NFL contracts. The Salary Cap. Aspirin. The three go together well. But whereas the structure of aspirin is fairly simple (willow bark extract), the structure of the first two is a whole different beast.
With the clock ticking closer to the franchise tag deadline, I figured I would take this opportunity to address a few aspects that most fans [read: people who don’t get paid for it] may find themselves wondering about these two.
Don’t all teams have the same salary cap?
Yes and no. The league sets a salary cap at the beginning of the league year (usually in late April/early March before free agency begins). This cap is for the season following the offseason and may be greater or lesser than the previous season’s salary cap (rarely is it exactly the same). This year’s salary cap is $120.6 million. Salary caps differ when teams conduct their business in certain ways, whether for better or worse. The new CBA allows for unused salary cap money to rollover between years. So teams may find themselves with more cap space than the league determined salary cap. Inversely, if a team violates any league rules or standards, their salary cap may be lessened for punitive reasons*. In both cases, teams wind up with what is referred to as their own “adjusted salary cap.”
*This most recently occurred with DAL and WAS for allocating large salary/bonus sums into the uncapped 2011 season. As penalty, these teams’ salary caps were artificially lowered for the 2012 and 2013 seasons and has-been/will-be distributed amongst 28 teams. Why 28? OAK & NO conducted their business in a similar manner but to a lesser extent, so rather than proactively punishing these two teams by removing cap space, the League passively punished them by just not including them in the redistribution process.
Who keeps track of adjusted salary caps?
A teams’ management is acutely aware of their cap number; however, the NFL must approve all contracts and bonuses and will reject any such deals that would exceed a team’s adjusted salary cap.
Do only player wages count towards the salary cap?
Yes. Wages paid to coaches, trainers, club staff, etc. do not apply towards the salary cap.
What “player wages” count towards the salary cap?
Simply speaking, wages include the player’s base salary, signing bonus, roster bonuses and any other bonuses or incentives.
What’s a player’s base salary?
It is what it sounds like. A base salary is determined in the negotiation process, and the salary is remitted to the player either weekly or bi-weekly (in equal portions) over the course of the NFL regular season. [Ex: A player has a base salary of $1.7 million and is paid weekly. The regular season consists of 17 weeks; so, the player would receive $100,000 in base salary each week of the regular season.]
There’s a lot of talk about signing bonuses: How do they work?
A signing bonus is at it sounds: a bonus earned by a player for signing a new contract or extension. The player receives the entire sum upfront, but the team may prorate the total over the course of up to five seasons, meaning that, for example, a $10 million signing bonus may be evenly distributed over five seasons so that the team’s salary cap only takes a hit of $2 million per season. Signing bonuses are guaranteed, meaning that if a player is traded or retires after receiving the bonus, the prorated costs stick around* (in talking salary caps, this is what is referred to as “dead money” as the team still has to pay towards a service they are no longer getting).
* A team may file a grievance if they give a player a huge signing bonus and he retires shortly thereafter without good reason. It’s called the “Barry Sanders Rule”, so guess who pulled that stunt?
What about roster bonuses?
Another common bonus, the roster bonus is earned if/when a player makes the 53-man roster in the regular season during the year in which the roster bonus is worked into a contract. The entire roster bonus affects the team’s salary cap for the season it is earned in and may not be spread over the course of several years such as the salary cap.
What other bonuses are there?
Other bonuses may include option bonuses and incentive bonuses. As these are slightly more complex and tougher to explain, and as we’re making “molehills” here, we’ll spare that discussion for another time.
Now, how does this relate to the Chiefs and Bowe?
The Chiefs reportedly have a little over $16.5 million remaining in their cap space. Though he hasn’t signed the tender, the $9.5 million offered to Bowe through the franchise tag has already been counted against the Chiefs’ cap space because it is money that has already been committed to a player (even though the player it’s committed to hasn’t officially accepted the offer yet). If Bowe does not sign a new deal and just signs the tender, the Chiefs’ reported cap of $16.5 million will not be affected. In simpler terms, the $9.5 million offered to Bowe in the form of a franchise tag is considered already spent and is not counted in the $16.5 million that the team reportedly has freely available. So, in theory, if the Chiefs offer Bowe a deal that he’ll accept, part of that deal could allow Bowe to be given as much money for the 2012 season as to cause a $24 million cap hit* for 2012 and it’d be permissible by the NFL for them to do so. It’d be crazy for them to do so (Fitz and Megatron don’t even cause that large of a hit in any given year), but the money’s there.
* Note: Poe remains unsigned… we can intelligently guess he’ll get the rookie minimum of $390,000 in base salary, like the other first-rounders who have been signed thus far, but we’re not sure what he’ll get in terms of signing bonus. Also this time of year, only the highest paid 51 players on the team count towards the cap… eventually the last two to make the 53 man roster will have to have their wages taken into consideration. A good rule of thumb here would be to deduce at least $2 million to cover these things. So, $16.5 million + $9.5 million – $2 million = $24 million.
So, Addicts, knowing what you know now, how do you think Pioli should approach the situation? How much money should Bowe be offered in a new contract, and how much should be counted against this season’s cap specifically? Keep in mind unused cap can be rolled over into next season, and we may have great use for it then, too *cough*QB*cough*.