NFL Collective Bargaining Agreement

Article 12
Revenue Accounting and Calculation of the Salary Cap


  • Section 1. All Revenues

    For purposes of this Article, and anywhere else stated in this Agreement, revenues shall be accounted for in the manner set forth below.

    (a)(i)

    All Revenues (“AR”) means the aggregate revenues received or to be received on an accrual basis, for or with respect to a League Year during the term of this Agreement, by the NFL and all NFL Clubs (and their designees), from all sources, whether known or unknown, derived from, relating to or arising out of the performance of players in NFL football games, with only the specific exceptions set forth below. AR shall include, without limitation:

    (a)(i)(1)

    Regular season, preseason, and postseason gate receipts including ticket revenue from “luxury boxes,” suites, and premium seating among NFL Clubs in all cases net of (A) admission taxes, (B) taxes on tickets regularly paid to governmental authorities by Clubs or Club Affiliates, provided such taxes are deducted for purposes of calculating gate receipts subject to revenue sharing and (C) surcharges paid to stadium or municipal authorities which are deducted for purposes of calculating gate receipts subject to revenue sharing. For purposes of this Subsection, unless otherwise expressly agreed to by the parties, the portion of ticket revenue attributable to luxury boxes, suites and premium seating shall be the face value of the ticket, or any additional amounts which are subject to gate receipt sharing among NFL Clubs. Revenues from premium charges on ticket sales in excess of the face value of the ticket (e.g., rebates from ticketing sources) shall be included in AR. Credit card charges related to ticket sales are not considered a deductible “surcharge” and will not be offset against gate receipts. If a Club charges a service fee on the tickets it sells in excess of the face value of the ticket, on a ticket account basis and not on a per-ticket basis (up to a reasonable maximum amount prescribed by League policy, which as of the effective date of this Agreement is $4 per ticket account), such service fee will not be AR;

    (a)(i)(10)(A)

    Revenues related to gambling on any aspect of NFL games, any performance of NFL players in NFL games or in any other NFL/Club-related activity, or any other NFL/Club-related activity, including without limitation revenues from gambling on the outcome of NFL games or any performance of players in NFL games or in NFL/Club-related activity (including without limitation revenues derived from the licensing of NFL games or player data), gambling-related sponsorship revenues, operation of gambling of any kind in an NFL stadium, use of NFL/Club-related telecasts or other content by gambling-related businesses, use of NFL/Club licensed gambling applications, and revenues related to ensuring the gambling-related integrity of NFL games or other NFL/Club-related activity (“Gambling Revenues”).

    (a)(i)(10)(B)

    For Gambling Revenues generated by operation of gambling-related businesses located: (i) in or physically attached to an NFL Stadium (defined for purposes of this Section as being “in” the Stadium); or (ii) within 200 feet of the outer wall of an NFL Stadium or the point of entry to an NFL Stadium at which a ticket is required, whichever distance is greater (defined for purposes of this Section as being “near” (but not “in”) the Stadium), including revenue from non-football gambling (e.g., revenues from slot machines located in or physically attached to an NFL Stadium), all revenue actually received or to be received by a Club or Club Affiliate (or the NFL or any NFL-related entity) during the season (e.g., rent payment or other payment to the Club, but in no event to include any gambling revenues received by an unrelated entity) will be included in AR, with the “season” for purposes of this provision defined as the start of the Club’s training camp through the last game played by the Club. For Gambling Revenues generated by operation of gambling-related businesses in an NFL Stadium during the offseason, only fifty percent (50%) of revenue actually received by the Club or Club Affiliate (or the NFL or any NFLrelated entity) will be included in AR. For Gambling Revenues generated by operation of gambling-related businesses near an NFL Stadium, including revenue from non-football gambling (e.g., revenues from slot machines), all revenue received or to be received by a Club or Club Affiliate (or the NFL or any NFL-related entity) during the season (e.g., rent payment or other payment to the Club, but in no event to include any gambling revenues received by the unrelated entity) will be included in AR; for Gambling Revenues generated near such an NFL Stadium during the offseason, only thirty-three percent (33%) of revenue actually received by the Club or Club Affiliate (or the NFL or any NFL-related entity) will be included in AR.

    (a)(i)(10)(C)

    For any Gambling Revenues generated by operation of gambling-related businesses located: (i) in (as defined above in Section (B) as being “in” the Stadium); or (ii) near the Stadium (as defined above in Section (B) as being “near” an NFL Stadium), that is not received by a Club or Club Affiliate (or the NFL or any NFL-related entity), but where the Club or Club Affiliate (or the NFL or any NFL-related entity) is a noncontrolling minority owner in such business, such revenue from such location shall be included in AR on a pro-rata basis based upon the NFL or Club’s (or related party’s) ownership stake in that entity, using the same in-season/offseason and location formula set forth above; provided, however, that this Subsection shall not apply to any passive ownership in which the stake of the Club or Club Affiliate is five percent (5%) or less. Should the NFL or any Club (or related party) own five percent (5%) or less in a passive ownership of a gambling-related business located in or near an NFL Stadium, revenue from such location shall not be included in AR. Subject to the preceding definitions, for any Gambling Revenues generated by operation of gambling-related businesses located in or near an NFL Stadium that is received by a Club or a Related Entity (or the NFL or any NFL-related entity) (but not a “Non-Controlled Related Entity”), one hundred percent (100%) of such revenue from such location shall be included in AR subject to the same in-season/offseason formula set forth above (e.g., in the offseason should such business be in an NFL Stadium, fifty percent (50%) of such revenue shall be included in AR; if such business is near, but not in, a Stadium, thirty-three percent (33%) of such revenue will be included in AR).

