This series is called Salary Cap Nuggets because ‘nuggets’ is such an interesting word in English. It calls to mind chicken nuggets - tasty, bite sized and easy to eat. But it also calls to mind gold nuggets - small, but valuable.
The salary cap is a product of the Collective Bargaining Agreement (CBA), which is a 301-page contract between the NFL Owners and the NFL Players Association. In these articles, I try to explore just one or two small parts of the NFL salary cap defined in the massive CBA. Hence, Salary Cap Nuggets - small, bite-sized, easy to digest, yet valuable information for NFL fans.
The goal is to, one bite at a time, get a clear understanding of the salary cap.
This nugget can be read as a stand-alone article, but it also provides detail for Nugget #8 - Rookie Contracts.
UNDRAFTED FREE AGENTS
Players who are not selected in the NFL Draft may immediately sign following the draft as an undrafted rookie free agent. As mandated by the CBA, the player will sign a three-year contract with the right to renegotiate following their second regular season.
Key idea here is that, while drafted players get 4-year contacts, with the right to renegotiate the deal after the 3rd year, UDFAs get 3-year deals, with the right to re-negotiate after two.
Since undrafted players get three-year contracts, they become restricted free agents for a year before hitting unrestricted free agency following the conclusion of their fourth season in the league.
So, let’s recap that idea. UDFAs:
- 3 year contract initially
- Restricted Free Agent in Year 4 (A player with with 3 accrued seasons when his contract expires is an RFA. His team can tender him and retain the right to match an offer from another team)
- Unrestricted Free Agent in Year 5 (same as all other rookies not drafted in the first round)
[Undrafted Free Agents] may receive a small signing bonus (typically $1,000 to $15,000) depending on the player.
This idea gets expanded upon below:
Teams are limited each year to the total amount of signing bonus money they can allocate to all signed undrafted players, but not for one.
In 2016, teams were allowed just over $92,000 for all undrafted players. A team could theoretically give their entire signing bonus allocation to one undrafted player and sign the remaining to contracts without a signing bonus.
So, the limit on UDFA signing bonuses is not individual — it is a pool of money available for signing the team’s UDFAs, and can be distributed at the team’s discretion. The amount of the UDFA bonus pool is controlled by the CBA.
In order to attract UDFAs that teams value, some creative ideas, perhaps not contemplated by the drafters of the 2011 CBA, have begun to emerge:
[W]e started to see teams circumvent the undrafted rookie pool signing bonus allocation by guaranteeing small portions of players’ P5 base salary.
There is no limit on the amount of base salary guarantee.
For example, a team may give a $2,000 signing bonus and guarantee $15,000 of the player’s first year P5 base salary for skill/injury/cap, with only the $2,000 counting toward that year’s rookie pool allocation. This $17,000 total guarantee may be higher than just receiving a signing bonus offer from another team.
I have seen a number of media reports over the past two off-seasons indicating that a number of teams are guaranteeing as much as a full year’s salary for UDFAs as an incentive to sign with the team. It will be interesting to see if anyone tries to legislate against this practice in the negotiations for the upcoming 2021 CBA.