On March 14, 2020, NFL Players voted to APPROVE (1019 to 959) a new Collective Bargaining Agreement (CBA), which reflects the results of collective bargaining negotiations between the National Football League Players Association (NFLPA) and National Football League (NFL) team owners.
This agreement goes into effect immediately, which means it impacts player compensation THIS SEASON, and it extends through the 2030 season. It is imperative that a player work with a financial advisor who understands these changes, as they will have an effect on his overall financial plan, impacting how they achieve their wealth and life goals – what we call NET WORTHWHILE™ (WEALTH + WORTH).
10 critical changes included in the 2020 CBA, and how it impacts how YOU get paid:
Summary: Revenue allocated to players increased 1%, starting in 2021 and gambling proceeds allocated to players just like other revenue, e.g. ticket sales, television deals.
The share of overall revenue allocated to the players increased from 47% to 48%, starting in 2021, with it increasing to 48.5% if the owners exercise their option for a 17-game season starting in 2021. For 2020, the revenue allocation remains at 47%, but owners have agreed to a one-time addition of $100 Million in player costs for 2020. Also, for the first time, revenue the NFL generates from gambling activity will be included in the calculation of total revenue that is allocated to players. While this number is hard to value right now as legalized gambling is still relatively new, most experts believe that gambling will provide massive amounts of revenue to the NFL going forward. It will be allocated to players just like revenues from ticket sales, television deals, merchandising, etc.
- INCREASED ACTIVE ROSTER SIZES:
Summary: Two players per team will go from practice squad pay to minimum active salary pay.
Starting with the 2020 season, teams will be able to have 48 players on their active roster (up from 46 in 2019), but 48 players on the active roster will ONLY be permissible if the team has at least eight offensive linemen on the active roster. If the team does NOT have eight offensive linemen on the active roster, they will be permitted to have 47 players on the active roster. These two additional spots were pulled from the inactive list (practice squad), so there will not be any net new roster spots. 2020 Salary cap is $198.2 Million.
- 17-GAME SEASON:
Summary: Starting in 2021, players who are not on minimum contracts, will receive their existing salary PLUS an increase of 1/17th of their salary to cover the addition of a 17th game.”
Starting in 2021, the owners have the right to expand the regular season to 17 games (doing so would also remove one of the four preseason games). They will almost certainly exercise that option. 2021 salaries for current players will be increased by 5.88% to cover this 17th game. This will NOT be available to players on minimum contracts, as the increase in annual minimums is intended to cover them for this extra game.
Starting in 2021, the extra game bonus will be funded first by the Rookie Distribution Pool and only if the amount exceeds what the NFL incur an additional cost. So, while it is true that players will receive an extra piece of their salary, it is most likely going to be funded by revenue streams created by the new CBA.
- PAY PERIODS:
Summary: Players’ salaries will be spread out over 34 weeks.
If the NFL goes to a 17-game (18-week) schedule, this would make it a 36-week pay period. The pay period will start the first week of the regular season and extend through the end of April. Each player’s game check will be half of what it would have been if he was paid only during the regular season.
- ANNUAL PAY:
Summary: the minimum salary amount increases at a greater rate per year.
Under the old CBA, the rookie minimum increased at about 3.5% per year, but will now increase at almost 6.4% per year. The 7-year veteran minimum increased at 1.7% per year under the old CBA and will increase at 3.88% per year under the new CBA. By the end of this CBA (2030), the rookie minimum will be up to $1.065M (up from $495k in 2019). The minimum for a veteran with 7 or more credited seasons will be $1.48M (up from $930k in 2019).
- SEVERANCE PAY:
Summary: Severance credits increase.
Under the old CBA, any player who received a credited season for 2020 would receive a credit towards their severance of $22,500. Under the new CBA, this amount is increased to $30,000, and will continue to increase up to $50,000 in year 2030.
- ROOKIE CONTRACT PROVEN PERFORMANCE ESCALATORS:
Summary: Players selected later in the draft can receive guaranteed salary escalation in the fourth season based on their performance.
For players selected in the 3rd-7th rounds of the 2017 Draft (or later) as well as players drafted in the 2nd round of 2018, there will be a formula for guaranteed salary escalation in the fourth season for players who play a certain number of snaps through years one to three.
- TRAINING CAMP SCHEDULE CHANGES:
Summary: Changes made to the running of training camps to ensure players have more time for recovery. Some of the changes include:
- New Five-Day Acclimation Period
- 5-hour limit on padded and full speed practices
- No more than 16 days in full pads per training camp
- No more than three consecutive days of practice in three out of five weeks of camp (no more than two consecutive days in the other two weeks)
- Mandatory one day off every seven days, with two days off in the first week
- RETIREMENT PLANS:- Pension: Pension contributions by NFL teams will go up by 10% annually. Even former players who have retired from the NFL will receive an increase to a minimum of $550 per month for EACH year that they played.- Second Career Savings “401(k)” Plan: The annual matching contribution limit by each NFL team is increased from $28,000 per player to $30,000 per player. The player must still contribute to the plan in order to receive the match. New to this CBA is that practice squad players can receive a match of up to $1,500 per year.
– Annuity Plan: Annual contributions by teams will increase to $110,000 per year for players with at least 4 credited seasons, up from $95,000 in the old CBA, and will increase by $15,000 in even calendar years.
– HRA Plan: contributions are increased to $35,000 per season in 2020 and will climb to $50,000 per season in 2030.
- Under the old CBA, players received an HRA contribution from their NFL teams of $30,000 per credited season, and there was a lifetime cap of $350,000. Under the new CBA, contributions are increased to $35,000 per season in 2020, and will climb to $50,000 per season in 2030. The cap was also increased to $450,000.
- Former players who never had a Health Reimbursement Account will be granted a one-time HRA credit of $50,000.
- LEAGUE DISCIPLINE:
– Fines: reduced league fines: Some league fines for on-field violations (late hits, etc.) have been reduced to lesser dollar amounts.- Club fines: A “Progressive Discipline” system has been instituted whereby a player’s first two fines for a specific club infraction (i.e. being late to a meeting) can be assessed at 40% and 70% of the maximum fine amount, respectively.- Commissioner Discipline: Removal of the Commissioner from making direct rulings on player disciplinary issues. Discipline to be implanted for violations of the Player Conduct Policy will now be heard by an “independent” discipline officer, who will be selected jointly by the NFL and NFLPA.
It is incredibly important that players understand the new CBA, as these changes impact the benefits that they are entitled to and working for. It is equally important that players work with a team that understands how these benefits work and how they impact their specific financial situation to ensure they are able to enjoy their wealth now and in the future.
To learn more about how the new CBA impacts you, contact SignaturePRO at SignaturePRO@sigfddev.wpengine.com.