Uncapped Year FAQ

[pats1]

This should answer most questions about the uncapped year. If you have any more, please feel free to ask them and I will attempt to answer them.

January 20: The NFL has created an Uncapped Year Q+A.

Why an Uncapped Year?
In 2006, the NFL and the NFLPA agreed to a new Collective Bargaining Agreement (CBA) through the 2012 NFL season. Worked into that agreement was the ability for the NFL owners to opt out of the deal as of the end of 2010 NFL season; they did so in 2008 because of problems with revenue sharing and rookie salaries, among other things. In either case, the final season of the CBA becomes an “uncapped year.” This does not mean that no salary or contract restrictions are in place. All of the regulations provided in the CBA are still in effect for the uncapped year unless otherwise specified. Following the 2010 league year, the CBA will expire completely. Without another CBA, there will be a lockout for the 2011 NFL season.

The NFL and NFLPA have begun to negotiate a new CBA, but it is unlikely that one will be reached in time for the start of free agency on March 5, when some of the different uncapped year restrictions come into place. Further, it has been reported that the two sides could still reach a deal before March 5, but as a bargaining chip, the NFLPA may be willing to keep the free agent rules of an uncapped year in place for 2010 under the new CBA to prevent chaos at the beginning of the free agent signing period.

While there is no salary cap in an uncapped year, there is also no salary floor, which means small-market teams do not have to spend to a certain level, potentially affecting competitive balance.

What are the free agent restrictions?
The most important free agent restriction in an uncapped year is the amount of accrued seasons a player needs to earn unrestricted free agency. In a normal season, a player would need three to become a restricted free agent and four to become an unrestricted free agent. In an uncapped year, players still need three to become a restricted free agent, but they now need six to become an unrestricted free agent. (An accrued season is equal to six or more weeks on a 53-man roster, injured reserve, or PUP; …NFI and other lists do not count)

Beginning March 5, all unrestricted free agents will be free to sign with any team, besides the “final eight” teams with more restrictions, which are discussed below.

Beginning in mid-February and ending March 4, teams may begin to tender restricted free agents “qualifying offers,” which come at five different compensation levels of a one-year, base salary-only contract, the final four of which all carry a right of first refusal: only right of first refusal, original draft pick compensation, second round draft pick compensation, first round draft pick compensation, and first and third round draft pick compensation. However, if any of these tenders is less than 110% of the player’s prior year base salary, the team must tender that player at 110% of their prior year base salary, plus whatever terms of prior year’s contract were in place. A team may choose not to tender a restricted free agent at any time, or may withdraw a tender before it is signed, in which case the player becomes an unrestricted free agent. Unlike a franchise tender, a restricted free agent tender is not guaranteed salary.

Right of First Refusal Only: $1,100,000 (4th/5th year: $1,176,000)
Original Draft Pick Compensation: $1,100,000 (4th/5th year: $1,176,000)
Second Round Draft Pick Compensation: $1,684,000 (4th/5th year: $1,759,000)
First Round Draft Pick Compensation: $2,396,000 (4th/5th year: $2,521,000)
First and Third Round Draft Pick Compensation: $3,043,000 (4th/5th year: $3,168,000)

Once the restricted free agent has been tendered a qualifying offer, he is free to solicit free agent offers from all teams, including the “final eight” without restriction, beginning on March 5. Those teams can then submit an “offer sheet” to the prior team outlining the terms of the contract they are offering the player. The prior team then has seven days to choose whether or not to match that offer sheet (exercise their right of first refusal), in which case they would re-sign their player, or to allow the new team to sign that player to an offer sheet. Keep in mind that “poison pills” can come into play here; the new team can make an offer sheet that says the contract is voided if the player is on the roster of the old team at any time, or something like that, in which case the team couldn’t realistically match the offer. However, poison pill or not, if the team doesn’t choose to match the new team’s offer sheet, they receive the designated draft pick compensation in return. It is always for the current year’s draft. Other teams have until eight days before the draft to extend an offer sheet, and teams thus have until the day before the draft to match those last-minute offer sheets.

If the player doesn’t sign his qualifying tender by June 1, the team can either choose to continue to offer their tender, or withdraw it. If they continue to extend their tender, the player cannot sign with any other team past June 1.

