Definitions & Frequently Asked Questions
When a player receives a guaranteed signing bonus; the team will pro-rate the bonus equally among the life of the contract up to a maximum of 5 years. Example: $10 million signing bonus would account for $2 million each year in a 5 year contract. This also applies to Option Bonuses that typically occur in the second or third year of a contract. This is does not apply to one-time roster bonuses which are not guaranteed upon signing the contract. This is merely an accounting function to smooth out the cap charge from a signing bonus.
Dead money is unaccounted for money that has already been paid or is guaranteed to be paid to the player. A player released after 3 years in a 5 year contract, which received a $10 million signing bonus would have $4 million remaining in dead money. Another example is if a player is released mid-season the salary paid up to that point will count as dead money on the salary cap.
This just means the player’s base salary amount. The p5 refers to Paragraph 5 of the player contract.
June 1st Designation
A player released/traded/waived prior to June 2nd will have all remaining dead money left on the contract accelerate into the current years salary cap. If this transaction occurs after June 1st; then only dead money associated with the current season will be charged towards the current year salary cap. Additional dead money in future years will accumulate and count towards the next league year salary cap. This would only come up if the player has more than 1 year left on his contract. Teams will sometimes use a June 1 designation prior to that date to save money towards the salary cap.
Split Salary Designation
A player with the split salary designation will have a lower salary rate if he is placed on a Reserve list (Injured, PUP, or NFI). Generally you will only see this on non-vested player contracts & rookie contracts drafted in round 3 or later.
A player coming off an injury that signs with a team; that team may want to add an injury waiver to the contract. The injury waiver is specific to a previous injury. A team cannot release/waive a player if injured without a settlement. Example: Injury Waiver for calf muscle injury. If the player re-injuries his calf muscle the team can waive or release the player without a settlement.
Likely To Be Earned (LTBE) Incentive Bonus
Teams may include incentives to a player contract. This could be tied to player statistics, playing time, pro-bowl, active game day roster, etc. To determine if the incentive is Likely To Be Earned, the team will refer to the previous year player statistics. The Texans use active game day roster bonus incentive often in player contracts. If the player has a $500,000 roster bonus for being active game day, the player will receive a $31,250 bonus each week. The team will refer to the player’s previous season to determine how much to account for at the start of the season. If the player was active for 14 games the previous season, then his roster bonus amount will be $437,500. It is considered likely that the player will be active for 14 games this season. The additional two games are considered Not Likely To Be Earned.
Not Likely To Be Earned (NLTBE) Incentive Bonus
NTLBE is as described and the opposite of the LTBE. Going off the example above the additional two games are considered not likely to be earned. Another example could be playing time. The player may have a 75% playing time LTBE incentive and and a 85% playing time NLTBE incentive. If the player achieves the NLTBE then that bonus amount will goes towards the team salary cap adjustment the following season. Now the confusing part, NLTBE roster bonus incentives count immediately towards the current salary cap. The team must ensure they have enough salary cap space to account for this during the season.
This is one item you will hear about in round 1 draft pick contracts. This is about the only negotiating point in a rookie contract. JaDaveon Clowney’s contract was fully guaranteed (both salary & bonus money) when he signed in 2014. If the Texans were to release him prior to expiration of the contract, essentially Clowney could sign a contract with another team and receive salary from both the Texans and the new team. However Clowney has offsetting guarantees in his contract. If his salary with the Texans was $1,000,000 and his salary with a new team was $500,000…the Texans would only have to pay $500,000 (difference amount between the two contracts).
The number of credited seasons determines the base salary (P5) rate for the player. To gain a credited season the player must be at full pay status for a minimum of 3 regular season games. The player does not gain a credited season if the player is on: Reserve PUP, Reserve Injured, Commissioner’s Exempt List, or team Practice Squad.
The number of accrued seasons determines the free agency status for the player, and if the player is considered a vested veteran or not. To gain an accrued season the player must be at full pay status for a minimum of 6 regular season games. They player does not gain an accrued season if the player is on: Reserve PUP, Commissioner’s Exempt List, or team practice squad.
Vested vs. Non-Vested Veteran
A player must have 4 accrued seasons to become a vested player. This includes pension & medical assistance after retirement. For salary cap purposes being fully vested has a few benefits: 1. The player’s base salary becomes fully guaranteed, through termination pay, if he is on the team roster for week 1 of the season. 2. If the player is released from his contract he does not go through the waiver system and becomes an unrestricted free agent immediately (except after the trade deadline).
Exclusive Rights Free Agent
A player with 2 or less accrued seasons will become an exclusive rights free agent at the completion of their contract. The team has exclusive rights over the player. The team will need to offer the player a contract or make the team can make the player an unrestricted free agent by not offering anything. If the team does offer a contract the player can choose to accept it, as is, or not play for the season for any team. Generally the contract is a 1 year deal for the minimum salary rate.
Restricted Free Agent
A player with 3 or less accrued seasons will become a restricted free agent at the completion of their contract. The team can choose one of three right of refusal tenders on the player. A first round tender, second round tender, or original draft position tender. Each tender has an assigned contract value amount. Another team can attempt to sign the player to a new contract, but the original team has the right to match it. If the original team does not match they will receive draft value equaling the original tender.
Unrestricted Free Agent
A player with 4 or more accrued seasons will become an unrestricted free agent at the completion of their contract. Unrestricted free agents are free to sign with any team as soon as they become a free agent.
Veteran Minimum Benefit
This was added to the CBA in 2011 in an effort to encourage teams to sign veteran players since the rookie contracts become slotted. A team can sign a player with 4 or more credited seasons to a one year contract. The contract will be the minimum salary amount, based on number of credited seasons, and shall include no more than $80,000 worth of bonus money and no more than $585,000 in guaranteed salary. The P5 salary can be guaranteed up to the amount equal to two credited season salary amount. The player cannot be extended to a new contract while on a veteran minimum benefit contract. The benefit comes in to effect on the salary cap. The salary cap charge will be for a 2 year credited player amount. We will use Nate Washington as an example. Based on credited seasons earned Washington has a $970,000 salary with an $30,000 signing bonus. Instead of a $1.0 million salary cap charge, Washington’s contract will have a cap charge of $615,000. The salary charge for a 2 year credited player is $585,000. $585,000 + $30,000 = $615,000. The team receives a $385,000 salary cap benefit by signing Nate Washington to this contract.
Note: For 2017 the bonus maximum is $80,000 and guaranteed salary maximum is $615,000.
A vested veteran who is on a 53 man team roster on Week 1 of the regular season will be eligible for termination pay. If the player is released during the season the player is entitled to his full salary amount through claiming termination pay. This claim can only be made once in player’s career.
Waived with Injured Designation
A non-vested player can be waived while not being able to pass a team physical. When the player is waived, being a non-vested player, they are subject the waiver system and will have the “injured” designation on the waiver to let other teams know. If the player is not claimed then the player returns to the original team’s Reserve Injured list. The team will have three options at this point: 1. Keep the player on the Reserved Injured list for the remainder of the season. 2. Wait until the player is healthy to pass a physical and then waive the player. 3. Negotiate an injury settlement and release the player immediately. Note that the team has a period of 5 days to complete an injury settlement after the player goes unclaimed.
An injury settlement is an agreed upon amount between the player & team that represents the number of weeks it would take the player to get healthy from their current injury. Once agreed upon the team releases the player to become a free agent. The player can continue to use the team facilities during the agreed upon weeks of the settlement. Once healthy, and able to pass a team physical, the player can sign with any of the 31 other teams. The play cannot resign with his original team for a period of 3 weeks + the negotiated period of the settlement.
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