The NFL free agency period is an opportunity for players to land lucrative paydays or find better team fits, while also serving as another avenue for teams to upgrade and improve their rosters. But a fairly basic premise — players sign contracts with teams they want to play for — involves a number of specific terms that are thrown around at this time of year.
The NFL’s collective bargaining agreement (CBA) is a thick, 456-page legal document. If you feel like reading the CBA itself, have at it. If you understandably don’t want to take on this task, I’ve underlined some of the most important terms in NFL free agency/contracts below.
First, let’s consider a rundown of the free agency period itself. It begins when the NFL League Year does (in 2022: 4 p.m. ET on March 16), while team spending is limited by the annual salary cap ($208.2 million in 2022).
Teams are allowed to negotiate with the agents of upcoming unrestricted free agents during the “Two Day Negotiating Period,” a window prior to the start of free agency (in 2022: from noon ET on March 14 until 4 p.m. ET on March 16). Self-represented players (“Unrepresented Player”) can now speak with members of team front offices (but not coaching staffs) during this period, which was previously prohibited.
When the new league year begins, contracts from the previous season expire, the trading period opens and tenders for restricted free agents must be submitted, etc. This is when free agents can officially sign new contracts, and trades (i.e., Russell Wilson being dealt to the Broncos) can become official.
And now, here’s a glossary of free-agent terms that range from free-agent designations and franchise tags to contract language and rookie deals. This is followed by an explanation of a player’s cap hit in a given season, as well as an introduction (to some) to adjusted average per year — a metric to compare contracts that were signed in different years (and financial landscapes).
NOTE: Player contract information from Over The Cap and Spotrac.
Unrestricted free agent (UFA): Any player with four or more accrued seasons and an expired contract; free to negotiate and sign with any team.
Restricted free agent (RFA): A player with three accrued seasons and an expired contract. RFAs are free to negotiate and sign with any team, but their original team can offer them one of various qualifying offers (“tenders”) that come with the right of first refusal and/or draft-pick compensation. If the tender is withdrawn by a team, the RFA becomes an unrestricted free agent. In 2022, teams must submit these tenders before 4 p.m. ET on March 16. These amounts change annually; the following numbers are for the 2022 season. Players can choose either (a) or (b) regardless of which is greater in the applicable tenders below.
The RFA tenders are classified as follows:
First-round tender: One-year contract worth the greater of (a) $5.562 million or (b) 110 percent of the player’s prior-year base salary. If the player’s original team decides not to match an offer sheet signed with another team, it is entitled to a first-round draft pick from the player’s new team. Unless received two days or later prior to the NFL draft, draft compensation for each tender is due in the same league year as the offer sheet is signed.
A signed offer sheet with a new team includes Principal Terms that must be matched by the prior club. However, if the new team includes terms that waive or limit its ability to designate the RFA a franchise player, the old team will not have to match this term if it has tendered the player with an offer worth $500,000 more than the first-round tender ($6.062 million in 2022).
Second-round tender: One-year contract worth the greater of (a) $3.986 million or (b) 110 percent of the player’s prior-year base salary. Draft-choice compensation: second-round pick.
Original-round tender: One-year contract worth the greater of (a) $2.540 million or (b) 110 percent of the player’s prior-year base salary. Draft-choice compensation: a pick in the round the player was originally drafted in.
Right-of-first-refusal tender: One-year contract worth $2.433 million. Team has the right to match any offer sheet signed with another team, but there is no draft compensation tied to this tender.
Upgraded tender: If a team places a first-round tender on a player who was selected outside of the first round, it can only receive a second-round pick as compensation for any of its other RFAs who were first-round draft picks. The same is true for the second-round tender — if a team uses it on a player drafted in the third round or lower, it can only receive a third-round pick for any other second-round RFA it intends to tender. As an example, the Saints used a first-round RFA tender on QB/RB/WR/TE Taysom Hill during the 2020 offseason. Had New Orleans had any RFAs who were former first-round picks, it could only receive a second-round selection in return for a declined offer sheet.
RFA tender salary increases: Each of the tenders will increase by an additional amount during the 2021 and 2022 league years as follows: Right-of-first-refusal tender ($0), original-round tender ($50,000), second-round tender ($125,000) and first-round tender ($125,000). Due to the reduction in the salary cap in 2021, these tenders will only increase by the fixed amounts set above this offseason. Beginning in 2023, each of these tenders will only increase with this percentage of the salary cap (if any) from league year to league year.
