SALARY CAP NOTES AND IMPLICATIONS
2012 Salary Cap Amounts
The 2012 salary cap is unofficial yet is projected to land somewhere between $121 and $125 million. Several predictions have it at $124 million. The Dallas Cowboys are estimated to have roughly $20 million in available cap space at the moment.
‘Soft Cap’ in 2012
2012 is the final ‘soft cap’ year. In 2011 the soft cap allowed teams to borrow $3 million against future caps to raise the potential total salary cap from $120 mil to $123 mil. 2012 will also have a soft cap allowing $2 million to be borrowed against future caps thus raising the cap slightly if exercised.
Incentive Bonuses (LTBE and NLTBE)
Incentive Bonuses in player contracts come in two classifications, and apply to the salary cap in very different ways. The two incentive bonus distinctions are Likely to be Earned (LTBE) and Not Likely to be Earned (NLTBE) bonuses.
LTBE incentive bonuses generally include a player reaching performance levels that were hit the previous year. Such as if the 2012 bonus for passing TD’s is 15, and last year the QB threw 20, it would fall under LTBE. However if the bonus level was set at 25 TDs, it then typically falls under NLTBE bonus. Other examples of LTBE bonuses are incentives that are in the sole control of the player, like non-guaranteed reporting bonuses and off-season workout and weight room bonuses. The reason LTBE bonuses are important is they count against the current year’s salary cap before they are ever earned. If they are not earned, the following year’s salary cap for said team is raised by that amount to compensate for unearned and unpaid salary that was deducted from the previous year’s cap.
Conversely, NLTBE incentive bonuses count on the salary cap of the year immediately following the season they were earned. NLTBE bonuses are typically performance levels set that a player did not reach the previous year, thus deemed unlikely for the current year. If these bonuses are not reached in that season, salary cap adjustments are not made to any year.
Releasing Players and Salary Cap Implications
Releasing a current player before June 1 results in the remainder of his signing bonus applying to this year’s cap. Releasing after June 1 allows the team to absorb only the current year’s bonus amount on the 2012 cap, and the total remainder on the 2013 cap. Releasing Terence Newman before June 1 would cost the Cowboys $6 million against the 2012 cap. Releasing him after June 1 would cost the Cowboys $2 million against the 2012 cap, and the remaining $4 million in 2013. With a post June 1 release of Newman, Dallas would add $6,016,000 to their current salary cap funds. This is done by losing his 2012 salary, not including signing bonus. Either way, on the roster or off, Dallas would absorb $2 million of his signing bonus.
2012 Minimum Base Salaries by Year
The lowest base salary an NFL player can be paid is determined according to accrued years of NFL service. The 2012 base salary minimums by year the player is entering into are found below.
Rookie $ 390,000 Years 4-6 $ 700,000
Year 1 $ 465,000 Years 7-9 $ 825,000
Year 2 $ 540,000 Years 10+ $ 925,000
Year 3 $ 615,000
With salary cap concerns factoring so heavily for all teams when deciding how to fill out their roster, an unfortunate result becomes many veteran casualties. Whenever two players with similar value to a team are fighting for a roster spot, naturally teams tend to side with youth and less expense over experience. With salary minimums increasing after each year of NFL experience, veterans become a much less attractive option, along with their elevated age. In an effort to offset this trend and help veterans retain their jobs, the NFL allows veterans of 7+ years of NFL service to affect the salary cap at a discounted rate. In 2011, veterans making the base salary minimum for 7+ years of service only counted $425,000 against their team’s salary cap. So a veteran player in his 7th year was paid $810,000, yet only counted $425,000 against the 2011 cap, a rate less than that of first year minimum salary players ($450,000).