TPFNC Definitions and Explanation. Explanation of the TPFNC:

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1 TPFNC Definitions and Explanation The NFL Salary Cap is the mechanism within the Collective Bargaining Agreement ( CBA ) that governs contract agreements between Clubs and Players. In the simplest of terms, the CBA and Salary Cap are the rules and the budget restrictions that Clubs and Players must abide by while negotiating contracts. For the purposes of this competition, the TPFNC Rulebook will serve as our CBA, and this document will provide the definitions, explanations, and application of rules for the competition; together governing your strategies, limitations, and ultimately your agreements throughout the competition. Explanation of the TPFNC: Negotiation Format The negotiation will take place within a 50 minute time period. Each side will have 2 participating members and up to 3 judges will preside over the negotiation. The negotiation will start by each side introducing themselves and giving an opening statement. The opening statement should be a brief summation of the player s background and any players you feel are relevant comparisons for the negotiation. After the opening statements one side will present an initial offer to begin the negotiations. The packet materials for each round will identify which side is supposed to make the initial offer. The initial offer should be a printed copy of document x below. After the initial offer is made the negotiation becomes an open conversation between sides. The round will end when the sides come to a full agreement or the time expires. Example of Initial Team Offer (Below is a fictional contract for example purposes only): Initial team offer Player Year P5 Signing Bonus Roster Bonus Workout Bonus Option Bonus Cap Hit Fully Guaranteed Jameis Winston 2015 $8,000,000 $2,000,000 $1,000,000 $1,000,000 $0 $12,000, $9,000,000 $2,000,000 $1,000,000 $1,000,000 $0 $13,000, $10,000,000 $2,000,000 $1,000,000 $1,000,000 $0 $14,000, $10,000,000 $2,000,000 $1,000,000 $1,000,000 $5,000,000 $19,000, $10,000,000 $2,000,000 $1,000,000 $1,000,000 $0 $14,000, $10,000,000 $0 $1,000,000 $1,000,000 $0 $12,000, $10,000,000 $0 $1,000,000 $1,000,000 $0 $12,000,000 Total 7 $67,000,000 $10,000,000 $7,000,000 $7,000,000 $5,000,000 $96,000,000 $10,000,000 Average Per Year $9,571,429 $1,428,571 $1,000,000 $1,000,000 $714,286 $13,714,286 3 Year Cash Flow $43,000,000 Total Value of Contract $96,000,000 Notes: At the conclusion of each negotiation round both teams will have a private self- evaluation analysis with the judge(s). Refer to the TPFNC Scoring Sheet and Self Analysis included in the competition packet. Objectives Each team will receive a set of objectives listed in order of importance. Teams will be judged on the totality of the objectives accomplished. Judges will be given deference on a team s performance regarding their tactics and use of leverage in attaining their objectives. 1

2 The negotiation packet will given an order of priority to the objectives that will determine their point value. Example of Objectives on TPFNC Offer Sheet: 1 AGENT OBJECTIVES Objective Objective Value Actual Achieved? Fully Guaranteed Money $10,000,000 $10,000,000 Yes 2 Total value of contract $100,000,000 $96,000,000 No 3 Signing Bonus $10,000,000 $10,000,000 Yes 4 3 year cash flows $30,000,000 $43,000,000 Yes 5 Offseason Bonus $1M in each of 5 offseasons with bonus See Table? 6 Number of Years of Contract 7 7 Yes Player Pool The Player Pool will serve as the complete list of contracts that teams will be allowed to use for comparative reasons in the negotiations. The details in the player pool are based off of the players actual contracts, but may be altered for the purposes of this competition. Do not use any other versions of a player s contract for use in the competition. Definitions: Paragraph 5 Salary (Base Salary) P5 or Base Salaries are the monies actually earned for playing during the NFL season. The name Paragraph 5 Salary is derived from the location in the Salary Cap section of the CBA (the 5 th Paragraph), which details this particular method of payment. P5 salaries are paid out in 17 installments throughout the year and do not require the player to be active for a game to receive payment. P5 salaries have minimum floors based on credited years in the league, but no maximum level. P5 salaries can be guaranteed or unguaranteed. For the purposes of this competition: split salaries and deferred payments should not be considered. Also, assume the minimum P5 in each year for all players must be at least $1 Million. (Highlighted below is the P5 Salary for Aaron Rodgers) Player Year P5 Signing Bonus Roster Bonus Workout Bonus Option Bonus Cap Hit Fully Guaranteed Aaron Rodgers 2013 $4,500,000 $6,650,000 $0 $11,150, $900,000 $6,650,000 $9,500,000 $0 $17,050, $1,000,000 $6,650,000 $10,100,000 $500,000 $18,250, $11,500,000 $6,650,000 $600,000 $500,000 $19,250, $12,550,000 $6,650,000 $600,000 $500,000 $20,300, $19,800,000 $0 $600,000 $500,000 $20,900, $20,000,000 $0 $600,000 $500,000 $21,100,000 Total 7 years $70,250,000 $33,250,000 $22,000,000 $2,500,000 $0 $128,000,000 $54,000,000 Average Per Year $10,035,714 $4,750,000 $3,666,667 $357,143 $18,285,714 Total Value of Contract $128,000,000 Notes: It was a 5 year extension with 2 years left on his previous deal roster bonus becomes guaranteed on 1st day of league year 2