Notable restricted free agents in 2022: Mike White (Jets), Dwayne Haskins (Steelers), D'Ernest Johnson (Browns), Jakobi Meyers (Patriots), Allen Lazard (Packers), David Quessenberry (Titans), Malik Reed (Broncos), Azeez Al-Shaair (49ers), Nik Needham (Dolphins), Andrew Wingard (Jaguars)
Exclusive rights free agent (ERFA): Any player with fewer than three accrued seasons and an expired contract. If his original team offers him a one-year contract at the league minimum (based on his credited seasons), the player cannot negotiate with other teams.
Notable exclusive rights free agents in 2022: Tyler Huntley (Ravens), Salvon Ahmed (Dolphins), Jalen Guyton (Chargers), Sam Mustipher (Bears), Storm Norton (Chargers), Malik McDowell (Browns), Carl Granderson (Saints), Deandre Baker (Chiefs).
Accrued seasons: Used to determine a player’s free agency status (unrestricted, restricted, exclusive rights). In order to accrue a season, a player must have been on (or should have been on*) full-play status for at least six regular-season games in a given season. A player under contract must report to his team’s training camp on his mandatory reporting date in order to earn an accrued season. If player holds out his services for a “material period of time,” he is also at risk of not accruing a season.
*When I write “or should have been on,” note that this is the language used in the CBA. Basically, in order to accrue a season, the player needs to be on the team’s active/inactive list, injured reserve or reserve PUP for at least six regular-season games in a given season.
Credited seasons: Used as a measure for many benefits, it’s most notably utilized to determine a player’s minimum salary. To earn a credited season, a player must be on (or should have been on) full-pay status for a total of three or more regular season games.
Minimum salaries in 2022 based on Credited Seasons (CS):
The franchise (or transition) tag is employed by teams to limit the mobility of one of its upcoming free agents (can be restricted or unrestricted). Each team is allowed to use one tag per offseason.
Teams can use this designation from the 22nd day preceding until 4 p.m. ET on the eighth day preceding the new league year. The window was opened on February 22 and closed on March 8.
Each of the different tags (non-exclusive, exclusive, transition) can be withdrawn by the team at any time before the player signs it. However, the tenders are guaranteed for skill, cap and injury once signed. A player must sign his tender to be traded to another team.
Teams and franchise players can sign multi-year extensions until July 15 (or the Monday after, if that date falls on a weekend). If there is no extension in place by that date, the team and player can only agree to a one-year contract for the current season.
A designated player must sign his tender prior to the Tuesday following Week 10 in order to remain eligible to play in the current season.
Prior Year Salary (PYS): A player’s PYS is composed of his base salary, roster and reporting bonuses, prorated signing bonus and other payments to players for playing in the NFL for the previous league year — except any performance bonuses outside of roster and reporting bonuses. This is important because the PYS is used for the calculations of the tags.
Non-exclusive franchise tag: A player who receives the non-exclusive franchise tag is free to negotiate with other teams. The player receives a one-year deal with a salary set at the greater of (a) the cap percentage average for his position (an amount equal to the sum of the franchise-tag figures at a player’s position over the previous five seasons divided by the sum of the salary caps over the previous five seasons multiplied by the current year’s salary cap) OR (b) 120 percent of his PYS (the player’s cap number from the previous season, minus any performance incentives).
Teams that use the non-exclusive franchise tag hold the right of first refusal. If a designated player signs an offer sheet with another team, the player’s previous team has five days to match the offer sheet. Should it decide not to, the player’s original team shall be entitled to draft-choice compensation equivalent to two first-round picks.
Players to receive non-exclusive franchise tag in 2022: WR Chris Godwin (Buccaneers, second franchise tag), OT Cam Robinson (Jaguars, second franchise tag), WR Davante Adams (Packers), OT Orlando Brown (Chiefs), S Jessie Bates (Bengals), TE Dalton Schultz (Cowboys), TE David Njoku (Browns), TE Mike Gesicki (Dolphins).
2022 non-exclusive franchise tag salaries:
Exclusive franchise tag: A player who receives the exclusive franchise tag cannot negotiate with other teams. The player receives a one-year deal for the greater of (a) the average of the five-largest PYS at his position at the conclusion of the restricted free agent signing period of the current league year (April 22 in 2022) or (b) the amount of the non-exclusive franchise tag. No player received the exclusive franchise tag in 2022.
Last player to receive an exclusive franchise tag: Dak Prescott (with the Cowboys in 2021).
