How NFL Players Are Paid: The Business of Football

How NFL Players Are Paid: The Business of Football is an article that explains how professional football players are paid.

Introduction

In the National Football League (NFL), player salaries are determined by individual performance, seniority, and the provisions of the league’s collective bargaining agreement (CBA). The league is divided into two conferences—the American Football Conference (AFC) and the National Football Conference (NFC)—and each conference is further subdivided into four divisions. The NFL’s 32 teams are located in cities across the United States.

The NFL is a professional sports league that operates on a single-entity basis, meaning that it is not operated as a cartel of separate clubs like other major North American professional sports leagues. Instead, all team owners collectively negotiate television rights, marketing deals, and player salaries with the league office. This provides greater control over costs and allows the NFL to centrally distribute its revenue among teams. In 2018, the NFL generated $14 billion in revenue.

Player salaries are paid out over the course of a 17-week regular season and four-week postseason. base salary for NFL players is $985 per week during the regular season and $1,000 per week during the postseason. Players on injured reserve are paid their full salary for the season regardless of how many games they miss. Players with an accrued seasons—defined as completing three or more seasons of service—are eligible for higher minimum salaries and bonuses.

The average NFL player salary was $2.7 million in 2018, while the median salary was $860,000. These figures do not include signing bonuses or other forms of supplementary income such as marketing deals or endorsement contracts. For example, New England Patriots quarterback Tom Brady earned an additional $15 million in 2018 from endorsements. In total, Brady earned an estimated $27 million in 2018, which made him the highest-paid NFL player that year.

The CBA between the NFL and its players expires in 2020, so it is possible that player salaries will change when a new agreement is negotiated between the league and the players’ union—the National Football League Players Association (NFLPA).

How NFL Players Are Paid

In the National Football League, the average career lasts just 3.3 years. So, how are NFL players paid? It may surprise you to learn that the majority of an NFL player’s salary is not guaranteed. In fact, only about 40% of an NFL player’s salary is guaranteed, with the other 60% coming from bonuses and incentives.

Salary Cap

The most important thing to understand about how NFL players are paid is the salary cap. The salary cap is the total amount of money that each team can spend on player salaries in a given year. For example, in 2019 the salary cap was $188.2 million.

Each team must stay under or at the salary cap at all times. If a team goes over the salary cap, they are subject to penalties from the NFL.

The salary cap is calculated using a formula that takes into account many factors, including revenue from television contracts, ticket sales, and merchandising. The NFLPA (the players’ union) also has a say in how the salary cap is calculated.

The salary cap goes up every year, usually by a few million dollars. So, even though players’ salaries are capped, they still go up every year as the cap itself increases.

Base Salary

Base salary is the simplest form of compensation for NFL players and is the same for all players in a particular year, irrespective of a player’s experience. A player’s base salary is determined by the number of years he has played in the NFL. Players are placed in salary tiers based on their years of service. For example, all players with zero to two years of service will earn the same base salary. In 2020, this was $610,000 for rookies and $860,000 for veterans. Players with three or more years of service earned different amounts based on their experience level.

The base salary is the foundation upon which all other forms of compensation are built. It is important to note that a player’s base salary is not necessarily fully guaranteed. In most cases, only a portion of a player’s base salary is fully guaranteed at signing. The remaining portion becomes fully guaranteed only if the player is on the roster at a certain date (usually the first day of the new league year).

Signing Bonus

A signing bonus is a lump sum of money paid to a player at the time of sign a contract. It is part of the total compensation that a player will earn under the contract, but is typically paid upfront as an incentive for the player to sign with the team. Signing bonuses are commonly used in NFL contracts, especially for high-profile players.

The size of a signing bonus depends on several factors, including the overall value of the contract, the player’s position, and the demand for the player’s services. For example, quarterbacks and other skilled positions typically command larger signing bonuses than defensive linemen or other less glamorous positions.

In recent years, signing bonuses have become a larger part of NFL contracts. This is due in part to the increasing popularity of free agency, which gives players more leverage in negotiations. Signing bonuses are also used to circumvent the salary cap, which puts a limit on the amount of money that teams can spend on player salaries.

Signing bonuses are not guaranteed money, meaning that a player can be released from his contract and not receive any further compensation (beyond any guaranteed money that may be in the contract). However, if a player is cut before his signing bonus has been fully earned (typically after four years), he will receive what is known as “accelerated payment.” This means that he will receive any remaining portion of his signing bonus that has not yet been paid out, in one lump sum.

Roster Bonus

A Roster Bonus is a sum of money paid to a player based on their inclusion on an NFL team’s active roster at a specific point in time. A Roster Bonus typically becomes fully guaranteed if a player is still on the team’s roster at the start of the League Year.