3 Signing Bonus A signing bonus is essentially a check handed up- front to the player. This element causes the most confusion due to the fact that it is treated differently on the cap than standard payments. The easiest way to reconcile this is to view a signing bonus like depreciating an asset. Signing bonus payments are prorated up to five years in the contract. If the deal is for 7 years, only the first 5 would hold signing bonus pro- rations; similarly a 3 year deal would only prorate over 3 years. Because signing bonus allocations on the cap are place holders for money already paid to the player, it creates a situation where when a player is released, traded, or retires, there is money that still must be accounted for on the cap even though it was already paid, referred to as dead money, which will be discussed on its own in. The Signing Bonus is prorated over a 5- year period unless the contract is for less than 5 years. Important note: Signing Bonus money is always considered fully guaranteed due to the nature of it being paid up front. 7- Year Contract Prorated Signing Bonus 3- Year Contract Prorated Signing Bonus Player Year P5 Signing Bonus Player Year P5 Signing Bonus Aaron Rodgers 2013 $4,500,000 $6,650,000 Carson Palmer 2013 $2,000,000 $2,000, $900,000 $6,650,000 VS $9,000,000 $2,000, $1,000,000 $6,650, $10,000,000 $2,000, $11,500,000 $6,650,000 Total 3 $21,000,000 $6,000, $12,550,000 $6,650, $19,800,000 $ $20,000,000 $0 Total 7 years $70,250,000 $33,250,000 Dead Money As discussed above, dead money occurs when a player has been paid or guaranteed future money, but is no longer on the roster. Any money that he was paid or guaranteed that is yet to be accounted for against the salary is considered dead money. The dead money will count against the salary cap in the year after the player is no longer on the roster. The objectives of the competition will factor in dead money although they will not explicitly mention it. Roster Bonuses Roster Bonuses come in a few different forms, the most prevalent of which are offseason roster bonuses. An offseason roster bonus triggers if the player is on the roster at the time of the trigger date. Other roster bonuses are paid on a per- game basis. For this competition, three options for roster bonuses will be available for negotiation th day of the league year at 4:00pm: The most preferred for the player because it forces the team to make a decision well before free agency. If the team pays the roster bonus, the player receives his money and is more than likely to see the current year in his contract. If the team opts not to pay the roster bonus and release 3

4 the player, the player is now a free agent well before free agency starts and allows him to test the market with no restrictions rd week of Training Camp: Not as preferable as option 1 because a team may decide to cut a player before paying the roster bonus, which leaves the player without a team after teams have filled their needs during free agency. This all but ensures the player will receive a below market salary for the season. This is beneficial to the club because they are given time to evaluate the player before committing to paying the bonus to the player. The team would benefit from the increased evaluation time 3. Per game basis: Per game roster bonuses have benefits to both the player and the club. They are often applied to players that have missed time due to injury. The bonus is paid to the player on a weekly basis for games that he is active and on the roster. Workout Bonus Workout Bonuses are monies paid to a player to come into optional camps during the offseason. These are usually in place to provide easily earned unguaranteed monies for the player and incentivize them to come into the facility with their teammates rather than work out on their own. Workout bonuses usually range from 100,000 to 1,000,000 per year. Option Bonus For the purposes of this competition, the option bonus should be considered a delayed signing bonus. The bonus can be put in any year, and can be exercised similar to a roster bonus. It can be prorated similar to a Signing Bonus, or it can be paid out and accounted for against the cap all in one year. Example of D'Brickashaw Ferguson s Bonuses: Player Year P5 Signing Bonus Roster Bonus Workout Bonus Option Bonus Cap Hit D'Brickashaw Ferguson 2012 $9,325,000 $320,000 $0 $750,000 $0 $10,395, $7,250,000 $320,000 $0 $750,000 $3,250,000 $11,570, $5,950,000 $320,000 $1,000,000 $750,000 $0 $8,020, $5,950,000 $320,000 $1,000,000 $750,000 $0 $8,020, $8,625,000 $320,000 $1,000,000 $750,000 $0 $10,695, $11,275,000 $0 $1,000,000 $750,000 $0 $13,025,000 Total 6 $48,375,000 $1,600,000 $4,000,000 $4,500,000 $3,250,000 $61,725,000 Total Value of Contract $61,725,000 Total Contract APY The total maximum compensation the player could receive in the contract divided by the number of years of the contract. (Below is a fictional contract for example purposes only) 4