Transition tag: A player who receives the transition tag is free to negotiate with other teams. The player receives a one-year deal for the greater of (a) the cap percentage average (calculation as shown above) of the top 10 greatest PYS at the player’s position or (b) 120 percent of his own PYS. Should such a player sign an offer sheet with a new team, his former team has five days to match the offer sheet. The transition tag is a cheaper alternative to the franchise tag (i.e., the franchise tags for QBs in 2022 is $29.703 million, while the transition tag is $27.186 million). However, should his former team decide not to match, there is no draft-pick compensation tied to the transition tag. If a transition player has not signed an offer sheet with a new team by July 22, he can only negotiate and sign with his prior team that season. No player received the transition tag in 2022.
Last player to receive transition tag: Kenyan Drake (with the Cardinals in 2020).
Multiple franchise tags: When a player receives the franchise tag for a second time, he’s owed a 120 percent increase of his previous franchise-tag salary (or the tag number for the current season, if higher). If a team places the franchise tag on a player for a third time, the player will receive the greater of (a) the quarterback tag, (b) 120 percent of the average of the top five PYS at his position or (c) 144 percent of his second franchise-tag salary.
As an example, Chris Godwin and Cam Robinson received the franchise tag from the Buccaneers and Jaguars, respectively, in 2021. Godwin earned $15.983 million on the tag in 2021, while Robinson made $13.754 million. Due to each receiving the tag for a second time, Godwin and Robinson will receive 120 percent of their 2021 franchise tag salaries. Godwin will earn $19.2 million if he signs and plays on the tag in 2022, and Robinson will earn $16.7 million.
Guaranteed money: Media outlets typically announce and talk about the “guaranteed money” in a player’s contract. However, much of this money is only partially guaranteed. Compensation in NFL contracts can be guaranteed for three purposes: skill, cap and/or injury. Compensation in a player contract can be guaranteed for one, two, all or none of the guarantees (subject to some rules). If money in a player contract is protected for skill, cap AND injury, that money is fully guaranteed at signing and will be paid to the player. If money is only guaranteed for one or two of the three protections, that money is only partially guaranteed. Here is a quick breakdown of each guarantee category:
Skill guarantee: If a player contract is terminated because, in the team’s opinion, he does not have the requisite skill (due to a loss or lack of skills comparable to others on the team at his position), the player will be entitled to any money that is protected by a skill guarantee.
Cap guarantee: If a player contract is terminated so that a team can get under the salary cap, sign a free agent or re-sign one of its current players, the player is entitled to any money that is protected by a cap guarantee.
Injury guarantee: If a player is released but is currently unable to perform football duties (i.e., doesn’t pass a physical) as a result of team activities, the player is entitled to any money in his contract protected against injury. An injury-only guarantee is the most common in terms of partially guaranteed money.
Full guarantees (guaranteed at signing): Money is fully guaranteed at signing if it is guaranteed for skill, cap and injury purposes. As an example, Kirk Cousins‘ three-year, $84 million contract with the Vikings was guaranteed for skill, cap and injury
Most fully guaranteed money: Josh Allen ($100 million with the Bills).
Contract renegotiations: The first renegotiation of a veteran contract can occur at any time, but any subsequent increase in salary during the original terms of the contract can only happen 12 months after the most recent renegotiation. Teams can’t renegotiate terms from any prior year of a contract. After the final regular-season game, terms for the current season can’t be renegotiated.
Base salary: Formally known as “Paragraph 5” salary due to its place in a standard NFL Player Contract, it is the compensation a player receives during the regular season. The collective bargaining agreement set league minimums for base salaries. A player’s “game check” is 1/18th (including the bye week) of his base salary in a 17-game season. When a player is suspended for a game, he forfeits 1/18th of his base salary.
In the Final League Year (2030) of the current CBA, players will be paid 100 percent of their base salary in weekly or bi-weekly amounts. This changes from 2021 to ’29, when players will be paid 50 percent of their salary over the course of a period that is double the number of weeks the player is eligible to be paid for (i.e., in an 18-week regular season, he would be paid over a 36-week period).
2022 largest base salary: Deshaun Watson, Texans; Kirk Cousins, Vikings ($35.0 million)
Signing bonus: Money earned by a player for signing his contract. Typically paid out within the first 12-18 months. Prorated against the salary cap for the life of the contract (five-season maximum). This is how the Cowboys could afford to give Dak Prescott a $66 million signing bonus last offseason. For cap purposes, Prescott’s signing bonus counts for $13.2 million against the Cowboys’ salary cap for each of the ensuing five seasons (four-year contract plus 2025, a void year).
