Post by Deleted on Dec 17, 2021 2:53:42 GMT -6
A lot of people don't understand the Salary Cap and how NFL contracts work, and who could blame them. The CBA is 456 pages of legal jargon that has your head spinning before you get to page 4. (And yes,I've read the whole thing!)
So in order to help folks out, I have created this Glossary Of Terms to try and simplify things so even the slow kids (like Reignman ) can understand it.
GUARANTEED MONEY:
Media outlets typically announce and talk about the "guaranteed money" in a player's contract. However, much of this money is only partially guaranteed. Compensation in NFL contracts can be guaranteed for three purposes: skill, cap and/or injury. Compensation in a player contract can be guaranteed for one, two, all or none of the guarantees (subject to some rules). If money in a player contract is protected for skill, cap AND injury, that money is fully guaranteed at signing and will be paid to the player. If money is only guaranteed for one or two of the three protections, that money is only partially guaranteed. Here is a quick breakdown of each guarantee category:
SKILL GUARANTEE:
If a player contract is terminated because, in the team's opinion, he does not have the requisite skill (due to a loss or lack of skills comparable to others on the team at his position), the player will be entitled to any money that is protected by a skill guarantee.
CAP GUARANTEE:
If a player contract is terminated so that a team can get under the salary cap, sign a free agent or re-sign one of its current players, the player is entitled to any money that is protected by a cap guarantee.
INJURY GUARANTEE:
If a player is released but is currently unable to perform football duties (i.e., doesn't pass a physical) as a result of team activities, the player is entitled to any money in his contract protected against injury. An injury-only guarantee is the most common in terms of partially guaranteed money.
FULL GUARANTEES (guaranteed at signing):
Money is fully guaranteed at signing if it is guaranteed for skill, cap and injury purposes.
CONTRACT RENEGOTIATIONS:
The first renegotiation of a veteran contract can occur at any time, but any subsequent increase in salary during the original terms of the contract can only happen 12 months after the most recent renegotiation. Teams can't renegotiate terms from any prior year of a contract. After the final regular-season game, terms for the current season can't be renegotiated.
BASE SALARY:
Formally known as "Paragraph 5" salary due to its place in a standard NFL Player Contract, it is the compensation a player receives during the regular season. The collective bargaining agreement set league minimums for base salaries. A player's "game check" is 1/17th (including the bye week) of his base salary in a 16-game season -- and would be 1/18th in a 17-game season.
SIGNING BONUS:
Money earned by a player for signing his contract. Typically paid out within the first 12-18 months. Prorated against the salary cap for the life of the contract (five-season maximum).
ROSTER BONUS:
Compensation earned by remaining on a team's roster on a certain date. Roster bonuses count in full against the salary cap in the season in which they are earned, unless fully guaranteed at signing. They are used to avoid signing-bonus proration, which pushes dead money into the future.
PER-GAME ROSTER BONUS:
A roster bonus awarded on a per-game basis for being on the team's game day (47- or 48-man) roster ("Active List") or its active (53-man) roster ("Active/Inactive List"), which varies by contract. For example, in a 16-game season, a player with a $1.6 million per-game roster bonus for being on the game day roster would earn $100,000 for each game he is active.
Note: Under the current CBA, teams are permitted to have 48 players active on game day if said team has eight active offensive linemen. If the team has fewer than eight players whose primary position is center, guard or offensive tackle, it can only have 47 game day actives. A team still cannot exceed a 53-man Active/Inactive List unless it is promoting one or two practice-squad players using the "Standard Elevation Addendum," in which case the team can expand its roster to 54 or 55 (only using said practice-squad players).
OPTION BONUS:
Gives a team (or, at times, a player) the ability to exercise the current or future years of the contract by paying a bonus. Prorated over the life of the contract (like a signing bonus, up to a max of five seasons).
WORKOUT BONUS:
Compensation for attending an agreed-upon percentage of the offseason workouts. No workout bonus can require participation in beyond 84.375 percent of the team's scheduled workouts (i.e., a player can miss five of 32 scheduled workouts and still receive his bonus).