    (a)(i)(10)(D)

    Notwithstanding the above, 100% of revenue received for all NFL/Club-gambling-related licensing fees shall be included in AR.

    (a)(i)(10)(E)

    For purposes of this Agreement, Gambling Revenues from wagers shall be calculated as: (i) the aggregate net difference between gaming wins and losses (not the total amount wagered) net of all excise taxes or other gambling or gaming-related taxes or surcharges actually paid or owed; or (ii) any greater amount received by the NFL or the Club (or any related entity), net of all excise taxes or other gambling or gaming-related taxes or surcharges actually paid or owed.

    (a)(i)(10)(F)

    Nothing in this subsection otherwise limits the amount of Gambling Revenue included in AR if such revenue was received or to be received as part of stadium lease or use agreement negotiation.

    (a)(i)(10)(G)

    Except as expressly provided in Subsection (B), non-football gambling revenues are not AR.

    (a)(i)(10)(H)

    Except as expressly provided in Subsection (C), the provisions of Section 1(a)(iv)(5) of this Article shall apply to any Non-Controlled Related Entities engaged in Gambling Revenues-related transactions

    (a)(i)(11)(A)

    Proceeds from the sale or conveyance of any right to receive any of the revenues described above.

    (a)(i)(11)(B)

    Notwithstanding Subsection (A) above or any other provision of this Agreement: [The following provision is intended to clarify and set forth the principles to govern the sale of a current or future owned-and-controlled NFL business. This is intended to set forth the treatment of the proceeds of the sale transaction and also ensure that players receive their share of a fair market value rights fee from ongoing operations of the business post-transaction. Except as set forth in this Subsection, this provision shall neither limit nor expand the definition of AR]: Proceeds from the sale or conveyance of an NFL owned-and-controlled business (e.g., NFL Films or NFL Network) (in whole or in part), or of any equity interest therein (in whole or in part), shall not constitute AR. Notwithstanding the foregoing sentence, if the business going forward is no longer controlled by the NFL, only the fair market value of the rights provided by the NFL for which amounts are paid (or imputed by the NFL) for that business (a rights fee being required) to the NFL or NFL Clubs (or their designees (i.e., a third party to whom the NFL or Club or Club Affiliate directs that amount be paid)) for the rights to attend, broadcast, distribute, market, license, or sell any other product or service in connection with NFL games, or in connection with any other NFL-related intellectual property (e.g., requiring a rights or licensing fee or other payments made to the NFL or its Clubs (or their designees (i.e., a third party to whom the NFL or Club or Club Affiliate directs that amount be paid)), shall be included in AR, but no revenue, dividends, distributions, or other income generated by or paid to that business) shall be included in AR. The fees paid by the acquiring entity to the NFL or NFL Clubs (or their designees (i.e., a third party to whom the NFL or Club or Club Affiliate directs that amount be paid)) for the rights set forth above to attend, broadcast, distribute, market, license, or sell any other product or service in connection with NFL games, or in connection with any other NFL-related intellectual property, to the NFL following the closing of such sale or conveyance shall be included in AR each League Year at no less than the “fair market value” to the NFL or NFL Clubs of such rights. For the avoidance of doubt: (a) the sale or conveyance of an owned-and-controlled business will be limited to the existing lines of business generating AR in each entity as identified in Appendix CC, which shall be updated annually by the NFL to reflect changes to existing lines of business and include any new lines of business that generate AR; (b) the fair market value of the rights included in AR each League Year may be a larger or smaller amount than the AR that was generated by the NFL owned-and-controlled business prior to such sale or conveyance; and (c) the sale or conveyance of an NFL owned-and-controlled business that includes lines of business not identified in Appendix CC or added in subsequent years may create a separate obligation to pay an additional rights payment to reflect the lines of business not identified in the Appendix. The Accountants shall have access to the payment terms of any such contracts to confirm that the amount paid for such rights reflects fair market value. Should the parties disagree as to the fair market value of the rights or licensing fees paid (or imputed) by the new entity, such dispute must be filed within one year of the payment and it will be resolved by the System Arbitrator. Any shortfall in fair market value determined by the System Arbitrator shall be added to AR each applicable year in which the entity has acquired the ability to use the NFL rights. The NFLPA shall have the right to review Appendix CC to confirm that the “lines of business” listed for each owned-and-controlled entity is complete. The NFLPA shall have the right to challenge the accuracy of Appendix CC using the System Arbitrator procedure. Nothing in the foregoing shall affect or limit application of the Agreement’s “No Double Counting” provision.