Largest signing bonus in a contract: Dak Prescott ($66 million with the Cowboys).
Roster bonus: Compensation earned by remaining on a team’s roster on a certain date. Roster bonuses count in full against the salary cap in the season in which they are earned, unless fully guaranteed at signing. They are used to avoid signing-bonus proration, which pushes dead money into the future. For example, new Broncos quarterback Russell Wilson is due a $5 million roster bonus on March 20 (fifth day of the league year). The Broncos will pay that bonus because the Seahawks traded him prior to that deadline.
Largest roster bonus in 2022: Patrick Mahomes ($27.4 million with the Chiefs).
Per-game roster bonus: A roster bonus awarded on a per-game basis for being on the team’s game day (47- or 48-man) roster (“Active List”) or its active (53-man) roster (“Active/Inactive List”), which varies by contract. For example, in a 17-game season, a player with a $1.7 million per-game roster bonus for being on the game day roster would earn $100,000 for each game he is active. Any previous contract clauses for 46- and 53-man per-game roster bonuses will be amended to reflect the new roster sizes. For example, Stefon Diggs has $250,000 in per-game roster bonuses for the 2022 season. He will earn $14,705 for each game he is active this season.
Note: Under the current CBA, teams are permitted to have 48 players active on game day if said team has eight active offensive linemen. If the team has fewer than eight players whose primary position is center, guard or offensive tackle, it can only have 47 game day actives. A team still cannot exceed a 53-man Active/Inactive List unless it is promoting one or two practice-squad players using the “Standard Elevation Addendum,” in which case the team can expand its roster to 54 or 55 (only using said practice-squad players).
Option bonus: Gives a team (or, at times, a player) the ability to exercise the current or future years of the contract by paying a bonus. Prorated over the life of the contract (like a signing bonus, up to a max of five seasons).
Largest option bonus in 2022: Josh Allen, Bills ($42.4 million). Must be exercised in the first five days of league year (March 16-20).
Workout bonus: Compensation for attending an agreed-upon percentage of the offseason workouts. No workout bonus can require participation in beyond 84.375 percent of the team’s scheduled workouts (i.e., a player can miss five of 32 scheduled workouts and still receive his bonus).
Largest workout bonuses in 2022: David Bakhtiari ($800,000 with Packers).
Reporting bonus: Earned by reporting to team activities by a specified date. For example, Darrelle Revis had a $1 million reporting bonus in his 2010 contract with the Jets, as the team sought to avoid further training camp holdouts.
Incentives (LTBE/NLTBE): Incentives in a player contract are limited to the list provided in Exhibits A-C in Article 13 Section 6 of the NFL’s collective bargaining agreement (pages 116-119).
Player incentives are considered “likely to be earned” (LTBE) or “not likely to be earned” (NLTBE) based on the player or team’s prior-year performance. For example, if a player has a $500,000 incentive for accumulating 1,000-plus rush yards in the upcoming season and he had 1,000-plus rush yards the previous season, the incentive is considered LTBE. If he did not record 1,000-plus rush yards in the previous season, the incentive is considered NLTBE. Except in certain circumstances, LTBE incentives count against the team’s salary cap in the current season, and NLTBE incentives do not count against a team’s current year’s cap. Except in rare cases, unearned LTBE incentives are credited to the following season’s salary cap, while earned NLTBE incentives are charged against the following season’s salary cap.
As a quick example of this, Chiefs DT Chris Jones earns $1.25 million each season he records 10 sacks. He finished with 9.0 sacks in 2021, so his incentive is considered NLTBE in 2021 and will not count against the salary cap this season. If Jones records 10-plus sacks in 2022, Jones will earn the incentive, and the Chiefs will be charged $2.5 million in 2023, which is comprised of the $1.25 million earned for 2022 season and $1.25 million incentive for 2023, becoming LTBE in that event. Should Jones fail to reach the sack threshold in 2023, the Chiefs will earn a cap credit of $1.25 million in 2024.
Salary escalators: A salary escalator is similar to an incentive in that it is triggered by attaining certain performance thresholds. However, the extra money is not always guaranteed to be received. An earned escalator translates into a raise in a future year (or years) of the contract. If the escalator applies to a non-guaranteed season and the player is released prior to it, he would not receive the benefit of his escalator. Contracts can also contain de-escalators that lower a player’s salary for failing to reach performance measures.
