The provisions relating to the calculation of the salary cap at Article 12 CBA7 are extensive and complex. It is beyond the scope of this article to explain them in depth, but it is worth briefly summarizing them to indicate where the salary cap figure comes from and what it relates to.
The NFL salary cap is calculated by reference to projected annual League and club revenues foreach league year, defined as "
All Revenues", or “
AR”. Details of how this figure is calculated are set out in Article 12 CBA. In summary, it can be broken down into three categories:
- League Media AR e.g. television rights sold nationally for entire for entire NFL games and internationally for live and delayed games; radio revenues; Copyright Royalty Tribunal revenues.
- NFL Ventures/Postseason AR e.g. revenues arising from the operation of postseason games to be received by the NFL and NFL-affiliates such as NFL Network, and revenues arising from the operation of NFL-affiliated entities such as NFL Network.
- Local AR e.g. all revenues to be received by Clubs or Club affiliates not included in either category above, including the sale or license of preseason television rights
These figures are combined to make total AR. Once the total AR figure is calculated, a percentage of it is set as the "
Player Cost Amount", which is the total allowable expenditure on player salary and player benefits across the league. The amount for player benefits is deducted and divided equally among the 32 teams, leaving the total salary cap which is also divided equally among the teams.