REPORTING BONUS:
Earned by reporting to team activities by a specified date.
INCENTIVES (LTBE/NLTBE):
Incentives in a player contract are limited to the list provided in Exhibits A-C in Article 13 Section 6 of the NFL's collective bargaining agreement (pages 116-119).
Player incentives are considered "likely to be earned" (LTBE) or "not likely to be earned" (NLTBE) based on the player or team's prior-year performance. For example, if a player has a $500,000 incentive for accumulating 1,000-plus rush yards in the upcoming season and he had 1,000-plus rush yards the previous season, the incentive is considered LTBE. If he did not record 1,000-plus rush yards in the previous season, the incentive is considered NLTBE. Except in certain circumstances, LTBE incentives count against the team's salary cap in the current season, and NLTBE incentives do not count against a team's current year's cap. Except in rare cases, unearned LTBE incentives are credited to the following season's salary cap, while earned NLTBE incentives are charged against the following season's salary cap.
SALARY ESCALATORS:
A salary escalator is similar to an incentive in that it is triggered by attaining certain performance thresholds. However, the extra money is not always guaranteed to be received. An earned escalator translates into a raise in a future year (or years) of the contract. If the escalator applies to a non-guaranteed season and the player is released prior to it, he would not receive the benefit of his escalator. Contracts can also contain de-escalators that lower a player's salary for failing to reach performance measures.
DEAD MONEY:
Refers to salary a team has already paid or has committed to paying (i.e., a signing bonus, fully guaranteed base salaries, earned bonuses, etc.) but has not been charged against the salary cap. In business terms, it is essentially a "sunk cost." Any money a team pays a player must be accounted for against the salary cap. If there is dead money in a player's contract and he is released or retires, that charge will accelerate onto the team's salary cap for the current year.
There is one avenue to lower this cap hit in a current league year: the June 1 designation. Teams can spread the cap hit over two seasons by releasing or trading a player after June 1 -- any signing bonus prorations for future seasons are charged to the following seasons' salary cap. Teams are allowed to release two players prior to June 1 (but on or after the first day of the league year) while still using this designation and getting the same cap treatment. However, the cap savings created by a June 1 designation do not take effect until after June 1.
Essentially, the salary cap is like a credit card, minus the interest. Anything that is paid out to a player must be paid back to (and accounted for against) the salary cap at some point.
VETERAN SALARY BENEFIT:
Formerly known as the minimum salary benefit, the veteran salary benefit allow teams to offer a "Qualifying Contract" to any player with at least four credited seasons at a reduced salary cap hit. Under this provision, a qualifying contract is a one-year deal worth the minimum base salary applicable to a player with his number of credited seasons, plus $137,500 in additional compensation (i.e., signing bonus, roster bonus, incentive, etc. -- amount begins to increase in 2022). These contracts are charged against the salary cap at the rate of a player with two credited seasons that league year.
FOUR-YEAR QUALIFYING CONTRACT:
Another type of veteran salary benefit, it can be offered to a player with at least four credited seasons whose contract with a team has expired after being on said team for four or more consecutive, uninterrupted league years prior to his contract expiring. Such a player must have been on the team's 90-man active/inactive list for said seasons (and every regular-season and postseason game). Teams can sign a maximum of two eligible players to this type of salary benefit.
A qualifying contract under this benefit is a one-year deal with a base salary of up to $1.25 million more (set to increase in 2022) than the minimum base salary for said player. However, if a team does sign two players to a qualifying contract, it can only give a combined $1.25 million in additional base salary between the two deals. Under such agreements, only the applicable minimum base salary (not the $1.25 million benefit) is charged against the salary cap.
WAIVERS: When a player contract is terminated, he is either free to negotiate and with a team at any time or subject to waivers. When released, a contract for a player with fewer than four credited seasons is subject to waivers at all times. The waiver system allows teams to place a claim on a player contract before that player becomes a free agent. The team with the highest priority will be awarded the player. A contract for a player with four or more credited seasons is not subject to waivers when released from the day after the Super Bowl through the trade deadline. After this date and outside of this period, the contract must be placed on waivers and can be claimed by another team.