In an uncapped year, teams have one franchise tag and one transition tag to use, or two transition tags to use.

What is this “Final Eight?” rule?
For the final four teams alive in the 2009-10 NFL playoffs, the following restrictions are in place for 2010 free agency:

-These teams may sign any player who was released by their former team
-These teams may re-sign any player who was under contract with that team at the end of the season
-These teams may ONLY sign one unrestricted free agent (from another team) for every one of their own unrestricted free agents who signs with another team. Further, that new player cannot have a first-year salary (excluding signing bonus proration) of any more than what the old player signed with his new team. Further, to prevent back-loading that new deal, the salary of the new player (including roster bonus, option bonus, LTBEs, and excluding signing bonus proration) cannot have an annual increase of more than 30%. Further, the newly signed player cannot renegotiate an increase until 12 months after he is signed. This is different from the normal rule, which allows a first renegotiation within 12 months, but not a second for another 12 months.
-These teams may not trade for any player who they would not otherwise be able to sign as an unrestricted free agent

For the four teams who lose in the divisional round of the 2009-10 NFL playoffs, ALL of the above restrictions are in place, except for the following:

-They may sign one unrestricted free agent with a first-year salary of at least $4,925,000 (that is a 2006 number, the 2010 number is adjusted by the % increase in total revenue, 2006-2010)
-They may sign as many unrestricted free agents with a first-year salary of $3,275,000 (again, not adjusted…does not include signing bonus proration) or lower, but also with an annual increase of less than 30% of that number. This is also not re-negotiable for a year.

Can’t a team just front-load a contract to take advantage of the uncapped year?
No, this would be difficult to do. That is because, according to the CBA, any salary decrease of greater than 50% from one year to the next becomes signing bonus and thus is spread out over the life of the deal. For example, if the Patriots signed Vince Wilfork to a deal with a $20M salary in 2010 (uncapped) and a $4M salary in 2011 (capped), then that is a decrease of more than 50% ($10M), that $16M difference would become signing bonus and pro-rated over the life of the deal; if it was a four-year deal, then it would count as $4M/year, so the 2010 cap charge would reduce to $8M ($20M - $16M + $4M), and the 2011-2013 charges would increase by $4M.

 

[pats1]

Couldn’t a team have back-loaded a contract a few years ago to take advantage of the uncapped year?
No, there are two rules that have prevented this (and when uncapped years loomed years ago). The first is the “30% rule,” which says that any contract beginning in a capped year and extending into uncapped year(s) may not increase by more than 30% in salary (excluding signing bonus proration) annually in those uncapped years.

However, there are ways to get around that. Since that 30% increase does not include signing bonus or other prorated amounts, you can have a contract that is heavy in signing bonus, and then is back-loaded with higher base salaries in uncapped years. The Deion Rule applies to contracts that begins in a capped season and extends into an uncapped season. If the prorated amounts (from the heavy signing bonus) are greater than the non-prorated amounts (base salary) in the first three years of the deal (capped or uncapped), then that amount (or 50% of the combined pro-rations in the uncapped year(s), if that is less) is subtracted equally from the uncapped years and applied equally to the capped years. This prevents teams from back-loading contracts into uncapped years.

Can't the uncapped year be used to dump salary without penalty?
No. As noted by AdamJT13 and Miguel later in this thread, the CBA rules regarding bonus acceleration into the current year when a player is released do not apply in uncapped years. Normally, in a capped year, releasing a player before June 1 would mean whatever guaranteed money allocations from future years would accelerate into the current year’s cap, which in some cases would put the team over the salary cap (like having $9M of bonus allocations accelerate into 2009 from releasing Adalius Thomas during 2009). However, the 2006 CBA allowed teams to designate two pre-June 1 cuts as post-June 1 cuts. If a player is released after June 1, that acceleration is divided equally into the current year and the next year, as long as that next year wasn’t uncapped (which, again, means the Pats would have ~$9M accelerate into 2009 by releasing Thomas before or after June 1, 2009). Trades, no matter before or after June 1, would always trigger acceleration. In an uncapped year, there is no acceleration at all; neither into the current year nor into the current year and the next year. When a player is released or traded during an uncapped year, his bonus amortizations in future years remain intact.. For example, if Player X is released in 2010 (uncapped) and has $4M bonus amortizations in 2010, 2011, and 2012, those $4M cap hits would stay in each of those four years and not accelerate.

