The Football Educator continues to break down Player Benefits, which when subtracted from the total of Player Cost Amounts will give us the annual NFL Salary Cap and the parameters that guide financial roster building in professional football.
As paraphrased from the CBA;
Eligible players will receive severance pay in the amounts determined as follows: (a) $17,500 per Credited Season for each of the seasons 2012 through 2013; (b) $20,000 per Credited Season for each of the seasons 2014 through 2016; and (c) $22,500 per Credited Season for each of the seasons 2017 through 2020.
Severance pay will be paid in a single lump sum payment by the NFL Club with which the player last earned a Credited Season. The payment will be made automatically on the last day of the calendar quarter in which the eligible player’s “separation from service,” unless his separation from service occurs within twenty (20) days of such date, in which case his severance pay will be paid on the last day of the next following calendar quarter.
Any player who returns to NFL football after receiving a severance payment will be entitled to further severance pay based solely on his subsequent Credited Seasons.
In the event a player eligible to receive severance pay dies before receiving such pay, the player’s designated beneficiary (or his estate in the absence of a designated beneficiary) will be entitled to receive such pay on the later of (a) the next payment date following the date of the player’s death, or (b) thirty (30) days after written notification of the player’s death.
Paraphrased directly from the CBA;
Player Annuity Program
The NFL Clubs will make advance contributions to the Annuity Program in an amount sufficient to pay all administrative expenses approved by the Annuity Board.
In the 2011–2020 League Years, an Allocation will be made for each eligible Player who earns a Credited Season in an Annuity Year and who has a total of four or more Credited Seasons as of the end of such Annuity Year. The amount of the Allocation will be: $65,000, for each of the Annuity Years 2011 through 2013; $80,000, for each of the Annuity Years 2014 through 2017; and $95,000, for each of the Annuity Years 2018 through 2020.
An eligible player who earns a Credited Season through the sixth week of the regular season of an Annuity Year will receive an allocation on December 1 of such Annuity Year. All other players who are entitled to an allocation in an Annuity Year will receive an allocation on March 31 of such Annuity Year.
Minimum Salary Benefit (aka – VET Min Contract)
This was one of the more progressive moves made in the last extension (not the most recent) that gave NFL clubs the flexibility to sign veteran players whose minimum salaries were on the high end of the scale but didn’t count the full amount against the CAP. It ensured a veteran player still having a little “gas in the tank” of an opportunity to catch on with a team late in the roster building process or in a role situation and still fit in the CAP.
The CBA goes on to define as follows;
- A “Qualifying Player” shall be a player with four or more Credited Seasons, whose contract has expired or been terminated.
- A “Qualifying Contract” covers only a single League Year and contains no terms that affect compensation in any way other than the applicable minimum Paragraph 5 Salary, up to $50,000 in “Additional Compensation” (e.g., signing bonus allocation, roster bonus, reporting bonus, or any incentive (“likely to be earned” or not)), and/or a guarantee for Salary and/or Salary advance of up to the Minimum Salary for a player with two Credited Seasons.
- A Qualifying Contract may not be extended or renegotiated in any manner.
- The maximum amount of Additional Compensation shall be increased to $65,000 for the 2012–14 League Years, to $80,000 for the 2015–17 League Years, and $90,000 for the 2018–20 League Years.
- Per-day offseason workout payments shall not be considered in determining “additional compensation” if such payments do not exceed the minimum level. If, however, the Player Contract provides for offseason workout payments above the minimum level, then the total of those payments shall be included in determining Additional Compensation.
- If the Player Contract provides for offseason workout bonus payments on a basis other than a per-day payment, such amounts shall count as Additional Compensation but will not affect the treatment of any offseason workout payments that do not exceed the minimum prescribed level. For example, a player with a 2011 Player Contract that provides for a $10,000 bonus payable to the player for offseason workouts, in addition to the per-day minimum of $145 (for a total of $1,450) and no other Additional Compensation, has Additional Compensation of $10,000.
- The difference between the Salary Cap count for a Qualifying Contract and the stated minimum for the Qualifying Player’s years of service shall be counted as a Player Benefit (“the Minimum Salary Benefit”). For example, in the 2012 League Year, a Qualifying Player with five Credited Seasons shall receive a Minimum Salary of $700,000; however, only $540,000 shall count against his Club’s Team Salary. The difference of $160,000 shall be counted as a Player Benefit.
We’re getting there, just a few more NFL Player Benefits to review in the next couple posts.