VOID YEARS: The void year is simply a dummy year (or years) added to a contract to help lower the cap hit (usually in the first year) of a new contract and spread out any signing bonus money.
There is always a date in a contract to trigger the void (usually the 5th day after the Superbowl). This is simply a procedual mechanism that releases the player into Free Agent status.
A player can never play in a void year, if his team wants to keep him a new deal needs to be done.
Here's an example of how it works:
The Vikings decide to upgrade the Center position in 2022 and go after Ryan Jensen, the best free agent Center available.
Jensen currently earns $10M on the final year of his deal with Tampa and tells the Vikings he wants $12M per year.
The Vikings are tight on cap space but really want Jensen,but how can they make it work?
Scenario1: Vikings pay Jensen $12M per year with no bonus money. This would mean that the entire $12M goes as a salary cap charge each year, which the Vikings can't afford this.
Scenario 2: Vikings pay Jensen $7m in the first year, and $12M in years two and three plus a $5m signing bonus to make up for the shortfall in year one.
The cap numbers look like this:
So Jensen gets his $12M per year and the cap hit for 2022 is lowered from $12M to $8.66M.
It's better, but the Vikings need every dollar they can get. This is where the Void Year comes in to play.
Scenario 3:
This time instead of giving a $5M bonus, we are simply going to give $10M to lower the 2022 cap hit and spread the bonus over 5 years by adding two void years.
As you can see, the cap hits for 2023 & 2024 only increase marginally between scenario 2 & 3, however the 2022 cap hit is a very affordable $4M.
The Vikings can now give the player what he asked for without taking a big cap hit in 2022, and don't break the bank in future years.
I should also add that as mentioned in the explanation above, a trigger date is specified to release the player into free agent status. In this case it would be 5 days after the 2024 Super Bowl.
So in order to help folks out, I have created this Glossary Of Terms to try and simplify things so even the slow kids (like Reignman ) can understand it.
GUARANTEED MONEY:
Media outlets typically announce and talk about the "guaranteed money" in a player's contract. However, much of this money is only partially guaranteed. Compensation in NFL contracts can be guaranteed for three purposes: skill, cap and/or injury. Compensation in a player contract can be guaranteed for one, two, all or none of the guarantees (subject to some rules). If money in a player contract is protected for skill, cap AND injury, that money is fully guaranteed at signing and will be paid to the player. If money is only guaranteed for one or two of the three protections, that money is only partially guaranteed. Here is a quick breakdown of each guarantee category:
SKILL GUARANTEE:
If a player contract is terminated because, in the team's opinion, he does not have the requisite skill (due to a loss or lack of skills comparable to others on the team at his position), the player will be entitled to any money that is protected by a skill guarantee.
CAP GUARANTEE:
If a player contract is terminated so that a team can get under the salary cap, sign a free agent or re-sign one of its current players, the player is entitled to any money that is protected by a cap guarantee.
INJURY GUARANTEE:
If a player is released but is currently unable to perform football duties (i.e., doesn't pass a physical) as a result of team activities, the player is entitled to any money in his contract protected against injury. An injury-only guarantee is the most common in terms of partially guaranteed money.
FULL GUARANTEES (guaranteed at signing):
Money is fully guaranteed at signing if it is guaranteed for skill, cap and injury purposes.
CONTRACT RENEGOTIATIONS:
The first renegotiation of a veteran contract can occur at any time, but any subsequent increase in salary during the original terms of the contract can only happen 12 months after the most recent renegotiation. Teams can't renegotiate terms from any prior year of a contract. After the final regular-season game, terms for the current season can't be renegotiated.
BASE SALARY:
Formally known as "Paragraph 5" salary due to its place in a standard NFL Player Contract, it is the compensation a player receives during the regular season. The collective bargaining agreement set league minimums for base salaries. A player's "game check" is 1/17th (including the bye week) of his base salary in a 16-game season -- and would be 1/18th in a 17-game season.
SIGNING BONUS:
Money earned by a player for signing his contract. Typically paid out within the first 12-18 months. Prorated against the salary cap for the life of the contract (five-season maximum).
