What is a Salary Cap anyway?

For starters, we are addressing the fact that the current CBA talks with-in the NFL have raised the question as NFL team owners and players are feuding over the rights to negociate a salary cap agreement. Rather on a rookie scale or for a seasoned player for that matter. As of now, there is much to be determined if the NFL plans to continue with the preparations for the up-coming 2011 season.

So what is a salary cap one might ask?

Well, the salary cap (under a professional sport agreement) is defined as the maximum amount that a team may spend on player compensation in a given season, for all of its players and staff combined.

The NBA has one in which there are considerable variables associated as inclusions and exclusions and so does the NHL for that matter. This is how the league determines potential and eligibility as a paid agreement between players and teams.

Each sport franchise as stated has it’s own technique that is used to set limitations on the salary that a player may receive with-in a season. The NBA along with the MLB features a so-called soft cap, meaning that there are several significant exceptions that allow teams to exceed the salary cap to sign players. The NHL along side the NFL use the hard approach which means there are no luxury taxes or exemptions.

What makes the current talks amongst the CBA and the NFL so interesting is the fact that the NFL salary cap is calculated by the current CBA to be 59.5% of the total projected league revenue for the upcoming year. This number, divided by the number of teams, determines an individual team’s maximum salary cap. For 2008, this was approximately $116 million per team. For 2009, it increased to $127 million. As a result of the NFL owners opting out of the CBA two years early, in the absence of a new CBA 2010 will have no salary cap or floor. Which as stated at the start of the CBA talks just before the Super Bowl there is only ten billion dollars in annual revenue that must be split amongst the players and owners. With the players accepting the difference of 59.5 percent of that money seems unfair to the owners who also are in need of a stable financial structuring to maintain and operate team facilities and stadiums.

So the fuss is over the fact that the player are really earning more money than what had been expected in order to satisfy the needs of the team and fans alike. With the CBA mediation to conclude this Tuesday there is much to think about when the salary of players is expressed as a major concern for the NFL and it’s team owners as of now.


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