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Catching Up on NFL Terminology

This is a look at some of the explanations of terminologies that will affect players as they enter the NFL and through thier careers..

Salary Cap
The salary cap is the amount of money that each team can spend on player salaries. It is determined as a percentage of defined gross revenues (DGR), a term defined in the League's Collective Bargaining Agreement (CBA) as the aggregate revenues from all sources relating to the performance of NFL games. This year, the League wide or aggregate salary cap is 62% of DGR. The individual team salary cap is determined by dividing that number by30. A certain amount is subtracted from that number for collective benefits. The difference is what teams have available to spend on player salaries. This year, the individual team salary cap is $46,614,000. Collective benefits are $5,160,000. Player salaries are capped at $41,454,000.

Rookie Pool
A portion of what teams are permitted to spend on player salaries is spent on rookies. The rookie pool limits the amount of dollars under the salary cap that a team can spend on its rookies. The League-wide or aggregate rookie pool is 3.5% of DGR. The League office allocates the aggregate pool to each slot in the draft in descending order with the first pick in the draft being assigned the most pool dollars and the last pick in the draft the fewest pool dollars. An individual team's is then determined by adding up the pool dollars assigned to each of their slots or draft picks.

Voidable Year
A voidable year in a contract is a year that drops off of the contract or is cancelled upon the occurrence of some pre-determined criteria. It is used in rookie contracts to reduce the pool number in a particular contract. For pool purposes, signing bonuses (SB) are prorated over the life of the contract and only that portion prorated or allocated to the first year counts against the rookie pool. This means that if a player signs a four year contract and receives a $2,000,000 SB, only $500,000 of that SB (2 million divided by 4) counts against the rookie pool. This means that the SB can, for any given pool number, be increased by simply increasing the number of years over which to prorate the SB. In the example above, the player could receive a $2,500,000 SB or another $500,000 in SB proration for the same $500,000 pool number by simply adding another year to the contract. If that additional year is voidable and eventually drops off of the contract, the player will have received a higher SB for the same pool number and contract length.

Escalation Clause
The NFL CBA prohibits teams from backloading rookie contracts (i.e. paying the player a small amount in his rookie year and an enormous amount in later years). The CBA contains a provision that prevents a team from increasing any contract year in a rookie contract by more than 25% of the player's rookie contract, excluding the SB. This means that if a rookie player signs a four year contract and earns $400,000 (excluding the SB) in his rookie year, the maximum salary increase from year one to two, two to three and three to four would be $100,000. In other words, the most the player could earn in years two, three and four would be $500,000, 600,000 and 700,000. An escalation clause would enable the player to circumvent the 25% rule and earn more than the $100,000 increase in the above example. Like the voidable year, the escalation clause will usually be triggered by the occurrence of some pre-determined criteria.

Incentive
Incentives are performance clauses in contracts that pay the player additional money over and above his base salary. In order to prevent teams from circumventing the rookie pool by paying players large bonuses for easily achievable performance clauses, the CBA divides performance incentives into two categories: Likely to be earned and Unlikely to be earned. The categorization of an incentive as either likely or unlikely to be earned is objectively determined by specific criteria contained in a series of side-letters or addendums to the CBA. Likely to be earned incentives count either fully of partially against the rookie pool. Because a player would rather negotiate pool dollars into the SB or base salary rather than into a clause that is contingent upon achieving some level of performance, likely to be earned incentives are used infrequently in rookie contracts. Unlikely to be earned incentives do not count against the rookie pool and are frequently used not only to simply provide potential additional money for players but also to trigger voidable and escalation clauses.

Workout Bonuses
Workout bonuses are bonuses that the team pays the player to participate in its off-season training program. These clauses have become more and more common as teams try to induce players to spend most of their off season working out at the team's facility.

Slotting
Slotting is a term used to describe the pattern of rookie contracts being valued in a hierarchical manner, beginning with the first pick in the draft having the highest value and ending with the last pick in the draft having the lowest value. Since the League allocates rookie pool dollars to each draft slot in descending order, with the first pick receiving the most pool dollars and the last pick receiving the fewest pool dollars, slotting is, notwithstanding frequent aberrations due to other variables that impact rookie contract negotiations, generally predictable.

Guaranteed Contracts
NFL contracts are not guaranteed. Players obtain partial guarantees through SBs (which the player retains regardless of whether or not he makes the team or gets injured) and through partial skill and/or injury guarantees contained in addendums negotiated and attached to the standard player contract.

Unrestricted Free Agent (UFA)
Any player with five or more accrued seasons, or with four or more accrued seasons in any capped year, is at the expiration of his contract, an unrestricted free agent. Teams retain no residual rights in their unrestricted free agents, who are completely free to negotiate and sign a contract with any club.