ROSTER BONUS:
Compensation earned by remaining on a team's roster on a certain date. Roster bonuses count in full against the salary cap in the season in which they are earned, unless fully guaranteed at signing. They are used to avoid signing-bonus proration, which pushes dead money into the future.
PER-GAME ROSTER BONUS:
A roster bonus awarded on a per-game basis for being on the team's game day (47- or 48-man) roster ("Active List") or its active (53-man) roster ("Active/Inactive List"), which varies by contract. For example, in a 16-game season, a player with a $1.6 million per-game roster bonus for being on the game day roster would earn $100,000 for each game he is active.
Note: Under the current CBA, teams are permitted to have 48 players active on game day if said team has eight active offensive linemen. If the team has fewer than eight players whose primary position is center, guard or offensive tackle, it can only have 47 game day actives. A team still cannot exceed a 53-man Active/Inactive List unless it is promoting one or two practice-squad players using the "Standard Elevation Addendum," in which case the team can expand its roster to 54 or 55 (only using said practice-squad players).
OPTION BONUS:
Gives a team (or, at times, a player) the ability to exercise the current or future years of the contract by paying a bonus. Prorated over the life of the contract (like a signing bonus, up to a max of five seasons).
WORKOUT BONUS:
Compensation for attending an agreed-upon percentage of the offseason workouts. No workout bonus can require participation in beyond 84.375 percent of the team's scheduled workouts (i.e., a player can miss five of 32 scheduled workouts and still receive his bonus).
REPORTING BONUS:
Earned by reporting to team activities by a specified date.
INCENTIVES (LTBE/NLTBE):
Incentives in a player contract are limited to the list provided in Exhibits A-C in Article 13 Section 6 of the NFL's collective bargaining agreement (pages 116-119).
Player incentives are considered "likely to be earned" (LTBE) or "not likely to be earned" (NLTBE) based on the player or team's prior-year performance. For example, if a player has a $500,000 incentive for accumulating 1,000-plus rush yards in the upcoming season and he had 1,000-plus rush yards the previous season, the incentive is considered LTBE. If he did not record 1,000-plus rush yards in the previous season, the incentive is considered NLTBE. Except in certain circumstances, LTBE incentives count against the team's salary cap in the current season, and NLTBE incentives do not count against a team's current year's cap. Except in rare cases, unearned LTBE incentives are credited to the following season's salary cap, while earned NLTBE incentives are charged against the following season's salary cap.
SALARY ESCALATORS:
A salary escalator is similar to an incentive in that it is triggered by attaining certain performance thresholds. However, the extra money is not always guaranteed to be received. An earned escalator translates into a raise in a future year (or years) of the contract. If the escalator applies to a non-guaranteed season and the player is released prior to it, he would not receive the benefit of his escalator. Contracts can also contain de-escalators that lower a player's salary for failing to reach performance measures.
DEAD MONEY:
Refers to salary a team has already paid or has committed to paying (i.e., a signing bonus, fully guaranteed base salaries, earned bonuses, etc.) but has not been charged against the salary cap. In business terms, it is essentially a "sunk cost." Any money a team pays a player must be accounted for against the salary cap. If there is dead money in a player's contract and he is released or retires, that charge will accelerate onto the team's salary cap for the current year.
There is one avenue to lower this cap hit in a current league year: the June 1 designation. Teams can spread the cap hit over two seasons by releasing or trading a player after June 1 -- any signing bonus prorations for future seasons are charged to the following seasons' salary cap. Teams are allowed to release two players prior to June 1 (but on or after the first day of the league year) while still using this designation and getting the same cap treatment. However, the cap savings created by a June 1 designation do not take effect until after June 1.
Essentially, the salary cap is like a credit card, minus the interest. Anything that is paid out to a player must be paid back to (and accounted for against) the salary cap at some point.
