The NFL season is full of jargon that can be a big confusing to the uninitiated: what is a "football move", for example. But, if in-season talk can be a little troublesome, the off-season conversations are oftentimes downright mindboggling. This series of "primers", known as "NFL 101", aims to break down the communication barriers between Joe and Jane Football Fan and those of use who obsess over every detail.
In part one, we looked at the basics of the NFL salary cap -- what it is, and why it matters. In part two, we will look at the two ways players get paid.
Salary
A player's salary is exactly what it sounds like. This is their annual compensation for playing. Unlike most fans, however, players might know how much they will make several years in advance.
Each contract is broken down by year, explaining how much they will make each season of the contract. The money is paid out on a per-game basis, taking the annual salary and breaking it up over the course of the 16-game schedule. Playwers are paid for the game whether they are active for the game or not. Not counted in salary are a few small payments for off-season practices and workouts that are mandated by the Collective Bargaining Agreement (CBA), a contract that is negotiated every several years between the league and the NFL Players' Association. These payments are not counted against the cap.
One thing to note is that a player's salary from one year to the next within a given contract can vary wildly. This is for accounting purposes that help a team juggle a player's salary-cap impact.
Let's look at an example. If Bob Player is under contract for three years with a total salary of $10 million, it might be broken out as follows:
- $1 million in year 1
- $4 million in year 2
- $5 million in year 3
This is actually a common practice, and it has to do with how bonuses are accounted for, which we will get to in a moment.
One final, and important, note about salaries is that they are rarely guaranteed. There are some conditions for rookie contracts that can make a portion of them guaranteed. Additionally, there can be language in the player's contract that guarantees some or all of a year's base salary depending on certain conditions. Most often, this is for injury. In that case, it simply says that a player can not be cut for being injured. He is guaranteed to be paid his salary even if he is injured and cannot play.
Bonuses
There are several types of bonuses that can be included in a player's contract. The most common are Signing, Roster, Workout and Option bonuses.
Signing Bonus
A signing bonus is a lump sum of money to be paid to a player when he signs a contract. This bonus is often a key aspect of contract negotiations, because it is the only truly guaranteed money in any contract. Signing bonuses are not, however, counted in their entirety the year a player signs the contract. Instead, the dollar value is prorated over the length of the contract, up to a maximum of five years. That is only for accounting, though; the bonus is paid, in its entirety, at signing. Let's go back to our example contract. Let's assume Bob Player's contract includes a $3 million signing bonus. It would then be a three-year, $13 million contract, broken down as follows:
- $2 million ($1 million salary and $1 million signing bonus (prorated)) in year 1
- $5 million ($4 million salary and $1 million signing bonus (prorated)) in year 2
- $6 million ($5 million salary and $1 million signing bonus (prorated)) in year 3
However, while his "cap numbers" (the total dollar amount for which he counts against the salary cap in a given year) would be $2 million, $5 million and $6 million over the life of the contract, his actual payouts per year would be $4 million, $4 million and $5 million, because he received the entire bonus in year one.
Roster Bonus
Roster bonuses basically say, "if you are still on the team when the new league year begins (typically in early March each year), we will pay you a bonus of X dollars." Unlike signing bonuses, roster bonuses are accounted for in their entirety in the year which they are paid. Let's revisit Bob Player's contract once again. If he has a $1 million roster bonus payable in year three, his actual pay per year would be $4 million, $4 million and $6 million, while his cap impact would look like this:
- $2 million ($1 million salary, $1 million signing bonus (prorated)) in year 1
- $5 million ($4 million salary, $1 million signing bonus (prorated)) in year 2
- $7 million ($5 million salary, $1 million signing bonus (prorated), $1 million roster bonus) in year 3
Typically, roster bonuses are given to players who meet any of these conditions: a history of injury, unproven players and players with dramatic increases in base salary from one year to another. This allows a team to cut ties with a player for these reasons and avoid having to account for their salaries, while giving the player a moderately binding promise of a lump-sum payout at the beginning of a league year.
Workout Bonus
Typically small compared to signing bonuses and roster bonuses, workout bonuses are included in contracts to encourage a player to attend off-season workouts and activities. These could be given to players who have reported to camp out of shape in the past, or possibly to older players to encourage them to stay in shape. They are only guaranteed once the given conditions are met.
Option Bonuses
Option bonuses are gaining in popularity, and can be seen as a kind of "delayed signing bonus". In essence, an option bonus is a bonus to be paid if a player is still on the team's roster after one or more league years have passed, similar to a roster bonus. The difference, though, is that an option bonus is prorated over the remaining years of the contract, just like a signing bonus. Using Bob Player's contract once again, let's assume he is given an option bonus of $2 million, payable in year two. His contract would now look like this:
- $2 million ($1 million salary, $1 million signing bonus (prorated)) in year 1
- $6 million ($4 million salary, $1 million signing bonus (prorated), $1 million option bonus (prorated)) in year 2
- $8 million ($5 million salary, $1 million signing bonus (prorated), $1 million roster bonus, $1 million option bonus (prorated)) in year 3
By comparison, his actual payouts each year would be $4 million, $6 million and $6 million.
Each of these bonuses gives the team options for how to account for various dollar amounts, allowing a team to front- or back-load a contract depending on current or future needs of the team to be in compliance with the salary cap, even though the actual payouts in a given year could be wildly different.
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