For example, Russell Wilson had the ability to increase his 2023 base salary of $21.0 million to $27.0 million through his performances in the 2020-2022 seasons ($2 million per season). Wilson’s 2023 base can increase for the following reasons (per season): Super Bowl MVP ($500,000), Offensive Player of the Year ($500,000), Pro Bowl ($250,000), 66.0+ comp. percentage ($250,000), 4,000+ pass yards ($250,000), 36+ pass TDs ($250,000). In 2020, Russell Wilson earned $1 million, increasing his 2023 base salary to $22.0 million (68.8 comp. percentage, 4,212 pass yards, 40 pass TDs, and Pro Bowl selection). This escalator will carry over to the Broncos after his trade from Seattle, so Wilson can escalate his 2023 salary further by reaching these thresholds in Denver in 2022.
Dead money: Refers to salary a team has already paid or has committed to paying (i.e., a signing bonus, fully guaranteed base salaries, earned bonuses, etc.) but has not been charged against the salary cap. In business terms, it is essentially a “sunk cost.” Any money a team pays a player must be accounted for against the salary cap. If there is dead money in a player’s contract and he is released or retires, that charge will accelerate onto the team’s salary cap for the current year.
There is one avenue to lower this cap hit in a current league year: the June 1 designation. Teams can spread the cap hit over two seasons by releasing or trading a player after June 1 — any signing bonus prorations for future seasons are charged to the following seasons’ salary cap. Teams are allowed to release two players prior to June 1 (but on or after the first day of the league year) while still using this designation and getting the same cap treatment. However, the cap savings created by a June 1 designation do not take effect until after June 1.
Essentially, the salary cap is like a credit card, minus the interest. Anything that is paid out to a player must be paid back to (and accounted for against) the salary cap at some point.
Veteran salary benefit: Formerly known as the minimum salary benefit, the veteran salary benefit allow teams to offer a “Qualifying Contract” to any player with at least four credited seasons at a reduced salary cap hit. Under this provision, a qualifying contract is a one-year deal worth the minimum base salary applicable to a player with his number of credited seasons, plus $152,500 in additional compensation (i.e., signing bonus, roster bonus, incentive, etc. — amount begins to increase in 2024). These contracts are charged against the salary cap at the rate of a player with two credited seasons that league year.
Four-year qualifying contract: Another type of veteran salary benefit, it can be offered to a player with at least four credited seasons whose contract with a team has expired after being on said team for four or more consecutive, uninterrupted league years prior to his contract expiring. Such a player must have been on the team’s 90-man active/inactive list for said seasons (and every regular-season and postseason game). Teams can sign a maximum of two eligible players to this type of salary benefit.
A qualifying contract under this benefit is a one-year deal with a base salary of up to $1.35 million more (set to increase in 2024) than the minimum base salary for said player. However, if a team does sign two players to a qualifying contract, it can only give a combined $1.35 million in additional base salary between the two deals. Under such agreements, only the applicable minimum base salary (not the $1.35 million benefit) is charged against the salary cap.
Waivers: When a player contract is terminated, he is either free to negotiate and with a team at any time or subject to waivers. When released, a contract for a player with fewer than four credited seasons is subject to waivers at all times. The waiver system allows teams to place a claim on a player contract before that player becomes a free agent. The team with the highest priority will be awarded the player. A contract for a player with four or more credited seasons is not subject to waivers when released from the day after the Super Bowl through the trade deadline. After this date and outside of this period, the contract must be placed on waivers and can be claimed by another team.
Guaranteed money, dead money and cap savings at signing
Let’s take a full look at one veteran contract to explore some of these things in action …
Example: Joey Bosa‘s 2020 contract extension (five years, $135 million)
2020: $15.0M cap hit – $78.0M in dead money = -$63.0M in cap savings
2021: $20.8M cap hit – $63.0M in dead money = -$42.3M in cap savings
2022: $28.3M cap hit – $42.3M in dead money = -$14.0M in cap savings
2023: $31.0M cap hit – $14.0M in dead money = $17.0M in cap savings
2024: $29.0M cap hit – $7.0M in dead money = $22.0M in cap savings
2025: $25.4M cap hit – $0M in dead money = $25.4M in cap savings
> Cap savings: pre-June 1 release
Joey Bosa guarantees by year at signing:
Remaining partial guarantees (injury only)
TOTAL GUARANTEES: $102.0 million
Length: Contracts for drafted rookies are set at four years. Undrafted rookies receive three-year contracts.
