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Salaries and Compensation in the NFL

Compensation in the NFL is complicated and consists of player salaries, incentive pay, and bonus pay. Compensation is impacted by the NFL salary cap, a limit on the amount a team can spend on compensation that was $67.4 million for the 2001-02 season, (Hall and Lim, 2002). Salaries and incentives both count against the salary cap each year, but signing bonuses are calculated over the life of the playerÆs contract.

Both player salaries and incentives have a negative impact on players, coaches, agents, teams, and even fans, due to the fact that such compensation is often meted out based on salary cap concerns. For example, when a player is offered incentives for a certain number of rushing yards, receiving yards, tackles, or sacks, the playerÆs performance is often related to incentives and not what is in the best interest of the team. Coaches can often make decisions to bench a player, when they are close to attaining incentive pay during years when salary caps are tight. Teams will often trade good players due to salary cap limitations, offending fans and undermining team performance. Even agents are guilty of orchestrating huge contracts for players that increase their value as agents, whether or not players ever benefit from the intricacies of compensation involved in such contracts. As such, compensation strategies in the NFL highly warrant modification and alternative methods of payment for players.

In order for the limitations of compensation noted above to be overcome, there are a few strategies the NFL must adopt with respect to player salaries and incentives. These strategies are below:

End the practice of player incentives in favor of overall team incentives, divided among players equally.

Negotiate with agents to reduce up-front monies paid to players by offering greater incentives based on team performance.

Increase fines on playersÆ off-field behavior that


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