This past weekend was the 2025 NFL Draft, taking place in Green Bay, Wisconsin. Although we have yet to see these rookies in action, many fans are already speculating how these players will perform in the upcoming NFL season.
Yet, the glitz & glamor doesn’t end at the big stage. The real magic happens at the negotiation table, when contracts need to be drafted by the players’ respective teams. In fact, numerous incentives, required provisions and back-and–forths are needed before their future stars sign the dotted line.
Let’s dissect what’s included as part of an NFL rookie contract.
Pre-Draft Conversations
There is no requirement for any draft player to go with the team that selects them. If they reject their offer, they’ll go back into the draft pool - unless they are traded. They don’t have a say on which team they want, but discussions often happen weeks before the draft.
Teams and agents become aware of these players through scouting, either through collegiate games or through NFL Combine Week. Specific details of contracts are never divulged, as picks are never set in stone.
However, we know what is likely to be in a contract. The language of NFL contracts will always have the following, based on the NFL’s Football Operations site:
- Compensation for termination due to a loss of skill,
- Compensation for termination to stay under the salary cap,
- Compensation for injuries sustained, preventing the player from competing, and
- Guaranteed amount of money at signing.
Salary & Incentives
According to Article 7 of the CBA, a rookie’s salary and length of employment is predetermined. For instance, a Round 1 pick will have a four year term with a “club option” - the choice to play for a fifth year with that team. Meanwhile, a 2nd round pick will have a four year term without this option.
Wages scale based on a Rookie Scale, which determines the wages of different draft round picks per draft year and how their salaries are divided across their contract. This is based on a formula known as the Year-One Formula Allotment. The full formula can also be found in Article 7, but generally, a rookie player’s salary decreases based on how late they were picked in the draft.
A player’s salary is limited by a salary cap, which is a ceiling for how much money a player can receive. This number includes anything “likely to be earned” per Section 6 of Article 13, meaning that teams cannot get around the salary cap by offering higher incentives and signing, roster & reporting bonuses.
On top of this, incentives are limited to specific team/individual statistics and approved awards/recognitions, eg. an offense player gets no brownie points for the team’s defense doing well unless they actually participated in the defense.
There is an exception for picks outside of the first round. If they exceed expectations, they can receive a boost to their salary known as a Proven Performance Escalator (PPE). This is measured by their participation in offensive and defensive snaps - in other words, plays on either side. Bonuses are added directly to the player’s base salary. PPE is divided by three tiers with the following requirements:
- Level One: participates in an average of 60% for 2nd round picks and 35% for third-seventh round picks of offensive/defensive snaps over their first three years or in 2/3 of their first three seasons,
- Level Two: at least 55% of offensive/defensive snaps in all of his first three seasons, and
- Level Three: selected to the Pro Bowl (NFL's all-stars game) as an original pick in any of his first three seasons
You can see the projections for picks in the 2022, 23, and 24 draft here.
Rookies picked in the 1st round can actually receive penalties to their salary upon exercising their fifth-year option if they don’t show up to training or miss preseason games.
Lastly, with the exception of PPE, any salary increase above 25% of their subsequent year’s salary is not permitted. This prevents a player’s salary from ramping up significantly.
Termination
In a contract, you can be discharged of your duties for a variety of causes. This includes a natural lapse of the contract through performance of duties, certain conditions being met, agreement of both parties or a breach of contract. After this termination, any obligations due to the players must be fulfilled - including paying out any remaining bonuses or incentives.
This can create what is called dead money, where there is money unaccounted for on the salary cap after a player’s contract is terminated. For example, when Ahkello Witherspoon was released from his contract, he already received his base salary and bonuses. However, since his bonuses were split between two seasons, his cap number was meant to be higher going into 2023. His release prior to the 2023 season causes this bonus that was meant to be paid during that season (and paid early) to be counted against the team instead.
The NFL likens this scenario to a credit card without interest. To avoid it, teams can release a player after June 1st and move those bonuses to the next season’s salary cap. This gives teams more flexibility in signing and retaining new players, as maintaining the salary cap is vital under the CBA. Negotiations
Rookie contracts cannot be renegotiated after they are made. They can only agree on new terms after their current term in the contract ends, if they choose to stay with their team and not become a free agent.
An agent acts as your lawyer in this regard. In addition to making sure a player is given the best possible treatment, they represent the player’s interests in sponsorships & endorsements. By NFL guidelines, an agent cannot make more than 3% of a player’s contract. Although a seemingly small number, when contracts can go into the tens of millions, their actual revenue per player is an astounding figure. Why So Many Limitations?
All of these restrictions feed into fair play and fair compensation. To keep games competitive and ensure the integrity of the sport, player unions and laws are made to hold these institutions accountable. It isn’t just the NFL - the NBA, FIFA-affiliated organizations, and more have standards limiting how much a team can progress by buying the best talent with exorbitantly high contract values.
Unfortunately, some leagues in other industries are left by the wayside. E-Sports leagues are largely governed by the company that owns the game’s intellectual property - thus, games without dedicated support from developers could have their entire player base collapse at a moment’s notice, making it rough for both teams and players.
Some leagues thrive without intensive restrictions. For instance, Major League Baseball (MLB) has
no salary cap, yet remains highly competitive. Money does not always make the world go round, it seems.
However, players do make up our entertainment world. Unions keep team owners accountable and prevent the abuse of a player’s likeness. It’s a simple matter of checks and balances, and an agent can guide you through that process. At the end of the day, teams are businesses, and they are more than willing to engage in a tug-of-war match with a player to get the most value.
I’ve only scratched the surface on what can happen pre- and post-draft. Sure, the event is a spectacle - the flashy suits, funny speeches, and conveniently pressed shirts with their round pick number. Yet, that’s just a glimpse at the bigger picture. The battle for a rookie doesn’t end until the dotted line is signed, and it begins as soon as you have the thought of going pro.
Bottom line? Check with your agent for everything related to your professional sports career. In this game of tug-of-war, the highlight reels will never be more important than the fine print.
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