PERFORMANCE BASED PAY FOR NFL PLAYERS UP NEARLY 80%

Total compensation in the third year of the NFL’s “Performance Based Pay” system increased by 78 percent to more than $57 million, the NFL announced today.

When the NFL and the NFL Players Association extended the Collective Bargaining Agreement in 2002, they created a supplemental form of player compensation based on a comparison of playing time to salary.

This year, the fund totaled more than $57 million ($1,784,000 per team) and will grow to approximately $79 million in 2005. The fund is expected to be nearly $100 million in 2006.

The $57 million distributed in 2004 was 78 percent higher than the Performance Based Pay of 2003, which was $32 million, or $1 million per team.

The total will continue to increase in each year of the CBA.

The biggest earner in Performance Based Pay last season was New York Jets rookie safety ERIK COLEMAN, who earned $227,625 in additional pay. Clubs have been notified to distribute payments to players.

Players become eligible to receive Performance Based Pay in any season during which they play at least one down of the regular season.

The fund that is distributed to players under the Performance Based Pay system was created by slowing the growth in 1) yearly minimum salaries for all players and 2) the annual entering player pool for rookies.

The pool of money distributed under the Performance Based Pay system comes from reduced growth of the rookie pool and minimum salaries.

Under the system, Performance Based Pay is computed by using a “Player Index.” To produce the index, a player’s regular season playtime (total plays on offense, defense and special teams) is divided by his adjusted regular season compensation (full season salary, prorated portion of signing bonus, earned incentives). Each player’s index is then compared to those of the other players on his team to determine the amount of his pay.

“The Performance Based Pay system is especially beneficial to lower-salaried players,” says NFL Executive Vice President of Labor Relations HAROLD HENDERSON. “Under this system, if a player is making the minimum but plays in a high percentage of his team’s plays, he stands to get a larger payout than a teammate with equal playtime but a higher salary.”

One hypothetical example is “Player A” in 2004 earning a salary of $600,000, playing in 50 percent of his team’s plays. His bonus would total approximately $60,000. “Player B” has a salary of $6 million and took part in a similar percentage of plays. His bonus would be approximately $6,000.

Added NFLPA Executive Director GENE UPSHAW, “We shift money from the projected increases in minimum salary to annual payments based on playing time, a fairer distribution of the money. ‘Pay for Performance’ rewards players who may be on the bottom of the team pay scale, but play a majority of the games."

Following is a comparison of the top 25 players in Performance Based Pay between 2004 and 2003, and the percentage of increase in each spot.

TOP 25 PERFORMANCE BASED PAY DISTRIBUTIONS FOR 2004 AND 2003































Performance Based Pay System

Each player on the same team com*petes for his own share of his club’s Performance Based Pay pool. The table below illustrates how the Index works, using a simplified four-player team as an example. Each player receives his share of the pool depending on how his index compares to those of his teammates.


Playtime
Compensation
Index
Bonus Payout

Player A
50%
$ 500,000
10.0
50% of the Club’s pool (10 out of 20)

Player B
50%
$ 1,000,000
5.0
25% of the Club’s pool (5 out of 20)

Player C
20%
$ 500,000
4.0
20% of the Club’s pool (4 out of 20)

Player D
10%
$ 1,000,000
1.0
5% of the Club’s pool (1 out of 20)

Team Total:
20.0 Points