Fifth-year option: The fifth-year option got a makeover under the new CBA. Each player selected in the first round of the NFL draft has a team option for a fifth season automatically included in his contract, which extends the four-year rookie contract to a fifth season for a non-negotiable fixed amount. Teams must exercise this option in the time after the conclusion of the player’s third regular season but prior to May 3 of the following league year.
Starting with players selected in the first round of the 2018 NFL Draft, players can earn different fifth-year option salaries based on their performance in the first three seasons of their career. The fifth-year option for such players is fully guaranteed at the time it is exercised rather than on the first day of the league year of the option. If such a player’s fourth-year salary is not fully guaranteed for skill, cap and injury, it becomes guaranteed as well when the option in exercised.
First-round picks will receive a base salary equal to the cap percentage average of the transition tag for the player’s position in his fourth season but using the appropriate third- through 25th-highest PYS if they have not been selected to the Pro Bowl on the original ballot and did not (a) partake in at least 75 percent of his team’s offensive or defensive plays in two of his first three regular seasons or (b) play a cumulative average of 75 percent of his team’s offensive or defensive plays over the course of his first three regular seasons or (c) log at least 50 percent of his team’s offensive or defensive snaps in each of his first three regular seasons.
First-round picks will receive a base salary equal to the cap percentage average of the transition tag for the player’s position in his fourth season, but using the appropriate third- through 20th-highest PYS at the player’s position if they have not been selected to the Pro Bowl on the original ballot but did (a) partake in at least 75 percent of his team’s offensive or defensive plays in two of his first three regular seasons or (b) play a cumulative average of 75 percent of his team’s offensive or defensive plays over the course of his first three regular seasons or (c) log at least 50 percent of his team’s offensive or defensive snaps in each of his first three regular seasons.
A first-round pick named to the Pro Bowl on the original ballot in one of his first three regular seasons will receive a fifth-year option equal to the transition tag at his position for the league year of the player’s fourth year of his rookie deal. Those selected to two or more Pro Bowls in their first three seasons will receive a fifth-year option equal to the franchise tag applicable to his position in the player’s fourth season.
Players on the fifth-year option will be fined $40,000 for each day of any late reporting or absence from training camp (increased to $45,000 in 2026) and one week of regular-season salary for each preseason game missed.
Examples (2018 draft class):
Rookie salary: A player’s rookie salary is composed of the following: signing bonus, base salary, offseason workout per diem (beginning in the second season), base-salary guarantees, permitted performance incentives, roster bonuses and reporting bonuses.
Proven performance escalator (PPE): This is intended to reward non-first-round draft picks for contributions that exceed the expectations of their draft status. The PPE is not considered “Rookie Salary” and is not subject to the 25 percent rule (more on that below).
Beginning with the 2018 draft class, players drafted in the second through seventh rounds are eligible to receive the Level One, Level Two or Level Three PPE. Those selected in the first round, as well as undrafted players, are not eligible for any PPE. Any player who qualifies for multiple levels of the PPE will receive the highest escalator but can’t receive more than one.
The PPE is now a three-level, non-negotiable amount in which a player’s base salary in the fourth year of his rookie contract increases if he meets certain predetermined thresholds.
The Level One PPE is structured differently for second-round picks and those selected in Rounds 3 through 7. In order to qualify for Level One, second-round picks must either (a) play 60 percent of his team’s offensive or defensive plays in any two of his first three seasons or (b) participate in a cumulative average of 60 percent of his team’s offensive or defensive plays over the course of his first three regular seasons. For third- through seventh-round picks, players can hit either (a) or (b) above, but the threshold to reach drops to 35 percent of such plays.
For such players, the Level One PPE increases a player’s fourth-year base salary by the difference of the original-round tender for restricted free agents set for the player’s fourth season and the player’s Year 4 rookie salary, less any signing bonus prorations. This amount is then added to the player’s Year 4 base salary.
A player selected in the second through seventh round will qualify for the Level Two PPE if he participates in 55 percent of his team’s offensive or defensive plays in each of his first three regular seasons. The amount of the Level Two PPE is the difference of the original-round tender in the player’s fourth season and his Year 4 rookie salary (minus any signing bonus prorations), plus $250,000. This amount is then added to the player’s year-four base salary. For example: Commanders wide receiver Terry McLaurin, a third-round pick in 2019, has played 86.1 percent of the team’s offensive snaps since 2019, according to Next Gen Stats, and will earn the Level Two PPE ($2.79 million in 2022).
