NFL Player Salaries: Is the NFL Salary Cap a Sham?

NFL Player Salaries: Is the NFL Salary Cap a Sham?

Intended to keep smaller teams competitive and to control inflated NFL player salaries, the NFL salary cap is anything but modest. Plus Find out how teams get around the cap.

By Jeff Ritter, special to PayScale.com

NFL Player Salaries - The Details
  • The NFL player salary cap for 2008 is $116 million per team.
  • The NFL salary cap is adjusted each season to reflect a percentage of the previous year's revenue. In 2007, the cap was 57.5% of the NFL's projected total revenues.
  • The NFL salary cap was created in part to help small-market and less profitable teams to stay competitive.
  • Each franchise is required to spend 84% of their NFL salary cap each year.
Any way you tackle it, this is a good time to cash a paycheck if you happen to be an NFL football player.

There's little doubt that the National Football League is currently king among American professional sports. While perched atop its throne, the league annually reaps a dizzyingly bountiful revenue stream - more than $6 billion in 2006 - from television contracts to ticket and merchandise sales, among others.

NFL player salaries are regulated each season by a salary cap, a maximum amount each franchise is allowed to spend on its total roster (coaches, trainers, etc., not included). The cap exists in part to pacify team owners, who write those paychecks, and to keep NFL player salaries at least somewhat under control. Small-market - and less profitable - teams can also remain competitive with the league's big boys, because the cap prevents them from spending their competition into submission. Thanks to an agreement between the owners and the players union, the salary cap is adjusted each season as a percentage of the previous year's revenue.


Salary Cap Per Team for NFL Player Salaries by Year

2008 $116 million 2003 $75 million
2007 $109 million 2002 $71 million
2006 $102 million 2001 $67.5 million
2005 $85.5 million 2000 $62.2 million
2004 $80.5 million 1999 $58.4 million

The cap has risen each year since it was first implemented in 1994; naturally, so have NFL player salaries. Comparing the current cap with recent years, it quickly becomes apparent that at least some of the sport's meaty returns are being passed along to the NFL players in one tight spiral.

NFL Top Salary by Season

Year NFLTeam NFL Player NFL Position NFL Salary
2007 Colts Dwight Freeney DE $30.8 million
2006 Patriots Richard Seymour DT $24.7 million
2005 Falcons Michael Vick QB $23.1 million
2004 Colts Peyton Manning QB $35 million
2003 Bears    Brian Urlacher  LB $15.1 million
2002 Giants Michael Strahan DE $20.6 million
2001 Broncos Brian Griese QB $15.2 million
2000 Patriots Drew Bledsoe QB $8.5 million

Thanks to the annual increase in the NFL player salary cap, most teams enter a new fiscal year with extra money to spend, and that's great news for the NFL players. Also - and imagine for a moment if your company had a policy like this - each franchise is required to spend at least 84 percent of the cap each year. This is one reason a lot of money gets tossed into fat new NFL contracts for players, many with marginal ability, each year. It's no wonder that college players bolt for the pros.

NFL Player Salaries and the NFL Signing Bonus

There is also a simple way for NFL teams to legally circumvent the salary cap and offer players even more money: NFL signing bonuses. These are lump payments that players receive immediately, but team bean counters are allowed to prorate throughout a NFL contract.

For example, say John Smith signs a five-year contract for $20 million, with a NFL signing bonus of $10 million. Smith pockets that $10 million immediately, but for salary cap purposes, that figure will be evenly dispersed throughout the life of the contract.

NFL teams also commonly "backload" contracts to keep their current NFL salary cap situation desirable. These contracts are often later renegotiated, or else the player is simply released (teams don't have to pay a player his salary once they are cut). Using John Smith's five-year deal as an example, his compensation could look something like this:

  Salary Bonus Paid to Smith Salary Cap Figure
Year 1 $500,00 $10 million $10.5 million $2.5 million
Year 2 $1 million 0 $1 million $3 million
Year 3 $2 million 0 $2 million $4 million
Year 4 $3 million 0 $3 million $5 million
Year 5 $14 million    0 $14 million $16 million

Again, Smith's $10 million NFL signing bonus, which he received immediately, was spread evenly over the team's salary cap for five years. Around year 4, the team would likely either resign Smith to a new deal, and a new NFL signing bonus, or simply cut him in order to stay under their salary cap. Don't feel too bad for Smith, he did receive a nice bonus up front, remember?

The most well-compensated players change every year as bonuses and salaries fluctuate within a player's contract. Here's a look at the 10 most highly compensated players from the 2007 season.

2007 NFL Top Salary by Player

Player Position Team Salary
Dwight Freeney DT Colts $30.8 million
Marc Bulger QB Rams $17.5 million
Leonard Davis OL Cowboys $17 million
Gaines Adams DE Buccaneers $15.4 million
Robert Geathers DE  Bengals $14 million
Cory Redding DT Lions $13.6 million
Derrick Dockery OL Bills $13.5 million
Reggie Bush RB Saints $13.4 million
Kris Dielman OL Chargers $13.3 million
Larry Johnson RB Chiefs $13.3 million

Keep in mind what we know about how NFL contracts work - before the 2007 season, Freeney signed a six-year deal with a $30 million NFL signing bonus. This list accounts for that bonus as a lump sum, rather than prorating it for salary cap purposes. Freeney won't be No. 1 on this list in 2008, not that it should matter to him. The highest paid players for this season will be those who sign new contracts with the biggest NFL signing bonuses - and there will be many.

We can't all be NFL football players, but we can dream. And hey, just because you can't run like LaDainian Tomlinson or throw like Tom Brady doesn't mean there isn't a job for you in the NFL.

Like managing a team's NFL salary cap.

Sources:
www.USAToday.com
www.askthecommish.com
www.nfl.com
www.nflpa.org
www.espn.com

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