NFL Salary Cap – Closing out Player Benefits; the final 3

The Football Educator looks at the final 3 Player Benefits as they relate to the overall total used in the equation to calculate the annual NFL Salary Cap.  The following is paraphrased from the Collective Bargaining Agreement.

Player Benefits – The Rookie Redistribution Fund

TGC Rookie Redistribution FundIn each League Year of this Agreement, the NFL and the NFLPA shall create a fund known as the Rookie Redistribution Fund that will be treated in the same manner as any other Player Benefit Cost.  The maximum amount of this Fund shall be;

  • $25 million for the 2012 League Year
  • $50 million for the 2013 League Year
  • $100 million for the 2014 League Year

The maximum amount of the Fund shall increase in each subsequent League Year by the annual rate of growth of the Year-One Rookie Compensation Pool. The total amount of the Fund shall be distributed in a proportion to be determined by the NFLPA:

  • To offset against the portion of the Legacy Benefit that is allocated as a Player Benefit Cost in such League Year
  • To fund a Veteran Player performance-based compensation pool as agreed upon by the parties
  • For any other new Benefit for current or retired players as agreed upon by the parties

Set forth in the table below are examples of the effect that various distributions would have upon the calculation of the Salary Cap under a hypothetical Player Cost Amount of $145 million assuming (i)the maximum Fund amount equals $25 million; and (ii) that projected Player Benefit Costs other than the Fund equal $23 million per Club:

Scenario Declared Fund Required Distribution (per club) Player Benefit Costs (per club) Salary Cap Player Cost Amount
A $0 $0 $23M $122M $145M
B $12.5M $396,625 $23.39M $121.61M $145M
C $25M $781,250 $23.78M $121.22M $145M

Player Benefits – The Legacy Benefit

TGC Legacy Fund Dave PearEffective August 4, 2011, the NFL established a benefit known as the “Legacy Benefit.” The Legacy Benefit is provided from the Retirement Plan to vested players who had Credited Seasons prior to 1993.

The NFL and the NFLPA jointly determined the amount of the additional benefit to be provided under the Legacy Benefit and to whom it is provided.

The NFL and its Clubs make an aggregate contribution of approximately $620 million to the Legacy Benefit over the term of the CBA, 49% of which counts as a Player Benefit Cost.

Player Benefits – The Neuro-Cognitive Disability Benefit

The Plan provides a benefit for those eligible Players who have a permanent, neuro-cognitive impairment but are not receiving Line of Duty or Total & Permanent Benefits under the Disability Plan or Pension Benefits under the Retirement Plan.

The medical standards for qualifying for this benefit are by a Special Committee made up of three healthcare professionals with expertise in neuro-cognitive disorders.

TGC Neuro Cognitive Disability FundOne healthcare professional shall be selected by the NFLPA, one healthcare professional shall be selected by the NFL’s Management Council, and a third healthcare professional by the other two healthcare professionals. The Special Committee recommended standards to qualify for the two benefits. In making its recommendations, the Special Committee considered whether, and if so to what extent, evidence of behavior could be utilized in setting appropriate standards. Applicants aren’t required to establish that the neuro-cognitive impairment arose out of football.

Players shall be eligible for benefits;

  • Under the age of 55;
  • Vested under the Retirement Plan due to their Credited Seasons;
  • Have at least one Credited Season after 1994; and
  • Have executed a release of claims and covenants not to sue in a form agreed upon by NFL & the NFLPA.

TGC Dave-CostaA player’s right to receive benefits shall be contingent on the player’s agreement to and execution of the release and covenant not to sue referenced above. The NFL & NFLPA acknowledge and agree that the provision of the benefit shall not be construed as an admission or concession that NFL football caused or causes, in whole or in part, the medical conditions covered by the benefit, or as an admission of liability or wrongdoing, and the NFL expressly deny any such admission, concession, liability or wrongdoing.

Players who satisfy the standards shall be entitled to the following neuro-cognitive disability benefits which shall be payable for no more than 180 months beginning on the first day of the month following a qualifying exam; provided, however, no monthly neuro-cognitive benefits will be paid for any month after the month in which the player’s 55th birthday occurs:

  • Moderately Impaired Benefit. Players who qualify shall receive a monthly benefit equal to the sum of the Player’s Benefit Credits, but no less than $3,000 (which such amount shall be increased in $500 increments every other year, beginning in 2013).
  • Mildly Impaired Benefit. Players who qualify shall receive a monthly benefit equal to 50% of the sum of a Player’s Benefit Credits, but no less than $1,500 (which such amount shall be increased in $375 increments every other year, beginning in 2013).

Special Committee:  Recognizing advancements in neuro-cognitive testing and evaluation are occurring at a rapid pace, a special committee, the members of which shall be chosen in the same manner set forth above, shall review the Plan’s standards every 2 years to determine if changes should be recommended.

Note – The 2015 League Year will establish another Player Benefit – The Long-Term Care Insurance Program.  This however doesn’t have  a current effect on the NFL Player Benefits total, and therefore on the calculation of the current Salary Cap.

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