NFL

The NFL Salary Cap Explained

The National Football League boasts one of the highest revenues in the United States, and that translates to handsome compensation for the players. 

Almost every year, the league sees a rise in revenue, and that means players are entitled to an annual pay rise. 

Nevertheless, there are rules in place to regulate the amount each team carries home. Just like other professional sports leagues, the American football league has salary caps in place to keep costs on the check and maintain a competitive balance between the teams.

But it isn’t quite clear how these caps work, and most fans find it hard to know how much their favorite teams are taking home in regards to the cap space.

We are here to break down the complicated aspects of the league’s cap rules and bring you on board.

About the Cap

A salary cap is a contract between the NFL and individual players, defining how much a team can spend on player salaries. 

Since the league uses a hard cap, no team is allowed to exceed the set upper cap limit for any given reason. The cap is adjusted every season, and the calculations are based on the league’s revenue for that particular season. 

Initially, before the implementation of the collective bargaining agreement, the calculation was based on gross revenue, or profits generated from deals with national television networks, the sale of tickets, and merchandise. 

However, some adjustments were made in 2006 to include things like advertising and naming rights. As of now, based on the updated collective bargaining agreement, the cap factors in all streams of revenue.

For the 2020 season, the American football league is setting its salary cap at $198.2 million, as reported by the NFL network. This represents a rise of about $10 million from the previous season. 

Note that the salary cap only applies to the players and not the coaches, trainers, or other personnel. Also, it doesn’t affect ticket prices or merchandise, but rather how a team keeps and acquires players.

Cap Constraints

No team is allowed to spend more than the stipulated amount of money against the cap, and each is expected to comply with the cap within the first day of the league year. 

Under the new collective bargaining agreement, there’s nothing like a minimum salary. Each team is required to spend at least 89 percent of the salary cap, and the portion is expected to rise to 90 percent in 2021. 

League-wide, each team should spend at least 95 percent of the cap on player costs. Nevertheless, if the expenditure is lower than this, the league must pay the difference directly to the players on or before April 15 of the following league year.

Rules That Govern the Salary Cap

Since teams with higher payloads will always try to dodge the salary cap, the league has set rules to limit the amount each team may wish to get above the cap.

Here are some of the rules:

The 30 Percent Rule

Under the collective bargaining agreement, no player is allowed a pay rise of more than 30 percent for contracts that extend beyond the final league year. That means that a team can only raise a player’s salary by 30 percent of their cap charge (excluding the signing bonuses) in 2020 during any subsequent year. 

The rule is there to prevent any team from spreading huge amounts of caps to uncapped seasons in a bid to save money in subsequent years. 

Initially, some teams would backload deals to push huge chunks of money to the end of the contract to avoid the salary cap. However, with the 30 percent rule, these contracts are kept on the check.

The Rule of 51

The league’s in-season rosters have a maximum of 53 players, based on the assumption that teams will keep at least 25 players each for defense and offense, alongside three specialists (punter, kicker, and long snapper). 

However, during the off-season, the rosters expand from 53 to about 90, and teams are still required to comply with the salary cap. That’s why we have the rule of 51

According to the rule, a team’s salary cap status is determined by the 51 highest-value contracts on its roster during this time. So when a player is contracted, both his cap hit and that of the player he pushes out of the top 51 are accounted for.

Incentives

Incentives are divided into two categories: likely to be earned and not likely to be earned. The likely to be earned incentives are based on the levels of performance a player was able to reach in the previous season and count against the salary cap in the year they’re scheduled.

However, in case a player failed to complete the incentive in the previous year, it’s considered likely not to be earned, and it’s not factored into the salary cap. 

There’s so much to the NFL’s salary cap that may be hard to crack. Nevertheless, with these basics, you have a clear picture of how things work. 

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