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.
Year One Formula Allotment & Total Rookie Allocation
This Nugget explains that the Total Rookie Compensation Pool (explained in Nugget 8) has a sub-component, the Year One Rookie Compensation Pool, which applies to money paid to draft picks in the year that they are drafted (as well as any UDFAs signed that season).
This Nugget focuses on some of the details of the Year One Rookie Compensation Pool, and should be read as a sub-component of Nugget 8.
Year One Formula Allotment
The NFL calls the first year slotted salary the Year One Formula Allotment. Each team will receive a Year One Rookie Allocation, which is the sum of each of their draftees’ allotment plus a small amount set aside for UDFAs. This allocation represents the total amount a team can spend in first-year salary cap dollars for their entire rookie class.
Total Rookie Allocation
In addition, the league calculates Total Rookie Allocation that represents the total dollars that can be spent on a draft class.
- To protect their rights, every player is also given a minimum salary that they must receive from the team. This helps to avoid the possibility of a team allocating more money to the highly drafted selection and not paying the lower draft selection.
- Once a team releases a draft selection, they also relinquish the rights to their allotment to further prevent high draft selections from finding ways to earn more initial compensation.
- Trades are also treated in the same manner unless executed on draft day, in which case the team that acquires the draft selection also receives the selection’s salary allotment.
Maximum spending limits for UDFAs
The NFL also mandates maximum spending limits on undrafted free agents. Each team can spend a limited amount of money on signing bonuses for UDFAs.
- In 2016, the limit on UDFA signing bonuses was just over $92,000 total among all UDFAs.
- That number grows by the same percentage as the Total Rookie Compensation Pool.
- However, there is no minimum number for an undrafted free agent bonus and, in many cases, the player receives no bonus at all.