    (a)(i)(2)

    Proceeds including Copyright Royalty Tribunal and extended market payments from the sale, license or other conveyance of the right to broadcast or exhibit NFL preseason, regular season and playoff games on radio and television including, without limitation, network, local, cable, pay television, satellite encryption, international broadcasts, delayed broadcasts, and all other means of distribution;

    (a)(i)(3)

    Revenues derived from concessions, parking, local advertising and promotion, signage, magazine advertising, local sponsorship agreements, stadium clubs, luxury box income other than that described in Section 1(a)(i)(1) above (with “Super suites” (i.e., suites substantially larger in size than the largest suite regularly available for sale in the stadium) to have no additional value imputed in respect of them by virtue of such status), Internet operations (including merchandise sales), and sales of programs and novelties;

    (a)(i)(4)

    The consolidated revenue generated by NFL Ventures L.P. (“NFL Ventures”) (including but not limited to those categories of revenue currently or formerly generated by NFL Ventures’ subsidiaries, NFL Properties LLC, NFL Enterprises LLC, and NFL Productions LLC d/b/a NFL Films, but excluding from NFL Ventures’ revenue any revenues otherwise included in AR pursuant to Subsections (a)(i)(1)–(3) above or Subsection (a)(i)(5) below). AR from NFL Properties LLC and NFL Productions LLC shall be calculated on a one-year lag, consistent with the parties’ past practice under the Prior Agreement.

    (a)(i)(5)

    Barter income, which shall be valued at 90% of the fair market value of the goods or services received;

    (a)(i)(6)

    The value of equity instruments unconditionally received from third parties by the NFL or member Clubs (i.e., not equity instruments in business entities formed and owned exclusively by the NFL, NFL Ventures L.P. or any of its affiliates, or the member Clubs) derived from, relating to or arising out of the performance of players in NFL football games shall be included in AR beginning in the League Year in which the equity instrument vests at the fair value of such instrument on the date of such vesting, amortized over ten years. In subsequent League Years within the amortization period, the amortized amount shall be adjusted pursuant to the Black Sholes option pricing model methodology or as otherwise agreed. After the amortization period ends, the full amount of the Black Sholes (or other agreed) methodology shall be included in AR. In the event that the equity instrument is sold, AR for that League Year shall be the proceeds less the AR previously recognized.

    (a)(i)(7)

    Revenues received by a Club or Club Affiliate pursuant to a stadium lease or directly related stadium-use agreement with an unaffiliated third party, where the amount of such revenues is determined based upon activities that are unrelated to NFL football, in circumstances where the involved Club or Club Affiliate is not required to make a non-de minimis investment of capital or cash to receive such revenue (provided that the provisions of this Subsection (1)(a)(i)(7) shall not be retroactively applied to include in AR revenues generated from nonfootball business opportunities arising out of leases or other stadium use agreements entered into prior to January 1, 1993, the financial terms of which have not been amended since such date);

    (a)(i)(8)

    Recoveries under business interruption insurance policies that are received by any League- or Club-related entity, to the extent that such recoveries compensate such entity for lost revenues that would have been included in AR. The amount of such recoveries shall be included in AR net of (1) premiums paid for the policy/policies recovered under in the League Year(s) that include the events and the recoveries; and (2) deductible and unreimbursed expenses arising out of or related to the events giving rise to the insurance claim/recovery. Any lump sum payments will be allocated under the method separately agreed to by the parties;

    (a)(i)(9)

    Any expense reimbursements received by a Club or Club Affiliate from a governmental entity in connection with a stadium lease or a directly related stadium-use agreement, except as provided in Subsections 1(a)(ii)(2)(E)–(F) and (J) below;

    (a)(ii)

    Non-AR.

    (a)(ii)(1)

    The following items are excluded from AR:

    (a)(ii)(1)(A)

    “Taxes/surcharges” on regular season, preseason, and postseason gate receipts (including ticket revenue from “luxury boxes,” suites, and premium seating) which are comprised of (A) admission taxes, (B) taxes on tickets regularly paid to governmental authorities by Clubs or Club Affiliates, provided such taxes are deducted for purposes of calculating gate receipts subject to revenue sharing and (C) surcharges paid to stadium or municipal authorities which are deducted for purposes of calculating gate receipts subject to revenue sharing (which amounts approximated in the aggregate $156 million for the 2019 League Year);

    (a)(ii)(1)(B)

    Revenues derived from wholesale merchandising opportunities (i.e., the manufacture and distribution of merchandise to third-party retailers) conducted by Dallas Cowboys Merchandising (“DCM”) other than any related royalty payments to any League entity, Club or Club Affiliate; and

    (a)(ii)(1)(C)

    Revenues from the PSLs sold by the New York Jets and New York Giants that are dedicated to the construction of New Meadowlands Stadium, including the amortization to League Years during the term of this Agreement of such previously-sold PSLs (which amounts are projected as of the effective date of this Agreement to be approximately $40 million for the 2020 League Year).