To qualify for the Level Three PPE, a second- through seventh-round pick must be selected to the Pro Bowl on the original ballot in at least one of his first three seasons. The Level Three PPE is equal to the difference between the second-round tender for restricted free agents and the player’s Year 4 rookie salary, less any signing bonus prorations. The player’s Year 4 base salary increases by this amount. For example, 49ers wide receiver Deebo Samuel, a second-round pick in 2019, will earn the Level Three PPE because he was selected to the 2022 Pro Bowl on the original ballot ($3.986 million in 2022).
Notable players who earned the PPE in 2022:
Performance incentives: While veterans can agree to various incentives, rookie incentives are based on playing an agreed-upon amount of a team’s offensive or defensive plays. All incentives in Year 1 of a rookie contract are considered Likely To Be Earned (LTBE).
Rookie performance incentives rules differ by the round a player was drafted in. For first- and second-round picks, the minimum amount of playtime a player can be rewarded for is set at 35 percent in the initial contract year and 45 percent in any other year of the deal. For players drafted in the third round and later, along with players who go undrafted, the minimum playtime incentive is set at 15 percent for the first year and 30 percent for any subsequent years. Rookie incentives must be set for a specific playtime percentage (i.e., 40 percent of plays) and can’t be awarded based on improving in such percentage year over year.
These incentives can’t be guaranteed for skill, injury or cap and can only be based on playtime in the current league year. Earning or failing to earn an incentive cannot modify, nullify or create another incentive clause. Unearned incentives cannot be carried over into future seasons.
Renegotiations: Rookie contracts for drafted players can’t be renegotiated or altered in any way until after the last regular-season game of the third contracted year. Undrafted rookies must wait until after their second season to amend a contract. Any rookie contract that is renegotiated or extended in any way is no longer considered a rookie contract and is not restricted by the rules governing such contracts.
25 percent increase rule: Unless a player’s base salary is set at the minimum every year, no team can sign a player to a contract that would give him a raise of more than 25 percent annually. So, the second year of the contract can’t provide a salary more than 25 percent of the first year, and after that, each subsequent year can’t offer an increase of more than 25 percent of his previous year’s salary.
When gauging a free agent’s value, it can be helpful to compare him to what other players at his position receive in salary. However, it can be misleading to simply look at the average per year (APY) of a contract that was signed in a previous year, when the salary cap was smaller. A more realistic picture of a signed player’s value can be attained by using adjusted APY. This allows those involved in negotiations to identify true financial benchmarks with a common denominator.
Consider two of the NFL’s highest-paid pass rushers: Myles Garrett and Khalil Mack. The Browns signed Garrett to a five-year, $125 million deal in 2020, which was the highest among all pass rushers at the time it was signed. The 2020 salary cap was $198.2 million, and Garrett’s $25 million average salary accounted for 12.6 percent of the Browns unadjusted 2020 cap space. When adjusted for 2022, his adjusted APY is $26.3 million.
Now consider Mack, who was just traded from the Bears to the Chargers. He signed a six-year, $141 million deal with the Bears in 2018. Even though the APY of Mack’s contract ($23.5 million) is lower than Garrett’s ($25.0 million), the former’s adjusted APY is higher. In 2018, $23.5 million was 13.3 percent of the salary cap; 13.3 percent of the $208.2 million 2022 cap is $27.6 million. The Chargers have Mack under contract for a total of $63.9 million over the next three seasons.
A player’s cap hit is made of various elements and does not reflect how much a player is paid in a given season — but rather, how much a team is charged against the salary cap in that season. For an example of this, let’s consider how teams use prorated signing bonuses to pay out more cash than they are being charged for against the cap.
Rams cornerback Jalen Ramsey signed a five-year, $100 million contract extension with the Rams in 2020. Ramsey received a $25 million signing bonus, which will count $5 million against the cap in each of the first five years (he had one season left on his prior contract, six total years). Ramsey’s Year 1 cash flow (in 2020) consisted of $26.203 million, stemming from the signing bonus and his base salary of $1.203 million. But due to signing bonus proration, the signing bonus only counted for $5 million against the cap; when his $1.203 million base salary was factored in, his cap charge in Year 1 was $6.203 million.