 

[upstater1]

Back to the frontloaded issue: I still see frontloading as a huge incentive with the uncapped year.

This would be legal under current rules: Vince Wilfork $12 million first year, $6 million second year, $6 million third year.

That's quite a cap gain: an extra $2 million a year in space.

 

[pats1]

Back to the frontloaded issue: I still see frontloading as a huge incentive with the uncapped year.

This would be legal under current rules: Vince Wilfork $12 million first year, $6 million second year, $6 million third year.

That's quite a cap gain: an extra $2 million a year in space.

Right, but there's an obvious ceiling there.

 

[upstater1]

Right, but there's an obvious ceiling there.

Quite frankly, I would be worried if the Patriots even tried to go beyond that ceiling with anyone. I thought giving a 33% higher contract than succeeding years would be aggressive. 50% is overly aggressive. More than that would have been nuts. It's almost a rule that saves teams from themselves.

 

[Patspsycho]

This should be a sticky.

Would appreciate more info on the benefits/drawbacks of an uncapped season. Will it allow a Yankees/Sox type of free-spending, when it comes to FA signings? Since we did not make the final 8, we are precluded from the "final 8" restrictions in terms of signing FA's, e.g., we are not limited to "lose one FA, sign another"?

 

[pats1]

This should be a sticky.

Would appreciate more info on the benefits/drawbacks of an uncapped season. Will it allow a Yankees/Sox type of free-spending, when it comes to FA signings? Since we did not make the final 8, we are precluded from the "final 8" restrictions in terms of signing FA's, e.g., we are not limited to "lose one FA, sign another"?

Correct, the non-final eight teams can sign FAs as they would in any other year.

 

[Adam Seward]

What would happen next capped season if a team ended up with a 300m payroll for next season?

 

[pats1]

What would happen next capped season if a team ended up with a 300m payroll for next season?

We don't know yet. There may be something worked into the new CBA that will make teams pay for that in future capped years.

 

[ctpatsfan77]

Can’t a team just front-load a contract to take advantage of the uncapped year?
No, this would be difficult to do. That is because, according to the CBA, any salary decrease of greater than 50% from one year to the next becomes signing bonus and thus is spread out over the life of the deal. For example, if the Patriots signed Vince Wilfork to a deal with a $20M salary in 2010 (uncapped) and a $4M salary in 2011 (capped), then that is a decrease of more than 50% ($10M), that $6M would become signing bonus and pro-rated over the life of the deal; if it was a six-year deal, then it would count as $1M/year, so the 2010 cap charge would reduce to $16M, and the 2011-2015 charges would increase by $1M.

Actually, if I understand the rule below correctly:

(5)The difference between the Salary in the second contract year and the first contract year when Salary in the second contract year is less than half the Salary called for in the first year of such Contract;

In the above scenario, the entire $16M difference would be treated as a signing bonus.

 

[upstater1]

What would happen next capped season if a team ended up with a 300m payroll for next season?

I would say that's impossible unless every single player on the team had his contract renegotiated, and what would be the incentive for doing that?

But you are right that some teams may go crazy.

I just want to see them get a little bit of cap relief as a big market team, by extending Brady perhaps, or bringing in a big FA like Karlos Dansby.

 

[Brono]

Great thread! Thanks!

I wonder how many teams are required to ratify a new CBA?

 

[pats1]

Actually, if I understand the rule below correctly:



In the above scenario, the entire $16M difference would be treated as a signing bonus.

You may be right. That would make more sense.

(my math was off anyway, I had $16M as the new 2010 number, it should have actually been $14M)

 

[ctpatsfan77]

You may be right. That would make more sense.

(my math was off anyway, I had $16M as the new 2010 number, it should have actually been $14M)

I believe the math works like this. Assume four-year, $36M deal

2010 salary $20M, 2011 salary $4M, [assume] 2012 salary $6M, 2013 salary $6M

$16M diff. becomes $4M/yr SB proration, so salaries become:

2010 $4M, 2011 $4M, 2012 $6M, 2013 $6M

With SB prorations added, it becomes:

2010 $8M, 2011 $8M, 2012 $10M, 2013 $10M

 

[ctpatsfan77]

Great thread! Thanks!