    (a)(ii)(1)(D)

    Any PSLs that were excluded from the calculation of Total Revenues under the 2006 CBA or from AR under the Prior Agreement, to the extent that the amortization schedule has not expired; and

    (a)(ii)(1)(E)

    Any PSRs or naming rights or cornerstone sponsorship proceeds that were excluded from the calculation of AR under the Prior Agreement, to the extent that the amortization schedule has not expired.

    (a)(ii)(2)

    The following is a nonexclusive list of examples of revenues received by the NFL and/or NFL Clubs which are not derived from, and do not relate to or arise out of the performance of players in NFL football games (and are therefore not “AR”):

    (a)(ii)(2)(A)

    Proceeds from the assignment, sale or trade of Player Contracts, proceeds from the sale of any existing NFL franchise (or any interest therein) or the grant of NFL expansion franchises, franchise relocation fees, dues or capital contributions received by the NFL, fines, “revenue sharing” among NFL Teams, interest income, insurance recoveries (other than those net business interruption insurance recoveries that are described in Section 1(a)(i)(8) above), sales of interests in real estate and non-AR-related property, and Club cheerleader revenues (provided that, if such cheerleader revenue is provided by an entity with which the Club has another commercial relationship, the Accountants will review the transactions and determine the appropriateness of any revenue allocations);

    (a)(ii)(2)(B)

    Revenues generated from stadium events unrelated to NFL football (e.g., concerts, soccer games) in which the Club or a Club Affiliate makes a non-de minimis investment of capital or cash, and the value of, and revenues generated from, stadiumrelated businesses and/or opportunities unrelated to NFL football in which the Club or an affiliate must invest a non-de minimis amount of capital, cash, or effort to generate revenue (other than real estate development opportunities, which are subject to Subsection 1(a)(ii)(I) below);

    (a)(ii)(2)(C)

    The value of promotional spots (e.g., television or radio spots) that are received from time to time by the NFL under national media contracts solely for its own use (either to promote the NFL’s own football related businesses (and not the businesses of any other party), or for charitable purposes) and not for resale (although for clarity, the NFL’s promotional spots may include references to or depict logos or marks of third party sponsors or providers (e.g., an advertisement promoting the NFL Shop may show merchandise with NFL sponsor logos) as long as the third-party does not provide consideration to be referenced or depicted in such spots);

    (a)(ii)(2)(D)

    The value of complimentary or other no-charge tickets distributed by a Club, up to 320,000 League-wide across all preseason games (i.e., an average of 5,000 tickets per preseason game), and up to 17,000 tickets per-Club across all home regular season games (i.e., an average of 2,125 tickets per regular season game) allocated at the Club’s discretion, provided that such tickets are excluded from visiting team sharing requirements. NFLPA approval is required for any exclusion from AR of such tickets above the levels set forth in this Subsection.

    (a)(ii)(2)(E)

    Specifically designated day-of-game expense reimbursements received by a Club or Club Affiliate from a governmental entity, where such reimbursements are for legitimate expenses that the Club or Club Affiliate has incurred that the governmental entity previously incurred (including in connection with the Club’s occupancy of a prior stadium, if the reimbursements arise out of the construction of a new stadium). This exclusion shall not apply to expense reimbursements received in connection with concession sales, operation of parking facilities, signage or advertising sales, or any other revenue generating activity at the stadium other than the conduct of the game itself (e.g., expense reimbursements for game-day security previously provided by the police, and post-game stadium clean-up previously provided by a municipality, are not treated as AR, if such reimbursement otherwise qualifies). All claims for this exclusion shall be supported by appropriate documentation evidencing the extent to which the Club or Club Affiliate incurred the designated day-of-game expense and the extent to which the governmental entity previously incurred the expense;

    (a)(ii)(2)(F)

    In addition to the amounts described in Subsection (E) above, 65% of other (i.e., non-day of game) operating or maintenance expense reimbursements only for the specific Teams and agreements as per Paragraph 3 of the letter agreement under the Prior Agreement dated November 21, 2007. If a Club has reimbursements under both Subsection (E) above and this Subsection (F), the allocation as between the two categories shall be consistent with how the parties treated such reimbursements under the Prior Agreement.

