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How Does The Salary Cap Work?

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Where can you learn about how the salary cap is structured?

Al Bello

We often throw around numbers relating to salaries when it comes to the NFL, but too often we don't actually understand what that means and how they affect the salary cap. We rely on the knowledge of Jason at www.nyjetscap.com or our very own Smackdad, but it's often best to learn for ourselves how the system truly works. The Collective Bargaining Agreement (CBA) is extremely complex, and you can read it here, or you can read a more simplified version. If you're on Twitter, I highly suggest that you read the tweets of @NFLosophy, a former Operations Coordinator in the NFL. He now runs a blog, which you can take a look at here, and where he breaks down the intricacies of the salary cap:

Salary

When a player signs a contract there are multiple ways that he can be paid. Everyone knows what a salary is. Salaries are paid out during the 17-week season in either weekly or bi-weekly checks just like you receive from your employer. Players can choose to have their salaries paid out over the length of the full year but few rarely choose that option. For cap purposes, salaries are very simple to calculate. Whatever is paid out counts versus the cap. If a player is waived in week 4, his first 4 weeks salaries count against the cap. The contract of the player who replaces him begins counting when he’s added to the roster. Salaries are only paid out if the player is on the roster.

Signing Bonus

Signing bonuses are exactly what they sound like. It is a bonus that is paid directly to the player at the time of signing his contract. For cap calculation purposes, the signing bonus is "prorated" over the life of the contract. This simply means that the amount of the signing bonus is spread out over the years of the contract evenly. So a $5 million signing bonus on a 5-year contract will count $1 million per year against the cap. Again, this is only for cap purposes – the player has already received this money. Signing bonuses are guaranteed and cannot be recouped except in extremely rare circumstances (think Atlanta vs. Mike Vick). The max proration for a bonus is 5 years. This is done so that teams can’t sign 10 year contracts to help alleviate the bonus hit.

We typically don't link to other blogs outside of our Flight Connections, but this is one circumstance where it's definitely worth your time to read through his site to help you fully understand the salary cap.