Performance Based Pay Increases
Total compensation in the fifth year of the NFL’s Performance Based Pay system increased by 21%, from $79.4 million to $96 million. The Performance Based Pay system was created as part of the 2002 Collective Bargaining Agreement extension. This system creates a fund used as a supplemental form of player compensation based on a comparison of playing time to salary. The system will remain in place in the new Collective Bargaining Agreement, with fixed increases to the system fund each year. This year, the fund totaled $96 million ($3 million per club), and will grow by 5% each year of the Collective Bargaining Agreement. The fund will be $3.15 million per team in 2007 and $3.307 million per team in 2008. The top recipient of Performance Based Pay for the 2006 season was Baltimore Ravens rookie safety Dawan Landry, who earned $366,017 in additional pay, which exceeded his 2006 base salary.
Players become eligible to receive Performance Based Pay in any season during which they play at least one down of the regular season. 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 and 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. One hypothetical example is “Player A” in 2006 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. “Pay for Performance” rewards players who may be on the bottom of the team pay scale, but play a majority of the games.
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