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
Our fourth article focuses on incentives, and although we’re going to use Clay Matthews’ contract as an example, the discussion will be oriented in a more general sense. This is something most people should have a simple understanding of, but there are some details on how these incentives are paid out and applied to the salary cap that might be new knowledge.
When Clay Matthews was drafted by the Packers in 2009, the new CBA and its “rookie salary scale” were not in existence. This allowed agents to negotiate larger contracts, especially for the top draft picks. In order to find some middle ground, teams would work in “incentive” pay to ensure they were getting their money’s worth. Even the top picks are a risk, so teams want to avoid being financially handcuffed to “busts.”
The rookie compensation rules in the new CBA have actually driven away these incentive-laden contracts, but that’s a conversation for later. Teams still use incentives in many of their contracts as a way to motivate player performance. Before we continue, though, let’s take a quick look at Clay Matthews’ contract details:
Notice how the incentives – worth a total of $3.275 million – aren’t figured into the charted cap numbers. It’s one of those contract details that don’t get pushed into the basic cap numbers for two reasons: (1) they have to be earned based on performance, and (2) most incentive benchmarks aren’t released to the media. Some players’ incentive details have been published, but usually they’re in general terms. Only noteworthy benchmarks tend to get released in any detail.
For example, when Adrian Peterson’s seven-year, $100 million contract was announced in 2011, it was noted that he could receive $1 million each time he ran for more than 1,250 yards in a season, up to three times. An addition $1 million in incentives were available “based on the Vikings’ regular-season and playoff results over the life of the contract.”
The big question, though, is how do these incentives affect the team’s salary cap?
It’s actually a little complicated. Incentives for a given year are considered either “likely to be earned” (LTBE) or “not likely to be earned” (NLTBE). LTBE incentives are automatically counted against the salary cap at the beginning of the year, while NLTBE incentives are not. Any NLTBE incentives reached during the year are immediately applied to the salary cap.
(Interesting to note is the clause which states that if any earned NLTBE incentives pushed a team over the salary cap limit at the end of the year, then the excess amount is applied to the next year’s salary cap.)
Ok, so what makes an incentive “likely to be earned” (LTBE)? This part is fairly simple. If that benchmark was reached in the previous year, then for salary cap reasons only, it will be expected to be reached in the current year. For example, if Clay Matthews earns a $500,000 bonus incentive by recording 10 sacks, then it is considered LTBE if he had 10 or more sacks the previous year. If he had less than 10 sacks in the previous year, then the incentive is considered NLTBE. (Remember that this is only for salary cap purposes and does not change the nature of the player being able to earn that incentive.)
If the incentive is tied to team performance, such as total wins, then it’s based on how the team did in the previous season.
Veterans who did not play the year prior will have the incentive labeled at LTBE or NLTBE through NFL and NFLPA negotiation. Unresolved disputes in this manner are referred to an impartial arbitrator. Any incentives in the first year of rookie contracts are automatically considered LTBE.
For more information and details, you can reference the current NFL/NFLPA CBA. Incentives are covered in Section 6(c), starting on page 96.
I will leave you with one last nugget of information. In the CBA, it clearly specifies what types of statistical categories may be used in determining incentive pay. This comes into play when discussing why “bounty pay” is punishable by the NFL Commissioner. The CBA expressly defines how players are allowed to be reimbursed for performance benchmarks:
Chad Toporski, a Wisconsin native and current Pittsburgh resident, is a writer for AllGreenBayPackers.com. You can follow Chad on twitter at @ChadToporski
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Suppose the Pack gets AR sewed up for say $23MM per year. CMIII stays healthly and puts up numbers that are tracking towards a typical season’s performance. Do the Packers offer him the $15MM it’s going to take to keep him? That number will represent >30% of the team cap, leaving the remaining <70% to be split among 51 guys.
Between the sheer fact that the Packer's have Rodgers and the plausible possibility that CMIII also wants to play somewhere else where he can more easily pursue his media career, could 2013 be his last year in Green and Gold?
I don’t think you’ll see the LB contract inflate to $15 per year. The top players are currently sitting around $10 million, and with the flat cap, it’s going to keep inflation down. We’ve seen that with free agency so far… players aren’t quite getting the contract sizes they’ve wanted because of the current cap economy.
Have to disagree with you here. The number is going to be over ‘market’ for this man. Cleveland or Atlanta would way overpay for the legacy factor. Anyone a player away would overpay and all of ’em would do it for the same reason.
Signing CMIII is a splashy deal that sells a ton of season tickets, and that fact transcends everything else for a lot of owners.
We’ll have to see, obviously, but I think that’s why the Packers will try to get a deal done during the season, if not before. They’ll want to make sure he doesn’t hit free agency.