    (a)(ii)(2)(G)

    Investments in or contributions toward the purchase of concession equipment by concessionaires on behalf of a Club or a Club’s Stadium, and the value of provided elements related to the operation and maintenance of the soft drink equipment in the Club’s Stadium (i.e., dispensing/vending equipment, service). For the purpose of this Section:

    • (i) The parties have agreed that the “equipment” and “provided elements related to the operation and maintenance of the soft drink equipment” that are not considered AR under this Section include, without limitation, the following items: (a) beer or soft-drink dispensing machines and the value of any provided elements related to the operation and maintenance of the beer or soft drink equipment in the Club’s stadium (i.e., dispensing/vending equipment, service); (b) cash registers, credit card readers, computers, printers, or other electronic equipment that is/are used solely in concession areas (including point-of-sale electronic hardware, software, and related wiring and internet equipment) or outside of such areas by food or beverage vendors (e.g., hand held ordering devices); (c) condiment, serving, or other food or beverage carts; (d) digital menu boards; (e) concessions electronic signage, or menu boards (electronic or not electronic); (f) food preparation machines such as broilers, fryers, grills, heat lamps, ice machines, mixers, ovens, ranges, popcorn machines, refrigerators, sinks, warming units, and wrapping machines; (g) non-disposable smallwares; (h) food preparation and serving tables; (i) shelving used in concession areas; (j) concession-related vending machines; (k) sanitation dispensers; (l) water conditioners and filters; (m) water heaters; (n) dishwashers and waste disposal equipment; (o) portable fire protection equipment such as extinguishers, in each case (k)–(o), only when dedicated for use exclusively in or for concession areas; and (p) internet, cabling, or other electronic transmission equipment directly and exclusively used with any of the equipment identified above.
    • (ii) The parties have agreed that the “equipment” and “provided elements related to the operation and maintenance of the soft drink equipment” that are not considered AR under this Section do not include, without limitation, the following items: (a) air conditioners, air heaters, carpentry, carpeting, ceilings, electrical, flooring, furnaces, insulation, lighting (other than heat lamps used for food preparation or service), painting, plumbing, non-electronic signage, tilting, or wall coverings; (b) architectural, design, contractor, installation or other services related to concession areas (except for maintenance or service costs covered by Subsection (G)(i)(a) above); (c) artwork; (d) buckets, mops, brooms, vacuum cleaners, or other cleaning or maintenance items; (e) construction buildout costs (other than the cost of specific equipment identified in Subsection (G)(i) above; (f) disposable smallwares; (g) financing costs; (h)–(i)[omitted]; (j) chairs, tables, bars (fixed or movable), or other furniture, other than food serving or preparation tables; (k) forklifts, golf carts, trailers, trucks, or other means of transportation; (l) hand-held electronic devices that are used for purposes other than ordering food or beverages, and are located outside of concession areas and operated by persons other than food or beverage vendors (e.g., multi-function handheld devices that are used by fans outside concession areas); (m) internet, cabling, or other electronic transmission equipment not directly and exclusively used with any of the equipment identified in Subsection (G)(i) above; (n) leasehold improvements; (o) maintenance or service costs other than for beverage dispensers as provided in Subsection G(i)(a) above; (p) security equipment or safes; (q) shop equipment; (r) surfacing; (s) time clocks; (t) uniforms or other clothing; and (u) items described in Subsections (G)(ii)(k)–(o) that are not dedicated for use exclusively in or for concession areas.
    • (iii) The amount considered as “equipment” for the above subsections includes the purchase price of the item along with any related shipping and taxes. The parties will discuss in good faith regarding whether any particular replacement parts used to repair equipment itself qualifies as “equipment” under the terms of this Section 1(a)(ii)(2)(G); and
    • (iv) To the extent that an item is not described in the foregoing, its status will be determined by whether it is closer in nature to the items described in Subsection (G)(i) or Subsection (G)(ii), unless the parties expressly agree in writing otherwise.
    • (v) To the extent that any amounts are deemed to be non-qualifying under this Subsection, they will be included in AR amortized over five (5) years.

    (a)(ii)(2)(H)

    The value of luxury boxes that are (1) used by a Club owner for personal purposes or to promote the Club or the owner’s other business interests; or (2) provided to stadium authorities, municipalities, and/or governmental officials, or (3) used or made available for use by the owner(s) of the visiting Club, or (4) provided for the use of a Club head coach; in each case where no revenue is actually received by the Club or a Club Affiliate, except that the value of such luxury boxes will be imputed as AR unless at least one luxury box in the stadium is available and unsold; provided that, in no event shall revenue be imputed for one luxury box that is used by the owner(s) of the Club, and one luxury box that is used or made available for use by the owner(s) of the Visiting Club. Without limiting the foregoing, the value of any luxury box that is provided to a former Club owner in connection with the sale of a Club shall be imputed into AR unless the prior owner is obliged to pay the club periodic consideration (i.e., annual rent) in connection with such use, in which case such consideration will be included as revenue in AR.

    (a)(ii)(2)(I)

    Revenues derived from real estate development opportunities in conjunction with or related to any stadium lease, land purchase agreement or other arrangement, provided that such revenues are not substitutions for revenues that would otherwise be included in AR.

