcons quarterback Michael Vick, whose "cap value" was slightly under $8 million.^[27] The overall value of his contract is 10 years at $130 million, averaging $13 million a year, including signing bonuses and annual salary^[28]. The NFLPA maintains a searchable record of base compensation for active players here

 Salary cap

The salary cap is defined as the maximum amount that a team may spend on player compensation (see above) in a given season, for all of its players combined. Unlike other leagues, for example the NBA (which permits certain exemptions) or Major League Baseball (which has a "soft cap" enforced by "luxury taxes"), the NFL has a "hard cap": an amount no team under any circumstances may exceed.

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 2006, this is approximately $102 million per team. For 2007, it is projected that this will rise to $109 million.^[26]

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.^[26]

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.^[26]

The above information uses material from Wikipedia and is licensed

under the GNU Free Documentation License.