VETERAN SALARY BENEFIT:
Formerly known as the minimum salary benefit, the veteran salary benefit allow teams to offer a "Qualifying Contract" to any player with at least four credited seasons at a reduced salary cap hit. Under this provision, a qualifying contract is a one-year deal worth the minimum base salary applicable to a player with his number of credited seasons, plus $137,500 in additional compensation (i.e., signing bonus, roster bonus, incentive, etc. -- amount begins to increase in 2022). These contracts are charged against the salary cap at the rate of a player with two credited seasons that league year.
FOUR-YEAR QUALIFYING CONTRACT:
Another type of veteran salary benefit, it can be offered to a player with at least four credited seasons whose contract with a team has expired after being on said team for four or more consecutive, uninterrupted league years prior to his contract expiring. Such a player must have been on the team's 90-man active/inactive list for said seasons (and every regular-season and postseason game). Teams can sign a maximum of two eligible players to this type of salary benefit.
A qualifying contract under this benefit is a one-year deal with a base salary of up to $1.25 million more (set to increase in 2022) than the minimum base salary for said player. However, if a team does sign two players to a qualifying contract, it can only give a combined $1.25 million in additional base salary between the two deals. Under such agreements, only the applicable minimum base salary (not the $1.25 million benefit) is charged against the salary cap.
WAIVERS: When a player contract is terminated, he is either free to negotiate and with a team at any time or subject to waivers. When released, a contract for a player with fewer than four credited seasons is subject to waivers at all times. The waiver system allows teams to place a claim on a player contract before that player becomes a free agent. The team with the highest priority will be awarded the player. A contract for a player with four or more credited seasons is not subject to waivers when released from the day after the Super Bowl through the trade deadline. After this date and outside of this period, the contract must be placed on waivers and can be claimed by another team.
VOID YEARS: The void year is simply a dummy year (or years) added to a contract to help lower the cap hit (usually in the first year) of a new contract and spread out any signing bonus money.
There is always a date in a contract to trigger the void (usually the 5th day after the Superbowl). This is simply a procedual mechanism that releases the player into Free Agent status.
A player can never play in a void year, if his team wants to keep him a new deal needs to be done.
Here's an example of how it works:
The Vikings decide to upgrade the Center position in 2022 and go after Ryan Jensen, the best free agent Center available.
Jensen currently earns $10M on the final year of his deal with Tampa and tells the Vikings he wants $12M per year.
The Vikings are tight on cap space but really want Jensen,but how can they make it work?
Scenario1: Vikings pay Jensen $12M per year with no bonus money. This would mean that the entire $12M goes as a salary cap charge each year, which the Vikings can't afford this.
Scenario 2: Vikings pay Jensen $7m in the first year, and $12M in years two and three plus a $5m signing bonus to make up for the shortfall in year one.
The cap numbers look like this:
| BASE SAL. | BONUS | CAP No. | |
| 2022 | $7,000,000 | $1,666,666 | $8,666,666 |
| 2023 | $12,000,000 | $1,666,667 | $13,666,667 |
| 2024 | $12,000,000 | $1,666,667 | $13,666,667 |
So Jensen gets his $12M per year and the cap hit for 2022 is lowered from $12M to $8.66M.
It's better, but the Vikings need every dollar they can get. This is where the Void Year comes in to play.
Scenario 3:
This time instead of giving a $5M bonus, we are simply going to give $10M to lower the 2022 cap hit and spread the bonus over 5 years by adding two void years.
| BASE SAL. | BONUS | CAP No. | |
| 2022 | $2,000,000 | $2,000,000 | $4,000,000 |
| 2023 | $12,000,000 | $2,000,000 | $14,000,000 |
| 2024 | $12,000,000 | $2,000,000 | $14,000,000 |
| 2025 | VOID | $2,000,000 | $2,000,000 |
| 2026 | VOID | $2,000,000 | $2,000,000 |
As you can see, the cap hits for 2023 & 2024 only increase marginally between scenario 2 & 3, however the 2022 cap hit is a very affordable $4M.
The Vikings can now give the player what he asked for without taking a big cap hit in 2022, and don't break the bank in future years.
I should also add that as mentioned in the explanation above, a trigger date is specified to release the player into free agent status. In this case it would be 5 days after the 2024 Super Bowl.
That game is dumber than basketball! 
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... and neither is this Chris guy.