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NFL Salary Cap Penalty Rules

By Craig Berman

The National Football League takes its salary cap rules very seriously. Teams must keep their payrolls under a salary maximum that changes every year, a so-called “hard cap.” There’s also a salary floor, approximately 89 percent of the salary cap, which prevents teams from paying its players too little. Violations can cost teams fines, draft picks, cancellation of contracts or allowable dollars to spend on salaries.

What Counts Is Complicated

NFL salary cap rules are complicated in terms of how the amount a player is compensated in a given year actually impacts the cap. Signing bonuses and annual contract figures count against the cap, as do contract incentives deemed as likely to be earned – for example, a bonus for attending required workouts. Incentives deemed not likely to be earned do not count, but once earned will count against subsequent years. A Pro Bowl bonus in the backup quarterback’s contract would be deemed unlikely to be earned, but if that quarterback then becomes the starter and is named the league's most valuable player, the incentive would fall into the likely to be earned category the following year.

Doing the Math

If a player gets a $5 million signing bonus and a five-year deal worth $10 million additional, he’ll start off counting $3 million against that first year’s cap -- one-fifth of the planned $15 million of compensation in the deal. Teams generally like to sign free agents to longer contracts to limit the hit of the signing bonus, particularly since nothing else is guaranteed. However, when the player is cut, the amount left on the contract all counts against the cap next season. So if that player has a disastrous training camp and gets cut in September, he would count $12 million against the following year’s salary cap.

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