NFL 101: Explaining Futures Contracts and the Rule of 51

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.NFL

NFL rosters are fluid. They have to be. In a game that is gently described as a collision sport, injuries take a flying leap past "possible" and land about twenty feet beyond "inevitable." Teams have several backups at most positions to deal with the lesser injuries that may take a week or three to heal. That's why NFL rosters have the seemingly odd maximum size of 53 -- the assumption being that most teams will keep about 25 each for offense and defense, plus the three specialists (kicker, punter and long snapper). It allows for injuries without teams having to do some roster judo to make things work.

But there are times when a roster can exceed the in-season 53. In fact, there are three different maximums throughout the league year, and a fourth one that exists only for off-season accounting purposes. It has a small, but not insignificant, impact on a team's salary-cap situation.

As already mentioned, an in-season roster consists of 53 players. There's no requirement to keep a set number of offense, defense and specialists; the math I mentioned is just a simplification of a seemingly arbitrary number. That number is essentially set in stone, with one caveat: if a player suffers a season-ending injury and is placed on the Reserve/Injury list, his roster spot is opened up and can be used for another player. The one thing to keep in mind, though, is this does not remove his salary from the books. A player cannot be waived while injured (that's not entirely true because of things like injury settlements, but we'll keep this simple), and continues to be paid regardless of his status. That means teams typically enter the season with at least a $1-2 million of salary-cap breathing room, to allow for the need to sign additional players as the season progresses.

The Team of the Future -- Today!

During the off-season, things get a little weird. First of all, teams are technically required to stick to the 53-man roster until the new league year begins in early March each year. Whether a team is in the Super Bowl or they were eliminated from playoff contention by week ten of the regular season, the 53-man roster rule is the same.

Enter the "Futures Contract."

These contracts are interesting. Unlike a normal player contract, which takes effect the moment they are signed, futures contracts take effect on the first day of the new league year. This coincides with the day teams can expand their rosters to a new, 90-player max -- the limit from day one of the league year until the first round of cuts during training camp.

Usually, futures contracts are used for young players. Technically, they can be used to sign anyone who was not on an active roster when the preceding regular season ended. The problem is, most savvy veterans are going to be on a roster, so you basically never hear of a highly talented player signing one of these contracts. Usually, teams will first target their own practice squad players they think could eventually contribute, because practice squads are dissolved when the league year ends. Signing those players to futures contracts ensures they will at least be under team control through the beginning of training camp, and not at risk of being snagged away by another team in need.

The "Rule of 51"

So, if rosters expand from 53 to 90 during the off-season, how can a team possibly stay in compliance with the salary cap? Even at league minimums, the additional 37 salaries would account for somewhere five and 10 percent of a team's salary cap -- and teams can sign those players long before the league picks a final cap number, anyway. This is exactly why the "Rule of 51" exists. Simply put, the "Rule of 51" states that, during the entirety of the off-season from the first day of the league year until the first game, the team's salary-cap status is determined by the 51 highest-value contracts on their roster. This actually makes it easier to be in compliance during the off-season than the regular season, because there are two fewer contracts being counted. And, because the bottom of a team's roster is usually filled with guys making the league minimum anyway, most minor roster changes will only affect a team's cap situation by a few hundred thousand dollars at most.

But what happens if, say, a team signs a veteran player who was cut during camp, but who will command a salary considerably higher than the minimum?

This is where the subtleties of Salary Cap Judo come into play.

One nice aspect of the Rule of 51 is that any team with an even remotely competent front office can find 90 people willing to play football at the price they are willing to pay. That means there will always be more than 51 players on an off-season roster. Let's assume that the player with the 51st-highest salary on Team A's roster is a two-year veteran making the league minimum for a player with that level of experience -- in 2016, that's $600,000. At some point during camp, Team B cuts a somewhat talented veteran because they already have too many players at that position -- a position of need for Team A, who quickly snatch up the player for a $1 million dollar contract.

Thanks to the Rule of 51, Team A is only going to take a $400,000 hit to their salary cap. That's because the new player makes more than the 51st-highest-paid player on Team A's roster, so that player's salary is no longer counted. Doing the math in two steps, we must first remove salary number 51 from the salaries accounted for, returning $600,000 to the team's available cap space. Then we can add the new salary, for a net loss of just $400,000.

Had the new player been a first-year guy making the minimum for someone of his experience, his salary of $450,000 would not have caused any adjustment to the team's cap numbers.

One final note: during training camp, there are two separate dates at which rosters must be trimmed. The first of these dates requires all rosters to be trimmed to a maximum of 75 players, roughly one week before the final cut-down. The Rule of 51 is unaffected by this first cut-down, because it still results in more than 51 salaries. The only way the first cut-down would affect a team's cap situation is if one or more of the players cut are in the top 51 for that team.