Now let’s examine Cowboys quarterback Dak Prescott‘s contract. Prescott signed a four-year, $160 million contract extension with the Cowboys in 2021, and he received a $66 million signing bonus. Prorated over five seasons (the four years of the contract and a 2025 void year), that signing bonus will count for $13.2 million against the cap in each of those seasons. Prescott’s Year 1 cash flow (in 2021) consisted of $75 million, stemming from his $66 million signing bonus and his $9 million base salary. His initial cap hit was set to be $22.2 million in 2021. However, prior to the season, the Cowboys converted $6.25 million of his base into a signing bonus (spread over the same five years as his signing bonus) in order to create $5 million more in cap space. His final cap hit for 2021 ended up being $17.2 million — from his $13.2 million signing bonus proration, $2.75 million base salary and $1.25 million restructure proration.
A typical contract restructure is when a team converts part of a player’s base salary into a signing bonus to create immediate cap relief. This does, however, increase the player’s yearly cap hits thereafter by pushing more dead money into future years.
As an example, Rams DT Aaron Donald had a base salary of $19.9 million in 2021. Los Angeles dropped his base salary to $1.9 million in 2021. The Rams converted the remaining $18 million into a signing bonus, which allowed them to spread that money over the remaining four years of the contract ($4.5 million per season). This allowed the Rams to reduce his cap hit from $27.9 million to $14.4 million in 2021, creating $13.5 million in cap space. However, this restructure increased his cap hits from 2022-2024 by $4.5 million each season: from $22.3 million to $26.8 million in 2022, $19.0 million to $23.5 million in 2023, and $21.8 million to $26.3 million in 2024.
The following is a breakdown of Donald’s contract restructure using the format above:
> Previous hits: 2021 ($27.9M), 2022 ($22.3M), 2023 ($19.0M), 2024 ($21.8M)
Postseason pay: In 2022, NFL players will be paid for postseason games in the following amounts: Wild-card winner ($46,500), Wild-card loser or team with first-round bye ($41,500), Divisional Round ($46,500), conference championship game ($69,000), Super Bowl winner ($157,000) and Super Bowl loser ($82,000). Players on the active list, inactive list or injured reserve list are paid this amount for the 2022 postseason (other players are subject to all or partial playoff compensation). These amounts increase annually over the course of the new CBA.
Pro Bowl pay: Players on the team that wins the Pro Bowl will receive $84,000 for participation. Players on the losing team will receive $42,000 this season. These amounts increase annually over the course of the new CBA.
Active (“Gameday”) list: If a team has a minimum of eight offensive linemen (primary position being center, guard or offensive tackle) on the active game day roster, the maximum roster size is 48 players. If a team has fewer than eight offensive linemen, the maximum drops to 47 players.
Active/inactive (“53-Man”) list: The active/inactive list remains at 53 players for the regular season and playoffs. However, a team can increase its roster to 54 or 55 players only by using the standard elevation addendum (explained below) to bring one or two practice squad players to the active/inactive list.
Roster size: In 2022, the practice squad now consists of 14 players. The max was 12 players in 2021.
Eligibility: Players with no accrued seasons and those with fewer than nine regular-season games in their lone accrued season are eligible for the practice squad. Teams can also have a maximum of four players who have earned no more than two accrued seasons. Beginning in 2022, the new CBA allows each team to have up to four players with unlimited accrued seasons on the practice squad.
Standard elevation addendum: Now included in all practice squad contracts, the standard elevation addendum allows teams to move a player from the practice squad to the active/inactive list for one week and then back to the practice squad without subjecting him to waivers. Under this addendum, a player reverts back to his team’s practice squad on the first business day after the game in which he is elevated. These players receive the applicable minimum salary for a player with his number of credited seasons (prorated for one week of regular season pay or the applicable postseason amount). This clause can be used by a team for a maximum of two regular-season or postseason games per player per season. If the team elevates a player for a third time and the team wishes to move him back to the practice squad, it has to waive or terminate his player contract. If a player is released or clears waivers (whichever is applicable) and he signs a practice squad contract with a new team, he is once again eligible to be elevated for the aforementioned maximum of two games.
In 2021, as a result of revenues lost during the COVID-19 pandemic, the salary cap declined for just the second time since its inception in 1994. The cap decreased by over $15 million in 2021 (down to $182.5 million from $198.2 million in 2020). This season, the cap will increase by $25.7 million to 208.2 million in 2022, the largest season-to-season increase in NFL history. Below is the NFL’s salary for each season since the cap was conceived in 1994:
Follow Anthony Holzman-Escareno on Twitter @FrontOfficeNFL.
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