    (a)(ii)(2)(J)

    Any amounts a Club or any Club Affiliate receives as reimbursement for capital improvements, repairs, or maintenance, from governmental entities obligated to fund or maintain such stadiums under the terms of the lease or other operating agreement (e.g., as the NFLPA has agreed with respect to Denver), where such reimbursement arises when the funding obligation previously resided with the stadium landlord in the stadium lease or operating agreement, and the Club subsequently agreed to assume such obligation and be reimbursed for such expenditures, without any other consideration being exchanged, and in amounts no greater than previously was the responsibility of the stadium landlord. In order to be subject to this provision, the NFL and the applicable Club shall provide the NFLPA with written documentation of the actual audited costs of such improvements, repairs, or maintenance, and the NFLPA Auditor shall have the right to audit the actual costs and reimbursements and the terms of the operating agreement. For the avoidance of doubt, this Subsection is not intended to affect the existing treatment of other public funding of stadium construction or renovation.

    (a)(iii)

    Television Revenue Used To Fund Stadium Construction/Renovation. Notwithstanding any other provision of this Agreement, the NFLPA and the NFL may agree, on a case-by-case basis, with no limitation on their exercise of discretion, not to include in AR network television revenue to the extent that such revenue is used to fund the construction or renovation of a stadium that results in an increase in AR.

    (a)(iv)

    Related Entities. The parties hereto acknowledge that for purposes of determining AR:

    (a)(iv)(1)

    NFL Teams may, during the term of this Agreement, be owned and controlled by persons or entities that will receive revenues for a grant of rights encompassing both (a) rights from the NFL Team so owned or controlled (the revenue from which is includable in AR) and (b) other rights owned or controlled by such persons or entities (the revenue from such other rights not being includable in AR), and that, in such circumstances, allocations would therefore have to be made among the rights and revenues described in this Section 1(a);

    (a)(iv)(2)

    NFL Teams may, during the term of this Agreement, receive revenue for the grant of rights to third parties which are owned or controlled by the persons or entities owning or controlling such NFL Teams (hereinafter “Related Entities”); and

    (a)(iv)(3)

    The reasonableness and includability in AR of such allocations and transactions between Related Entities shall be determined by the Accountants, in accordance with the procedures described below.

    (a)(iv)(4)

    Any entity which has the same ownership as the NFL, any NFL Affiliate (including without limitation NFL Ventures or any of its subsidiaries), or a Club, or is controlled by the same persons or entities which own or control the NFL, any NFL Affiliate, or a Club, and is engaged in AR-related transactions with the NFL, any NFL Affiliate, or a Club will be treated as the same entity as the NFL, any NFL Affiliate, or Club, as applicable, for the purposes of the AR Reporting Package and any audit with respect thereto.

    (a)(iv)(5)

    For any entity which does not fit the rule set forth in Subsection (4) above, but which has partial common ownership with the NFL, any NFL Affiliate, or a Club, and which is engaged in AR-related transactions with the NFL, any NFL Affiliate, or the Club (a “Non-Controlled Related Entity”), if the NFL, any NFL Affiliate or a Club contracts with such a Non-Controlled Related Entity for the right to provide goods or services (other than ticket or broadcast rights), revenues from the sale of which would be included in AR if sold directly by the NFL, any NFL Affiliate, or the Club, only the amount paid by the Non-Controlled Related Entity to the NFL, any NFL Affiliate, or the Club for the right to provide such goods or services (which amount must be negotiated in good faith and should reflect the amount that an independent third party would pay for the right to provide such goods or services) shall be included in AR. (For example, if a Club contracts with a Non-Controlled Related Entity when it could have contracted with an independent third party to be the concessionaire at a stadium, AR shall include the concessionaire fee, but not the revenues received by the Non-Controlled Related Entity for the sale of concessions.) The Local Accountants and Accountants shall have access to the payment terms of any such contracts to confirm that the amount paid reflects fair market value. If there is a dispute about whether the amount reflects fair market value, the issue shall be resolved by a jointly-appointed arbitrator who has experience in the line of business in question, and the fair market value shall be included in AR.

    (a)(iv)(6)

    In the event of a question whether a business or enterprise owned (wholly or in part) by a Club, Club Affiliate, or Club owner is or is not involved in AR-related transactions, the NFLPA agrees to accept the written certification from the certified accountant of such business or enterprise, that such business or enterprise is not involved in AR-related transactions. Notwithstanding the foregoing, the NFLPA may seek an order from the System Arbitrator granting access to the records of such business or enterprise if it demonstrates that there is a reasonable basis for asserting that such business or enterprise is involved in AR-related activity.

    (a)(v)

    Rounding. For the purposes of any amounts to be calculated or used pursuant to this Agreement with respect to AR, Projected AR, Benefits, Projected Benefits, the Player Cost Amount, Cash Spending, and the Stadium Credit, such amounts shall be rounded to the nearest $1,000. For purposes of any percentage to be calculated or used pursuant to this Agreement, unless otherwise specifically provided, such percentages shall be rounded to the nearest one-one hundredth of one percent (e.g., 47.00%).

