Friday, April 4, 2008

Yearly Compensation Amounts

7:50am EDT

In an earlier blog entry about signing bonuses, I outlined items that would be prorated over the life of the contract. Below are some common compensation terms that, for salary cap purposes, are considered a period cost and are included immediately in a players current year cap cost.

Base Salary - This is the salary that is outlined in paragraph 5 of a player contract. It is the amount of money that a player will receive for being on the active/inactive/reserve roster on game day. Veterans with four accrued seasons and are on the active/inactive roster on the the 1st regular season game, are guaranteed their entire base salary.

Non-guaranteed Roster bonuses - Are payable to a player for being on the roster at a specific time of the year. Unless the bonus is guaranteed, it is included in the player's salary cap cost in the year that it is earned.

Non-guaranteed Reporting bonuses - Are bonuses payable to a player for reporting to training camp on time. Unless the bonus is guaranteed, it is included in the player's salary cap cost in the year that it is earned.

Non-guaranteed Workout Bonuses - Are bonuses that are payable for participation in the teams Off-season workout program, which is a 4 day per week, 14 week program. The minimum workout bonus for any player is $130 per day. Players that receive a workout bonus that is in excess of the league minimum have the amount included in their player's salary cap cost immediately. For players that don't have a workout bonus stipulated in their contract, the entire cost of the program is included in their player's salary cap cost when they start the program. The cost would be $6,720 for any player that begins the workout program at the start (March 17th).

Incentive bonuses - Are incentives that a player will receive based on meeting certain performance barriers. These types of bonuses can be based on any of a multitude of things including both individual statistics and team statistics. Some of the more popular are pro bowl selection, passing yards, receiving yards, rushing yards, playing time, tackles, interceptions, turnovers, team wins, team playoffs, team offensive efficiency, team defensive efficiency. These types of bonuses are classified into two types, Likely to be earned (LTBE) and Non-likely to be earned (NLTBE), and are reconciled at the end of the league year and included in the cap adjustment amount for each team. The Lions had a negative cap adjustment amount from last year and I discussed it in two earlier blogs, March 2nd and March 1st.

  • Likely to be earned incentives - the criteria for whether a bonus is a LTBE or NLTBE is generally whether the barrier was met in the preceding season. i.e. if Jon Kitna has an incentive bonus that will pay him $500,000 for passing for 4000 yards in 2008, then since he passed for 4000 yards in 2007, it would be considered likely to be earned in 2008. LTBE incentives are included in a player's cost in the year that they would be earned.
  • Non-likely to be earned incentive - If Jon Kitna has an incentive bonus in his contract that will pay him $500,000 for passing for 4500 yards in 2008, then since he passed for less than 4500 yards in 2007, that bonus would be considered a NLTBE incentive.
    At the end of the league year, the league offices and the management council reconcile all the LTBE bonuses with the NLTBE bonuses and submit either a credit or a charge in the next season.

Escalators - Are potential increases in a players compensation, based on meeting certain criteria. They can be based on any of a number of things, including the items that I listed above under incentive contracts. What happens when a player reaches these thresholds is that his base salary is increased in a following season. Just like with LTBE incentives and NLTBE incentives, they are reconciled at the end of the league year, however, they are not part of the Cap Adjustment amount. They would actually increase a players salary cap cost for a given season.

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