A large portion of a player’s compensation often comes in the form of a Roster Bonus, especially for veterans and high-priced free agents. This allows teams to spread out the cost of signing a player over the length of their contract, rather than paying all of it up front. It also gives teams some protection against having to pay out large sums of guaranteed money to players who are no longer with the team.

NFL teams will often include Roster Bonuses as part of a player’s contract in order to create more salary cap space. By including Roster Bonuses in a contract, teams can lower a player’s base salary and increase their annual cap hit in later years when the Roster Bonus has been paid out.

Roster Bonuses are generally paid out once per year, but can be structured as per-game bonuses or as multiple bonuses paid out over the course of a contract.

Workout Bonus

In order to receive their Workout Bonus, NFL players must participate in a specific percentage of their team’s offseason workouts. The amount of the bonus depends on the number of years a player has been in the league. For example, a player with four or more years of experience would receive a $175,000 bonus for attending 80% of their team’s offseason workouts. A first-year player, on the other hand, would receive just $1,015 for attending the same percentage of workouts.

Incentives

Incentives are payments made to players for achieving certain statistical milestones or other accomplishments during the course of a season. For example, New England Patriots quarterback Tom Brady received a $5 million bonus for leading his team to the Super Bowl in 2016. Incentives can also be given for making the Pro Bowl, being named first-team All-Pro, or winning league MVP or Offensive Player of the Year. These bonuses are typically paid out following the completion of the season, but sometimes they’re paid out in installments during the year. Incentives are typically included in a player’s contract as a way to help him reach certain performance-based goals, and they can be structured in a number of different ways.

How NFL Teams Manage the Salary Cap

In the National Football League, teams are limited in the total amount of money they can spend on player salaries each year. This limit is known as the salary cap, and it is one of the most important aspects of the NFL business model. The salary cap is set at a certain amount each year by the NFL, and it can increase or decrease depending on league revenue.

The Franchise Tag

In the NFL, each team has a set amount of money that it can spend on player salaries for the season, which is known as the salary cap. If a team wants to sign a player to a contract that is worth more than the salary cap, they can use what is called the franchise tag.

The franchise tag allows a team to sign a player to a one-year contract that is worth the average salary of the top five players at their position. So, if a quarterback is signing a contract worth $20 million per year and there are only four other quarterbacks in the league who make more than him, then his franchise tag would be worth $19.6 million.

The franchise tag can be used on any player who is set to become a free agent, but it can only be used once per year. Teams will often use the franchise tag as a way to keep their best players from leaving in free agency, but it can also be used as a way to try and trade a player.

Restructuring Contracts

Players are not always paid their entire salaries upfront. Some players will have what is called a “restructured” contract. This is a contract that has been modified to fit the team’s current salary cap situation. A player may agree to give up some of his guaranteed salary (money that he is owed no matter what happens) in exchange for a signing bonus, which is paid to him immediately. This gives the team more flexibility in how it spends its money within the salary cap.

A player may also agree to have his base salary reduced in exchange for a bigger signing bonus. This is often done with veteran players who are nearing the end of their careers and are not expected to play as much. It gives them a chance to receive more money upfront, while freeing up some space under the salary cap for the team to sign other players.

Players may also be asked to take pay cuts, which involve reducing their base salaries for the upcoming season. This is usually done with players who are not performing up to expectations or who are nearing the end of their careers and are no longer worth their current salaries. Pay cuts can be difficult for players to stomach, but they sometimes allow older veterans to stay on teams that they otherwise would have been cut from.

Cutting Players

In order to stay under the salary cap, NFL teams are constantly making roster moves. Some of these moves are small, like releasing a player who is no longer performing up to par. Other moves are much bigger, like trading away a star player who is due for a big contract extension.

The most extreme roster move a team can make is to release a player with an “unhealthy salary.” This is a move that is generally reserved for players who are no longer able to play due to injury or age. When a player is released with an unhealthy salary, their entire salary is removed from the team’s books.

This allows the team to sign other players or extend the contracts of existing players while staying under the salary cap. It can be a very effective way for teams to manage their rosters, but it can also be very difficult for the players involved.

Conclusion

When it comes to how NFL players are paid, there is a lot of information to digest. In short, NFL players are paid based on their performance on the field and their contribution to the team. There are a variety of different factors that go into how much each player is paid, but ultimately it comes down to the team’s discretion. NFL players are some of the highest paid athletes in the world, and they have a lot of options when it comes to how they want to be paid. While there is a lot of money to be made in the NFL, players need to be aware of the business side of football and make sure they are getting paid what they deserve.