So, what is a basic rundown of the various nuances of the salary cap as it exists in the NFL today?
running for the hills. Me.
The NFL's cap is a so-called "hard cap" (which no team can exceed for any reason under penalty from the league), and a hard salary floor (a minimum team payroll that no team can drop beneath for any reason, 75% of the cap). The cap was introduced for the 1994 season and was initially $34.6 million. Both the cap and the floor are adjusted annually based on the change in the league's revenues.
This number has increased every year and will reach approximately $109 million in 2007, with a salary floor of approximately $81.75 million per team.
Under the NFL's agreement with the NFLPA (with a few rare exceptions) the salary cap effects of guaranteed payments to players are prorated over the term of a contract. A $10 million dollar signing bonus on a four year contract counts as $2.5 million towards the cap during each of those four years. If a player retires, is traded, or is cut before June 1st, all remaining bonus is applied to the salary cap for the current season. If after June 1st, the current cap is unchanged, and the next year's cap must absorb the entire remaining bonus.
Because of this treatment, NFL contracts almost always include the right to cut a player before the beginning of a season. If a player is cut, his salary for the remainder of his contract is not paid, and never counted against the salary cap for that team. A highly sought-after player signing a long term contract will usually receive a guaranteed signing bonus, thus providing him with financial security even if he is cut before the end of his contract.
Incentive bonuses require a team to pay a player additional money if he achieves a certain goal. For the purposes of the salary cap bonuses are classified as either "likely to be earned" which requires the amount of the bonus to count against the cap, or as "not likely to be earned" meaning it will not count against the team's salary cap. Large NLTBE bonuses are written into contracts to make them sound larger in the media. A team's salary cap may be adjusted downwards for NLTBE bonuses that were earned in the previous year and upwards for LTBE bonuses that were not earned in the previous year.
Teams usually design contracts so that the player's cap salary is highest in later years of the cap. They accomplish this by setting the player's base salary at lower amounts in the first years of the contract than the higher years.
The effect of the salary cap has been the release of many higher-salaried veteran players and their replacement by lower-salaried younger players. The salary cap prevents teams with a superior financial situation from the formerly widespread practice of stocking as much talent on the roster as possible by placing younger players on reserve lists with false injuries. This was often used to allow an inexperienced player to learn valuable skills, and some money, while not counting as a player on the active roster. This practice allowed teams to keep an experienced, capable quarterback, whose skills were beginning to decline with age or who was merely nearing retirement, to train a potentially great, but inexperienced young quarterback. (A notable example is the case of the San Francisco 49ers playing Hall of Famer Joe Montana while grooming Hall of Famer Steve Young.)
Generally, the practice of keeping older players who had contributed to the team in the past, but whose abilities have declined, had fallen out of favor, as a veteran's minimum salary was required to be higher than a player with lesser experience. To prevent this, a veteran player who receives no bonuses in his contract may be paid the veteran minimum of up to $810,000, while only accounting for $425,000 in salary cap space.
It is widely believed that the salary cap has increased parity in the NFL. Although the system has allowed a greater turnover in playoff teams than at any other time in the Super Bowl era, it has not prevented the New England Patriots from winning three Super Bowls in four years (The seasons beginning in 2001, 2003 and 2004). Media reports have attributed this to New England's aggressively unsentimental use of the salary cap in trimming veterans (such as Lawyer Milloy, a key member of the 2001 team who was cut just before the start of the 2003 season.)
The salary cap has also served to limit the rate of increase of the cost of operating a team. This has accrued to the owners' benefit, and is widely regarded as being responsible for the NFL being overall the most financially stable of the major North American sports organizations. While the initial cap of $34.6 million has increased to $102 million, this is due to large growths of revenue.
Let's see. Does anyone have a slide rule and a couple free hours! trying to figure a guy's cap hit can give one a head-ache!
salary cap helped the nfl tobe the the most balanced of all sports. the trouble is the signing bonus. the richer teams pay more than the smaller market teams. it dosent help having the glasses er hunts with cheap pocketbooks.
i can remember what a chief super bowl team looks like! ......
I don't think the signing bonus is the trouble, as it is the only thing that is guaranteed in a football players contract unlike the NBA or MLB where all of it is guaranteed.