Also, I think the Packers will have some leverage in keeping the price down due to the missed games from a recurring injury.
Cleveland and Atlanta aren’t at the bargaining table are they? So even IF they wanted to overpay Matthews they won’t have the chance. GB doesn’t have an “owner” so what some other owner MIGHT do is completely irrelevent to the negotiations between GB and Matthews!
I was a little surprised, but http://www.spotrac.com/top-salaries/nfl/cap-hit/linebacker/ seems to back up your contention. There’s a long way to go before the cap hit (or average salary) for LBs gets anywhere near $15.
Where do you come up w/ this garbage about Matthews wanting to play somewhere else? First GB isn’t letting him near FA, so that takes away and bids from other teams. Second he’s never even hinted that he doesn’t like playing in GB. And third the Packers will pay him among the best LB in the game, if not the best.
I guess you assume that becuz he’s from So Cal, you assume he’s a media whore? Sure the networks like him, he’s a well spoken good looking guy and Packers are marketable players. But just cuz they might want him doesn’t mean he needs them. I think he loves playing in GB and I bet you can’t prove me wrong!
I live in Los Angeles. My boss’s brothers wife works in entertainment industry and has dinner with Matthews severally times a year. He doesn’t have to be in L.A. to get the commercials and things like. Clay’s a marketable guy, he’ll get his deals. My concern is what if the Packers don’t do we’ll this year? Players are really going to look at Ted’s unwillingness to do a damn thing in free agency. You can’t sit here and tell me Matthews, Raji, and others aren’t watching. IMO it’s vital that Ted does well with this years draft and last years, especially Perry pay dividends.
I think Matthews Raji and Rodgers for that matter are smart enough to realize that Thompson has built a SB contender, not to mention gotten each of them a SB ring doing it the same way now as he did when they won the SB and see a GM w/ a philosophy that he sticks to and got them a SB. So why would he need to change?
I hope your right but let me ask you this. The way the Packers were beaten by the Giants and 49ers last season, that doesn’t make you a little nervous about this years schedule? It’s a tough schedule Stroh. The one decent team we beat was Houston but as last season unfolded the Texans had issues going against any teams with multiple receiving threats and a good QB.
On paper. Teams can go from doghouse to penthouse and back again in a year. Happens regularly… NYG, AZ Cards to name a couple. NO one knows how difficult the ’13 schedule is until the games start in Sept. And remember the Packers division rivals play almost an identical schedule. Only 2 games are different for each team based on division standing the year prior.
Nothing like a tough schedule to toughen a team up for the post season. It certainly helped in ’10 and made the Packers mentally tough for the SB run. Easy schedules in the regular season aren’t a predictor of post season success.
Clay will be in the green and gold
Matthews needs help to obtain and maintain the level of play we see from him in the 1st half of the season.This isn’t to say that Matthews isn’t very good,he is,just not great,as we see him being taken out of games easily and far to often with the whys being of different opinions,which I’m sure will appear fast and furious.
The Packers need to get him signed before he hits FA,and if I was Clay and TT,I would be doing all I can to get Perry to understand what he can do for both…just like the commercial that boasts…”Milk,it does a body good”,Perry needs to be the milk for Clay and TT for each to ensure the true benefit it might supply.
I want Matthews in GB,but he does have his question marks and it’s in his best interest to erase some of those asap this season.
I wouldn’t expect to see a deal done until after the 1oth week to see how his hamstring and how much his play is predicated on what he can derive from Perry being on the field and just how well Perry has adopted to the 3-4 OLB position.
Matthews is absolutely a great LB! There isn’t a scheme he couldn’t excel in and there is LB responsibility in any of those schemes that he can’t perform. He’s even a very good coverage LB even if he isn’t asked to do it often.
The Packers do need Perry to learn how to play OLB. They need more playmakers on D and they need him to provide some pass rush to win game, so Matthews isn’t the only pass rush threat the offense has to account for.
“Matthews is absolutely a great LB!”
Sorry,there is no way Matthews has achieved that status…’absolutely great’…is it plausible/possible,yes,but I think you have lowered the bar for what absolutely great stands for at this juncture of his career.
PFF graded him the best or 2nd best OLB this year and he’s made the pro bowl every year he’s been in the NFL! Sorry but there is nothing more he can do to prove he’s great. By what measure dont you consider him great?
Packers need to do two things. Pay Clay and then make him agree to be cloned so they can use him at all 4 LB spots.
here’s the solution…
That hamstring is a very serious issue. I don’t think Clay will ever match his 2nd season, but that is ok… Clay at 50% is better than most in the league…