I wonder how many teams are required to ratify a new CBA?

I think it's 3/4 (which is what it took to end the current one); IIRC, the current one passed 30-2.

 

[mgteich]

FOUR YEARS $36M
These are the salaries as well as the caps.
$12M $6.84M $7.8M $9.36M

Under the old system the later caps would be higher because there would be a signing bonus to spread.

The key to structureing the new deal is the following

Year 1 - Negotiated Amount
Year 2 - Year 1 x 50%
Year 3 Year 1 x 50% x 130%
Year 4 Year 1 x 50% x 130% x 130%

and so on.

-------------------------------

For a 4 year deal, the total package is approximately 3 times the first year, so it easy to structure.

If you want to give someone a $36M 4 year deal,
Year 1 is $12M
Year 2 is $6M
Year 3 is $7.8M
Year 4 is $10.14M
This is $60K short, so add $20K a year to the normal workout bonus.
==========================
If a year 1 of more than 1/3 of the total package is needed, 3/4 of the excess will affect future caps.

 

[pats1]

I believe the math works like this. Assume four-year, $36M deal

2010 salary $20M, 2011 salary $4M, [assume] 2012 salary $6M, 2013 salary $6M

$16M diff. becomes $4M/yr SB proration, so salaries become:

2010 $4M, 2011 $4M, 2012 $6M, 2013 $6M

With SB prorations added, it becomes:

2010 $8M, 2011 $8M, 2012 $10M, 2013 $10M

Good point, it would also spread over the orignal year.

 

[WhoaDirty]

So based on the 50% from uncapped to capped, then the 30% rule we have now (assuming it would be continued), would this be a legal contract equating to a 4 year/$36 million deal?

2010: $17 million
2011: $8.6 million
2012: $6.1 million
2013: $4.3 million

 

[sieglo]

How possible is it that:

1) BB knew the 2009 team wasn't capable of making/winning the SB; and
2) Didn't adequately prepare for the Ravens in order to avoid becoming subject to the final eight rule?

 

[Miguel]

I am quoting Adamjt13
What actually happens in an uncapped year??? - Page 2 - KFFL Community

A literal reading of the CBA explains it. I asked a former member of an NFL front office about it, and he confirmed my interpretation.

Here are the portions of the CBA that apply --

-----------------------------------------

(ii) Acceleration.

(1) For any player removed from the Team’s roster, or whose Contract is assigned to another Club via waivers or trade, on or before June 1 in any League Year prior to the Final Capped Year, or at any time during the Final Capped Year, any unamortized signing bonus amounts will be included in Team Salary for such League Year, except that for each League Year preceding the Final Capped Year, each Club may designate up to two Player Contracts that, if terminated on or prior to June 1 and if not renegotiated after the last regular season game of the prior League Year, shall be treated (except to the extent prescribed by Section 7(d)(iii) below) as if terminated on June 2, i.e., the Salary Cap charge for each such contract will remain in the Club’s Team Salary until June 2, at which time its Paragraph 5 Salary and any unearned LTBE incentives will no longer be counted and any unamortized signing bonus will be treated as set forth in Subsection (2) below. If acceleration puts a Team over the Salary Cap, the Team will have seven days to conform with the Salary Cap, but may not sign any players until there is Room to do so under the Salary Cap.

(2) For any player removed from the Team’s roster or whose Contract is assigned via waivers or trade after June 1, except in the Final Capped Year, any unamortized signing bonus amounts for future years will be included fully in Team Salary at the start of the next League Year.

-------------------------------------------


The first section (on or before June 1) applies only "in any League Year prior to the Final Capped Year, or at any time during the Final Capped Year." In an uncapped year, it does not apply. Therefore, there is no acceleration when a player is removed from the roster on or before June 1 in an uncapped year.

The second section (after June 1) applies in every season "except in the Final Capped Year." Therefore, even in an uncapped year, when a player is removed from the roster after June 1, any unamortized signing bonus amounts for future years accelerate into the next season."

which means that if AD was released any time in 2010 $4.4 million would be the dead money hit in both 2010 and 2011.