One of the hardest things for the average fan to comprehend is how NFL contracts work and how they apply to a team’s salary cap. There are many complicated elements, rules, and exceptions that can be hard to sort out. In this series, my goal is to help you better understand how this whole system works, plus what it means to the Green Bay Packers’ current salary cap and contract concerns.
Before reading, make sure to check out the previous article(s) in the series:
- Part 1: An Introduction to the Basics
- Part 2: A.J. Hawk and Contract Restructuring
- Part 3: Jermichael Finley and the Two-Year Deal
- Part 4: Clay Matthews and Incentives
Our fifth article focuses on B.J. Raji and the use of “escalators” in contract negotiations. Yesterday we detailed how “incentives” work, and there are some similarities between those and escalators. However, there is a major difference that gives teams a lot of financial power when it comes to future roster decisions.
As should be common knowledge, B.J. Raji was drafted in the same year as Clay Matthews (2009), though Raji was a higher first-round pick. If you compare his contract to Matthews’ from yesterday, you’ll notice some obvious differences outside of the generally larger dollar amounts. The difference I want to note today is how Raji’s contract is boosted with escalators, while Matthews is boosted with incentives. Take a look:
B.J. Raji’s base salaries in 2012 and 2013 have the possibility of being escalated by $1.2 million and $2.35 million, respectively. So what exactly is an escalator? It’s a clause in the contract that, when triggered, increases the salary of the player. The triggers can be anything from playing time to performance/statistics-based benchmarks. In this case, it is very much like an incentive. If Player A accomplishes X, then he gets paid more.
The big difference, though, is that escalated money goes into effect in a future year, while the incentive gets paid out immediately. So in B.J. Raji’s case, his escalator of $1.2 million had to be triggered prior to 2012, but the money wasn’t added to his salary until that year.
Right away, you should be able to see how this can be more advantageous for the team rather than the player. Unless the escalator is guaranteed money – which it usually isn’t – then the team can cut a player or force a renegotiation before that money is even seen. While the threat of dead money could save a player in the early to middle portion of his contract, he should be worried about escalators that don’t kick in until the contract’s final years.
Imagine being a computer salesman. Your boss tells you that next month your salary will go up $5,000 if you sell 200 computers this month. Being the overachiever you are, you go out and sell 250 computers. However, at the beginning of the next month, your boss says he simply doesn’t have the money to pay you extra. Your only option is to find work elsewhere or accept a pay cut.
The Atlanta Falcons are a perfect example this offseason. Dave Choate over at SBNation.com highlighted four players whose salaries increased in 2013 due to escalators. Two of those players, whose combined 2013 salaries would be over $10 million, are now looking for jobs in free agency: Michael Turner and John Abraham.
This isn’t to say that escalators don’t have a place on the bargaining table, but all players, agents, and team administrators should understand the implications behind them.
One final thing . . . Under the new CBA, “proven performance escalators” are mandatory in the contracts of rookies drafted in the third through seventh rounds. (All other rookies are ineligible for this.) According to the CBA, Article 7, Section 4(c): “An eligible player will qualify for the Proven Performance Escalator in his fourth League Year if: (1) he participated in a minimum of 35% of his Club’s offensive or defensive plays in any two of his previous three regular seasons; or (2) he participated in a “cumulative average” of at least 35% of his Club’s offensive or defensive plays over his previous three regular seasons.”
The fourth year escalator will bump the salary up to the right of first refusal amount.——————Follow @ChadToporski