    (a)(vi)(1)

    Subject to Subsection 1(a)(vi)(6) and Subsection 4(f) below, AR shall not include PSL proceeds that are unequivocally dedicated to stadium construction or stadium renovation projects commenced after the start of the Prior Agreement, and that have received a waiver of any applicable League requirement of sharing of “gross receipts”;

    (a)(vi)(2)

    Except as set forth in Subsection (1) above, AR shall include all revenues from PSLs received by, or received by a third party and used, directly or indirectly, for the benefit of, the NFL or any Team or Team Affiliate, subject to any deduction for taxes as provided in Section 1(a)(i) above and the provisions of Subsection (3) below with respect to PSL refunds. Such revenues shall be allocated in equal portions, commencing in the League Year in which they are received, over the remaining life of the PSL, subject to a maximum allocation period of fifteen years; provided, however, that Interest from the League Year the revenues are received until the League Years the revenues are allocated into AR shall be imputed and included in AR, in equal portions over such periods.

    (a)(vi)(3)

    For purposes of this Agreement, the term “PSL” shall include any and all instruments of any nature, whether of temporary or permanent duration, that give the purchaser the right to acquire or retain tickets to NFL games and shall include, without limitation, seat options; seat bonds; and suite bonds or long-term conveyances of suite occupancy rights where proceeds are unequivocally dedicated to stadium construction (e.g., Founders’ Suite Programs) that directly or indirectly give purchasers the right to acquire NFL tickets. PSL revenues shall also include revenues from any other device (e.g., periodic payments such as surcharges, loge maintenance fees, etc.) that the NFL and the NFLPA agree constitutes a PSL.

    (a)(vi)(4)

    PSL revenues shall be reported net of actual refunds made in the year for which such revenues are reported. If an amount has been refunded, then the refunded amount shall be deducted from PSL revenues used in the calculation of AR. If there is a non-contingent contractual commitment to refund, but the refund is to be made at a later date, then the only amount included is the Interest on the refund. Otherwise, all amounts are included regardless of any refund contingencies. If a refund contingency occurs and money previously included as PSL revenue is refunded, the NFL shall receive a credit against AR (i.e., League-wide AR shall be reduced) in the amount of the refund the next League Year.

    (a)(vi)(5)

    In the event of a payment default and/or forfeiture of PSL revenue being received on an installment payment plan, the unamortized portion of such revenue, in excess of cash received, shall no longer be included in AR upon the date, and to the extent, of default/forfeiture. In the event that cash received at the time of the default/forfeiture exceeds life-to-date amortization of PSL revenue, amortization will continue as scheduled until equaling the amount of cash received. In the event that any such PSLs are re-sold, and the re-sale does not meet the criteria of Subsection 1(a)(vi)(1) above, the re-sale will be included in AR and amortized over the life of the PSL up to a maximum of fifteen years.

    (a)(vi)(6)

    Exclusions from AR of PSL revenue in respect of funding for stadium projects initiated after the 2005 League Year will terminate upon sale of the recipient franchise if the waiver from revenue sharing also terminates.

    (a)(vii)

    Premium Seat Revenues (“PSRs”).

    (a)(vii)(1)

    Subject to Subsection 1(a)(vii)(4) and Subsection 4(f) below, AR shall not include PSR proceeds that are used for stadium construction or stadium renovation projects commenced after the start of the Prior Agreement, and that have received a waiver of any applicable League requirement of sharing of “gross receipts.”

    (a)(vii)(2)

    Except as provided in Subsection (1) above, AR shall include all PSRs net of amounts described in Subsection 1(a)(i)(1).

    (a)(vii)(3)

    For purposes of this Agreement, the term “PSR” shall mean the revenue from any periodic charge in excess of the ticket price that is required to be paid to acquire or retain any ticket to NFL games (other than PSL revenues and charges for purchase or rental of luxury suites), including charges in respect of any amenities required to be purchased in connection with any ticket.

    (a)(vii)(4)

    Exclusions from AR of PSR revenue in respect of funding for stadium projects initiated after the 2005 League Year will terminate upon sale of the recipient franchise if the waiver from revenue sharing also terminates.

    (a)(viii)

    Naming Rights/Cornerstone Sponsorships.

    (a)(viii)(1)

    Subject to Subsections 1(a)(viii)(3)–(4) and Subsection 4(f) below, AR shall not include naming rights and cornerstone sponsorship proceeds that are used for stadium construction or stadium renovation projects commenced after the start of the Prior Agreement, and that have received a waiver of any applicable League requirement of sharing of “gross receipts.”

    (a)(viii)(2)

    Except as provided in Subsection (1) above, AR shall include all naming rights and cornerstone sponsorship proceeds.

    (a)(viii)(3)

    Exclusions from AR of naming rights revenue in respect of funding for stadium projects initiated after the 2005 League Year will terminate upon sale of the recipient franchise if the waiver from revenue sharing also terminates.

