National Football League - Player Contracts and Compensation

Player Contracts and Compensation

Although not as frequently as the other major professional sports leagues in the United States, the NFL still is not immune to labor disputes, such as the players' strikes of 1982 and 1987, and more recently a lockout in 2011, though the latest did not result in the cancellation of any regular-season games.

The National Football League Players Association (NFLPA) has historically served as the labor union for NFL players. Among its duties is negotiating collective bargaining agreements (CBA) with league owners, which governs the negotiation of individual player contracts for all of the league's players. The NFLPA was established in 1956, and has renounced collective bargaining rights at least twice in its history during labor disputes: the 1987 strike and the 2011 lockout.

One CBA was in place since 1993, and was amended in 1998 and again in 2006. But in 2008, the owners exercised their right to opt out of the agreement two years early. This led to a lockout in 2011, the NFL's first work stoppage since 1987, which is longer than Major League Baseball (1994 and beginning of 1995 seasons), the NHL (2004–05 season canceled), or the NBA (2011–12 season).

Among the items covered in the CBA are:

• The league minimum salary
• The salary cap
• The annual collegiate draft
• Rules regarding "free agency"
• Waiver rules

Under the 1993 CBA, players were tiered into three different levels with regards to their rights to negotiate for contracts:

• Players who have been drafted (see below), and have not yet played in their first year, may only negotiate with the team that drafted them. If terms cannot be agreed upon, the players' only recourse is to refuse to play ("hold out") until terms can be reached. Players often use the threat of holding out as a means to force the hands of the teams that drafted them. For example, John Elway was drafted by the Baltimore Colts in 1983 but refused to play for them. He had a fallback option of baseball, as he had played in the New York Yankees organization for two summers while at Stanford. The Colts traded his rights to the Denver Broncos and Elway agreed to play. Bo Jackson sat out an entire year in 1986, choosing to play baseball in the Kansas City Royals organization rather than play for the Tampa Bay Buccaneers, the team that had drafted him. He reentered the draft the following year, and was drafted and subsequently signed with the Los Angeles Raiders.
• Players that have played three full seasons in the league, and whose contract has expired are considered "Restricted Free Agents" (see below). They have limited rights to negotiate with any club.
• Players that have played four or more full seasons in the league, and whose contract has expired, are considered "Unrestricted Free Agents"(see below) and have unlimited rights to negotiate with any club. Teams may name a single player in any given year as a "Franchise Player" (see below), which eliminates much of that player's negotiation rights. This is a limited right of the team, however, and affects only a small handful of players each year.

In the 2010 season, the CBA was not extended, thus changing the rules so that players don't become "Unrestricted Free Agents" until they have played at least six full seasons in the league. They will be "Restricted Free Agents" if they have three–five full seasons in the league.

Under the current (2011) CBA, several items were altered:

• Free agency guidelines returned to the way they were from 1993 to 2009. This means that a player needs four years of experience to become an unrestricted free agent, and three years of experience for restricted free agency.
• The salary cap is now $120.375 million, with no team salary minimum. For the 2011 season, teams have the option of using a $3 million exemption on a signed player. For the years following the 2011 season, teams have the option of designating three player exemptions at $1.5 million each.
• The salary minimum will return for the 2013 season, at which time each team must spend at least 89% of the cap in cash on player salaries.
• The rookie compensation was altered. There is a limit to the amount of money given to rookies, with the maximum total in 2011 being $874 million. First round picks receive four-year deals, with a fifth year option. In the second through seventh rounds, there are slotted four-year deals.
• The league minimum salary for players increased by 10–12 percent, based on tenure.
• A team's ability to place a franchise or transition tag on top players to retain his rights did not change. Other major concerns included health and safety of players, as well as former player benefits and pensions.

The new 10-year collective bargaining agreement runs through 2021, and has an estimated value of $12–$16 billion per year.

For more information on the players' and owners' takeaways with the 2011 CBA, see the 2011 NFL lockout article.