Everything to know about salaries in the NFL

The Bengals start playing meaningful football on Sunday when they take on the Colts. But before that, the Bengals had to form their 53-man roster, which was no easy task.

Some of the monetary guidelines and practices can be confusing to the average fan. If the Bengals made roster moves based on talent alone, that would be easy enough to figure out. But Mike Brown is running a business, so dollars and cents are an important part of the equation. There might be some cuts or additions made that had more to do with contracts than skills. George Iloka’s release from the team was allegedly a financial decision, for example.

So, how do salaries in the NFL work?

First, let’s start with the salary cap itself.

The Salary Cap

For those who don’t know, the salary cap, simply put, is the amount of money that teams are allowed to spend on players’ salaries. The reason for this is simple: each team has the exact same amount of money to spend, so every team is on a level playing field in free agency.

For contrast, baseball has no salary cap. Teams like the Yankees can spend all they want on players’ salaries while teams like the Reds, who operate in a small market, must be more judicious with their money.

The exact salary cap is dictated by the Players Association in the Collective Bargaining Agreement. Under the current CBA, all sources of revenue, including television contracts, merchandise sales and ticket sales, are added up and divided among all 32 teams.

When the salary cap was first introduced in 1994, the cap was set to $34 million. The salary cap for the current NFL season is $177.2 million.

Spending requirements

There is a minimum amount of money that a team can put towards their caps. All 32 teams are required to spend at least 89 percent of their caps (which this year is $157.7 M). This is called the minimum cash spend requirement, also known as the 89 percent rule.

Teams don’t have to spend their 89 percent every year, however. This requirement must be the average amount spent over the four year spending period. The current spending period started in 2017 and will continue through 2020.

In other words, the Bengals could have to spend 88 percent of their cap last year and this year, but would have to spend at least 90 percent over the next two years.

The second requirement is that the league as a whole must spend 95 percent of its total cap space. So the average percent of cap spending must come out to 95 percent every year, or the remaining money will be given to the players. This rule also applies over the course of the spending period.

So, those are the limitations placed on the NFL owners and general managers when they work out their players contracts. How do the contracts actually work?

Contracts

Players’ contracts can be just as complicated since there are several ways they can earn money. First and foremost, they earn a salary.

Salary

A player’s base salary is what he earns every week just for being on the roster. Its paid out in 17 installments after each game. So, if a player has a base salary of $1M, then his paycheck every week is worth $58,823.53.

A split salary is given to a player who is on IR to reduce his financial burden. This is most common among young players who were late-round draft picks.

If a team releases a player, they stop paying the player’s salary but still owe him dead money (more on that below). So this is where GMs save money by making cuts.

Bonuses

There are several different types of bonuses a player can earn.

A signing bonus is what is known as “guaranteed money.” This is cash a player earns just for signing a contract. Signing bonuses are typically spread throughout the life of the contract, but if a player is released, the team must pay him the rest of the bonus he is due.

For instance, if John Doe received a signing bonus of $1M for a four-year deal, each year he is paid $250,000. If John Doe is released after the first year, he is due the remaining $750,000. The amount of money owed is known as dead money.

For clarification, the signing bonus is the total amount the bonus is worth. A prorated bonus refers to the amount of that bonus a player is paid each season (so in the above example, the $250,000 each year is the prorated bonus).

Then there are roster bonuses, which is what a player may earn for being on an active roster at the beginning of the league year. Reporting bonuses are similar; these are bonuses for reporting on time for workouts or training camp. These bonuses are paid out in a year-by-year basis, according to the terms set forth in the contract.

Incentives

There are two different types of incentives, which are rewards for attaining certain goals. The first kind are likely to be earned (LTBE) incentives. LTBE incentives count against the salary cap at the beginning of the season, but if the player doesn’t earn the incentive, the team keeps the money and the corresponding cap space is carried over to the next season.

A bonus not likely to be earned (NLTBE) does not count against the salary cap, but is awarded to the player all the same.

A good example between the differences between the two types of incentives are in Tyler Eifert’s contract. Eifert’s cap hit, or amount of cap space his contract takes up this year, is $4,625,000. His salary is worth $1 million, while the rest is guaranteed in signing, roster, and workout bonuses.

However, Eifert’s injury history made the Bengals worried when he went to re-sign. Instead of earning a $62,500 salary every week (which would normally be how a contract like his will work out), he is eligible to earn a LBTE incentive worth $62,500 for every game for which he is active.

So, he may earn his full million; he may only earn a fraction of it. Either way, there is $1M worth of cap space allotted for his incentives. He will also earn NLTBE bonuses if he has 50 to 65 catches, 650 yards, and/or 8 touchdowns.

If he earns all of his bonuses, his contract will actually be worth a maximum of $8.5M. But since he has only caught more than 50 passes once, 8 touchdowns once, and never recorded more than 650 yards in his five year career, these incentives are considered NLTBE.

So, let’s look at some contracts. We’ll start with Eifert’s (via Spotrac.com).

Since this is only a one year deal, it’s pretty straightforward. The cap hit is the sum of his projected salary and the bonuses he will earn, which is where the $4.625 million figure comes from. In this case, yearly cash and cap hit are the same because it is only a one-year deal.

Next, let’s check out the contract of the Bengals’ first-round pick in the 2018 draft, Billy Price (via Spotrac.com).

Price signed a four year deal worth a total of $11,712,491. His contract has a fifth year option, which we will ignore for simplicity’s sake. If the Bengals were to pick up the option, the signing bonus and dead cap would be disbursed differently.

Price will not earn a roster or workout bonus, but his signing bonus is worth $6,598,175. So the $1,649,543 yearly payment is the signing bonus spread out over four years. However, the entire signing bonus is paid up front, so the yearly paid portion in his first year is his first years’ salary plus the signing bonus.

After that, his yearly cash only includes his salary. Even though his whole bonus is paid in the first year, it is still spread out on paper to save cap space. If the Bengals cut him after one year, then the dead cap amount of $7,505,790 is the amount of cap space lost due to the distribution of his signing bonus. (Obviously, the Bengals will not be cutting him any time soon.)

The last contract we’ll look at will be Dre Kirkpatrick’s (via Spotrac.com).

Kirkpatrick signed a five-year extension in 2017 with a signing bonus of $7 million, which brings the total value of the contract to $52 million.

Kirkpatrick’s dead cap in 2017 was the sum of that year’s salary and bonuses along with the total signing bonus. However, since the Bengals only spent $1.4M on his signing bonus, his yearly cash value is much lower.

This year, Kirkpatrick’s cap hit is almost the same as his dead cap, so the Bengals wouldn’t save much money by releasing him. After this season though, the Bengals could save millions in cap space by letting Kirkpatrick go, if they so choose.

His salary will exceed $9 million each season after 2018 while his dead cap will fall from $4.2 million. If the Bengals release him any time after this season, they could save anywhere from $10 million to about $23 million.

It is also important to note that Kirkpatrick has per game active bonuses in all five years of his contract. In the first two years, they are LTBE so they count toward his salary. In the final three years, they are listed as NLTBE, so he could earn some extra money not listed on the table above.

If Kirkpatrick plays out the entirety of his contract and earns all of his bonuses (which is quite possible), he will earn the maximum value of $52 million.

This whole realm is so much more complicated than that (the formula to calculate the salary cap alone takes up 10 pages of the CBA), but this is the basic concept. But don’t worry, when the NFLPA negotiates a new CBA in 2021, everything could change so you will be thoroughly confused again. For now, this is how football players are paid in 2018 and likely will continue to be paid through the 2020 NFL season.