1 Year Deals

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The Cap is determined through a complicated calculation system, which has changed with the latest extension of the CBA. The Cap is based on income that the teams earn during a League Year. Originally that "pot" was limited to what was known as Defined Gross Revenues (DGR), which consisted of the money earned from the national televison contract, ticket sales, and NFL merchandise sales. In 2006 the CBA was modified, and the "pot" was expanded to include total revenue. Thus, other sources of revenue, including such other items as naming rights and local advertising, were added. As was the case with the original DGR, the expanded revenue is divided equally amongst all 32 teams for purposes of calculating the salary cap.

 

 

For all of you nerds out there, here is the actual mathematical calculation:

 

 

The newest edition of the CBA has a term, "All Revenues" (AR), which pretty much includes all revenue streams. The CBA spells ou the particulars over the course of about 10 pages, but in a nutshell the AR includes ticket sales, revenue from luxury box suites and premium seating, local and national broadcasting (TV/radio/Internet) royalties, concessions, parking, local advertising, stadium leasing, and merchadising. The AR is then divided into 3 distinct brackets: League Media (essentially revue from regular-season games), NFL Ventures/Post Season (self-explanatory) and Local (more or less revenue generated from preseason games). Now, fo r the part that you have been waiting for, the distibution of these revenues:

 

 

Projected AR x CBA Percentage = Players Share of AR. This is called the Player Cost Amount. For 2011, that amount is $4,556,800,000 (roughly $142.4 M per team).

 

 

Player Cost Amount minus Projected League wide Benefits = Amount Available for Player Salaries. For 2011, that amount is $3,852,000,000.

 

 

Amount Available for Player Salaries / Number of Teams = Unadjusted Salary Cap per Team. For 2011, that amount is (3,852,000,000/32 =) $120.375 M.

 

 

The CBA Percentage is as follows: Players receive 55% of AR (Media), 45% of AR (NFL Venture/Post Season) and 40% of AR (Local). Overall, the players receive between 47% and 48.5% of total revenue. More specifically, in years 2012-2014 the overall percentage is capped at 48%. For years 2015-2020 the percentage is capped at 48.5%.

 

http://www.askthecommish.com/SalaryCap/faq.aspx

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How is the NFL Salary Cap Calculated?

 

The Salary Cap is calculated based upon the revenue earned by the teams during a League Year. This is defined in the CBA as “All Revenues” (AR) and includes practically all revenue streams for the teams and the league.

 

All revenues are aggregate revenues. This includes: regular season, preseason, & postseason ticket sales including ticket sales from luxury boxes, suites, premium seating, excluding taxes and surcharges paid to stadium or municipal authorities. AR includes revenue from copyright royalties, the rights to broadcast the NFL preseason, regular season, and postseason games on TV, radio, and internet, locally, nationally, and internationally via various outlets including network, local cable, pay TV, satellite, international, delayed broadcasts and other means. AR includes revenue from concessions, parking, local advertising, promotions, signage, magazine advertising, local sponsorship agreements, stadium leasing, and merchandise. AR includes revenue from NFL ventures LP, NFL properties, NFL films, etc, barter income, equity instruments derived from player performance, revenue pursuant to a stadium naming rights revenue and sponsorship unless specified

 

Revenues that are not included in AR are taxes, surcharges on tickets from luxury box suites, premium seats, wholesale merchandising opportunities done by the Dallas Cowboy merchandising, revenue from Personal Seat Licenses sold by the New York Jets and Giants, any PSL excluded in prior CBA agreements. Also excluded from AR is revenue not derived from related to performance of players in football games such as sale of player contracts, value from promotional spots on TV and radio, franchise fees, revenue sharing, interest income, insurance recoveries, revenue from stadiums unrelated to NFL football events, value of complementary tickets for preseason and regular season games, reimbursements to a team from a government entity, purchase of concession equipment, value of luxury boxes, revenue used to construct or renovate stadium, and naming rights to stadiums used for stadium construction or renovating.

 

AR is divided into three categories to determine the Salary Cap and the Player Cost Amount: (1) League Media (essentially revenue from regular season games broadcast on various platforms including TV, radio, satellite, internet, internationally, etc), (2) NFL Ventures/ Post Season (essentially revenue from postseason games and NFL affiliated entities such as NFL Ventures, NFL Network, NFL Properties, NFL Enterprises, NFL Productions. This includes, RedZone, NFL Digital), (3) Local (essentially revenue generated by the teams from preseason games).

 

The calculation of the distribution of revenues is as follows:

 

Projected AR * CBA Percentage= Players Share of the AR, termed as “Player Cost Amount” in the CBA. In 2011, the amount was $4,556,800,000 ($142.4 million per team).

 

To calculate the CBA percentage, the players receive 55% of projected League Media AR, 45% projected NFL Venture/Postseason AR, and 40% of projected Local AR.

 

However there are restrictions, as for years 2012-2014, the overall percentage is Capped at 48% and for years 2015-2020 the percentage is Capped at 48.5%. Also, the minimum the Player Cost Amount can be is 47%. Therefore the players will receive between 47% and 48.5% of the total revenue from the league each year during the term of the CBA. The CBA rounds percentages to nearest one-one hundredth of one percent 47.00.

 

The Amount Available for Player Salaries = Player Cost Amount – Projected League Wide Benefits. In 2011 the league estimated the Projected League Wide Benefits to be $704,800,000 ($22.025 million per Team). Therefore the numbers equate to be $4,556,800,000 – $704,800,000 =$3,852,000,000 (total amount of money available for player salaries).

 

To determine the unadjusted Salary Cap per team the equation is Amount Available for Player Salaries divided by the number of teams in the league. For 2011, $3,852,000,000/32= $120,375,000 Per team.

 

If games are cancelled for a week, good faith negotiation adjustment to AR and Salary Cap.

 

Accounting is done utilizing information reported by the teams and the league accounting firms. An independent accountant will be jointly appointed by NFL and NFLPA to review and create special purpose letters. The accounting is done on a year-end basis. Salary Cap and League Wide Cash Spending in a League Year is determined using special purpose letters.

 

 

NFL SALARY CAP FAQ: http://nflsalarycapguru.com/

Edited April 5, 2013 by papazoid

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