5 Player Year P5 Signing Bonus Roster Bonus Workout Bonus Option Bonus Cap Hit Jameis Winston 2015 $8,000,000 $2,000,000 $1,000,000 $1,000,000 $0 $12,000, $9,000,000 $2,000,000 $1,000,000 $1,000,000 $0 $13,000, $10,000,000 $2,000,000 $1,000,000 $1,000,000 $0 $14,000, $10,000,000 $2,000,000 $1,000,000 $1,000,000 $5,000,000 $19,000, $10,000,000 $2,000,000 $1,000,000 $1,000,000 $0 $14,000, $10,000,000 $0 $1,000,000 $1,000,000 $0 $12,000, $10,000,000 $0 $1,000,000 $1,000,000 $0 $12,000,000 Total 7 $67,000,000 $10,000,000 $7,000,000 $7,000,000 $5,000,000 $96,000,000 Average Per Year $9,571,429 $1,428,571 $1,000,000 $1,000,000 $714,286 $13,714,286 3 Year Cash Flow $43,000,000 Total Value of Contract $96,000, Year APY The total maximum compensation the player could receive in the contract over the first 3 years of the contract. It is a good barometer to compare contracts because it usually consists of the money that is most likely to be paid to the player. (Below is a fictional contract for example purposes only) Player Year P5 Signing Bonus Roster Bonus Workout Bonus Option Bonus Cap Hit Jameis Winston 2015 $8,000,000 $2,000,000 $1,000,000 $1,000,000 $0 $12,000, $9,000,000 $2,000,000 $1,000,000 $1,000,000 $0 $13,000, $10,000,000 $2,000,000 $1,000,000 $1,000,000 $0 $14,000, $10,000,000 $2,000,000 $1,000,000 $1,000,000 $5,000,000 $19,000, $10,000,000 $2,000,000 $1,000,000 $1,000,000 $0 $14,000, $10,000,000 $0 $1,000,000 $1,000,000 $0 $12,000, $10,000,000 $0 $1,000,000 $1,000,000 $0 $12,000,000 Total 7 $67,000,000 $10,000,000 $7,000,000 $7,000,000 $5,000,000 $96,000,000 Average Per Year $9,571,429 $1,428,571 $1,000,000 $1,000,000 $714,286 $13,714,286 3 Year Cash Flow $43,000,000 Total Value of Contract $96,000,000 Guaranteed Money For our purposes, there are only two types of money in a player contract: guaranteed or not guaranteed. In reality there are multiple guarantees (Skill, Injury, Cap, vesting, etc ) but for the purposes of this competition, you have the option of guaranteeing only the P5 (Base) Salary. What a guaranteeing of the P5 (Base) Salary will do, is in the event a player is released prior to a year that contains a P5 (Base) Salary guarantee, that amount of money will not only be paid to the player, it will also still have to be accounted in the salary cap as dead money. (Highlighted below is the Fully Guaranteed Money for Percy Harvin) Player Year P5 Signing Bonus Cap Hit Fully Guaranteed Percy Harvin 2013 $2,500,000 $2,400,000 $4,900, $11,000,000 $2,400,000 $13,400, $10,500,000 $2,400,000 $12,900, $9,900,000 $2,400,000 $12,300, $9,950,000 $2,400,000 $12,350, $11,150,000 $0 $11,150,000 Total 6 Years $55,000,000 $12,000,000 $67,000,000 $14,500,000 Average Per Year $9,166,667 $2,000,000 $11,166,667 Total Value of Contract $67,000,000 Notes: Harvin s $12 million signing bonus and $2.5 million 2013 base salary. Harvin s $11 million 2014 base salary was guaranteed for injury only and became fully guaranteed on February 7,

6 Cap Hit The cap hit is the amount of money paid to the player that will be counted against the salary cap in a specific year. Remember this will not always consist of the entire amount paid to the player that year, but only the amount set to be accounted for against the cap. Thus, the a prorated amount of the signing bonus will be used for a specific year and not the entire signing bonus. Also remember that if an option bonus is going to be prorated, only the prorated amount will count against the cap in a given year. (Highlighted below is the Cap Hit for Aaron Rodgers) Player Year P5 Signing Bonus Roster Bonus Workout Bonus Option Bonus Cap Hit Aaron Rodgers 2013 $4,500,000 $6,650,000 $0 $11,150, $900,000 $6,650,000 $9,500,000 $0 $17,050, $1,000,000 $6,650,000 $10,100,000 $500,000 $18,250, $11,500,000 $6,650,000 $600,000 $500,000 $19,250, $12,550,000 $6,650,000 $600,000 $500,000 $20,300, $19,800,000 $0 $600,000 $500,000 $20,900, $20,000,000 $0 $600,000 $500,000 $21,100,000 Total 7 years $70,250,000 $33,250,000 $22,000,000 $2,500,000 $0 $128,000,000 Average Per Year $10,035,714 $4,750,000 $3,666,667 $357,143 $18,285,714 Total Value of Contract $128,000,000 Terms that should NOT to be discussed in a TPFNC negotiation. Incentive based bonuses. Escalating or deescalating contract values based upon performance or otherwise. Vesting guarantees. Guarantees for injury, skill, or cap. 6