March 31, 2007

Major NFL Salary Cap Loophole

Thanks to ESPN the Magazine for pointing this out to me. As most of us know, NFL contracts contain performance incentives. The NFL classifies those incentives as "likely to be earned" (LTBE) or "not likely to be earned" (NLTBE). LTBE counts against the cap, but NLTBE does not.

So for example:
-$1M if Larry Johnson gains over 1000 yds rushing = LTBE
-$1M if Sean Taylor lets Plaxico blast by him < 5 times = NLTBE

Here's the catch. ALL special teams incentives and incentives added DURING the season are classified LTBE. If a LTBE incentive is not reached, the cap is credited by that amount the next season.

Example 2: Team A has $12M in cap room on Sept. 1. That cap room doesn't do anything for the team during the season, and can't be carried over. However, if the team goes back and adds $2M special teams incentive clauses to the contracts of 6 six offensive linemen, something as silly as registering 10 special teams tackles, the team eats up the rest of the cap for that year. Then, when none of those incentives are earned, the team gets a $12M credit towards next year's cap.

According to ESPN the Magazine, the Pats gave C Dan Koppen a $1.9M special teams incentive clause. Koppen doesn't play on special teams. They accounted for $1.9M of unused cap space and got a credit for that amount this season. Then they signed Adalius Thomas.

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