Restricted Free Agent (RFA)
Any player with three or more accrued seasons, but less than five accrued seasons (or less than four accrued seasons in any capped year), is, at the expiration of his contract, a restricted free agent. Restricted free agents are free to negotiate with any new teams. Teams retain rights of first refusal/compensation rights in their restricted free agents.

Collective Bargaining Agreement (CBA)
The contract that is collectively bargained by the NFLPA with the NFLMC on behalf of all NFL players. Basically, it describes the employment relationship between players and teams and includes virtually all terms of condition and employment.

Physically Unable to Perform Non-Football Injury
This is a list for players who are injured off the field or outside the scope of their player contract and who are unable to pass their team's physical prior to training camp. This list would include rookie players who were injured in college, then signed a contract with an NFL team but were unable to pass their team's physical. Players on the N-F/I list are not entitled to compensation while on the list although their contract continues to run until they are in the final year of their contract.

Physically unable to Perform/ Football Injury
This list is for players unable to pass their team's physical prior to training camp because of a prior season injury. Players on PUP-F/I receive their full salary while on the list and their contract continues to run until they are in the final year of their contract.

Injured Reserve
This list is for players injured while performing under their contract and after the team's physical prior to training camp. Players on IR receive their salary while on this list and their contract continues to run.

Practice Squad
Each team is permitted to sign up to 5 players to its practice squad. Practice squad players are free to negotiate and/or sign a contract with any other team, except that a team signing a player off of another team's practice squad cannot sign that player to its practice squad but must sign him to either its active or inactive list. Players who have earned an accrued season (i.e: who have been on full pay status for 6 or more regular season games) are not eligible for the practice squad. Players without an accrued season are eligible for the practice squad for two seasons.

Active List
The active list limit is 46 players per club. This is the number of players that can dress for each regular season game.

Inactive List
The inactive list consists of 7 players, at least one of whom is a quarterback. These 8 players do not dress for regular season games, although the quarterback can dress and play if the two active quarterbacks get injured.

Franchise Player
Each NFL team may designate one of its players who would otherwise be an unrestricted free agent as its franchise player. Teams automatically tender their franchise player a one-year contract for the average of the five largest salaries at that player's position either the previous year (type i franchise player) or at the end of the current year's restricted free agent signing period (type ii franchise player) or for 120% of the player's prior year salary, whichever is greater. If a type i franchise player signs with another team, that team must compensate the designating team with two first round draft choices.Type ii franchise players cannot negotiate with other teams. The designating team retains their exclusive rights.

Transition Player
Each NFL team was/is permitted to designate two unrestricted free agents in 1993, one in 1994 and one in 1999 as transition players. The agreement also provides that teams can designate another unrestricted free agent as a transition player in lieu of using their franchise designation. teams automatically tender transition players a one year contract for the average of the largest salaries at the player's position the prior year or 120% of the player's prior year salary, whichever is greater. Transition players are free to negotiate with any team but the designating team retains the right of first refusal.

National Football League Players Association (NFLPA)
The NFLPA is the players union. It represents the players in negotiations with the NFLMC for its system of individual contract negotiations as well as for severance pay, pension benefits, disability benefits, health insurance and all other collection benefits. The NFLPA protects and enforces the players' rights under the collection bargaining agreement (CBA) and represents the players in all grievances involving breaches of the CBA. The union also regulates and certifies agents and its research department disseminates information to agents and players to assist them in individual contract negotiations.

Players Inc.
Players Inc. is the licensing and marketing subsidiary of the NFLPA. It represents NFL players in group licensing involving 6 or more players. It licenses to trading card, apparel, poster, computer and other companies the rights to use players' names, signatures and likenesses in conjunction with their products. Players, Inc. represents approximately 98% of the players in the NFL. The other 2% (approximately 35 players) are represented by the Quarterback Club, a separate licensing arm for NFL quarterbacks. Players, Inc. schedules appearances, signings, cruises, charity events and trade shows for players, although players are not precluded from obtaining these types of opportunities on their own or with other players in groups of fewer than 6.

NFL Management Council (NFLMC)
The NFLMC is the League's bargaining arm and its counterpart to the NFLPA. It is responsible for negotiating the collective bargaining agreement with the NFLPA as well as for administering the agreement and representing the League and individual teams in grievances involving breaches of the CBA. A companion entity to the Management Council is NFL Player Programs. Although it is a division of the NFL that is separate from the MC, Player Programs, like the MC, affects player employment. Player Programs administers the following 4 distinct programs to assist players off the field: 1) Continuing education program to assist players who want to return to school either to complete their undergraduate degree or to pursue a graduate degree; 2) Career internship program to help a player find a job in particular field during the off-season; 3) Financial education program to help players plan financially for their life after football; 4) Family assistance program to help players with personal or private problems/matters.

NFL Properties
NFL Properties is the League's counterpart to Player's, Inc. It licenses team logos, promotes various programs for the NFL, develops League-wide advertising opportunities and establishes and runs events such as the Quarterback Lineman Challenge.