    (a)(viii)(4)

    For any stadium construction or renovation project initiated after the 2020 League Year with $150 million or more of the cost funded by the Club or Club Affiliates (with the threshold increased as of the 2026 League Year to $175 million):

    (a)(viii)(4)(A)

    “cornerstone sponsorship proceeds” means, for any such stadium, the six (6) stadium-related sponsorships for new stadiums, and, alternatively, four (4) stadiumrelated sponsorships for stadiums with renovation project(s), in each case that exceeds the threshold, with respect to sponsorship elements/deliverables comparable to those in existing cornerstone sponsorship agreements other than the naming rights partner, where such sponsorship shall be used to support the construction or renovation project. Clubs shall be required to declare which sponsorships, meeting this definition, shall be considered “cornerstone sponsorships” upon execution of such sponsorship agreement. This declaration must be made within two years of the completion of all phases of such construction or renovation project. Cornerstone sponsorships may only be replaced upon expiration of the cornerstone sponsorship agreement, unless a cornerstone sponsor becomes unable or unwilling to meet its obligations under the agreement. At no time may a Club have more than six (6) or four (4) cornerstone sponsorships, as applicable, regardless of the number of construction/renovation projects that have been approved.

    (a)(viii)(4)(B)

    Notwithstanding anything else in this Agreement, and without limitation: (i) revenue derived from tickets, suites, fees to enter club suites or any other part of the stadium, PSLs, PSRs, luxury boxes, concession sales, parking, sales of programs and novelties, pouring rights, and naming rights for practice/training facilities, shall not be subject to exclusion hereunder; and (ii) a sponsorship agreement must have at least fifty-five percent (55%) of revenues attributable to sponsorship elements/deliverables related to the stadium (including tickets, suites and the IP value of the sponsorship) to qualify as a cornerstone sponsorship.

    (a)(ix)(1)

    Notwithstanding Subsections (vi)–(viii) above, for any AR exclusions subject to the Cap Effect Guarantee described in Subsection 4(f) below: there shall be no requirement of a waiver from sharing of “gross receipts” provided that there is an economically-equivalent method of League support for such project (e.g., relief from payment of a League assessment). The NFL shall provide the NFLPA with prior notice of any such economically-equivalent method used with respect to such exclusions.

    (a)(ix)(2)

    Notwithstanding Subsections (vi)–(viii) above, the NFL shall have the right to include in AR any revenues that would otherwise qualify for exclusion from AR under those Subsections.

    (a)(ix)(3)

    For the avoidance of doubt, Subsections (vii)–(viii) above do not require that specific funds from PSRs, naming rights, or cornerstone sponsorship proceeds be traceable to specific payments supporting construction or renovation projects for the exclusion to apply (recognizing that these proceeds are among the sources of funds to pay construction costs or related debt service), nor does the exclusion of PSLs, PSRs, naming rights and cornerstone sponsorship proceeds under Subsections (vi)–(viii) above permit the aggregate exclusion from AR of amounts that would exceed the actual private costs of such construction or renovation projects.

    (a)(x)

    Los Angeles Stadium.

    (a)(x)(1)

    Notwithstanding any other provision of this Agreement, but subject to Subsection (x)(5) below, the NFL shall be entitled to exclude from AR: (i) the Los Angeles Fan Club memberships (PSLs) as previously agreed as set forth in the parties’ prior letter agreements on this subject; and (ii) thirty percent (30%) of the Incremental Revenue generated by the Los Angeles Rams and Los Angeles Chargers (as defined in this Section, the “LA Incremental Revenue Exclusion”) until such time that the total exclusions equal the private cost (including, without limitation, financing costs) to construct the stadium, net of PSLs plus interest, as defined in Section 1(a)(xiv). Financing costs shall be calculated at the NFL’s long-term borrowing rate as of the opening of the stadium.

    (a)(x)(2)

    “Incremental Revenue” shall be total AR, net of PSLs, generated by the Los Angeles Rams and the Los Angeles Chargers from the Los Angeles stadium, less each Club’s baseline revenue. The baseline years for the Los Angeles Rams and Los Angeles Chargers shall be 2015 and 2016, respectively, with resulting baseline revenues of $56,864,000 (Rams) and $90,025,000 (Chargers).

    (a)(x)(3)

    No additional Stadium Credits or AR exclusions will be taken for the Los Angeles stadium project.

    (a)(x)(4)

    All of the parties’ agreements with respect to Los Angeles shall be without prejudice to any treatment the parties may agree upon for any future stadium or after this Agreement.

    (a)(x)(5)

    For purposes of this Section:

    (a)(x)(5)(A)

    Projected AR shall be initially calculated as if the PSR, cornerstone and naming rights AR exclusions for the Rams and Chargers for the 2020 League Year totaled $98 million (the “Baseline LA Exclusions”). The Baseline LA Exclusions shall be re-set after the 2020 League Year based on the amounts of PSR, cornerstone and naming rights revenues actually received or to be received on an accrual basis by the Chargers and Rams or their respective Stadcos for the 2020 League Year (with any cornerstone and naming rights revenues received in a lump-sum payment amortized over the life of the naming rights/cornerstone sponsorship agreement up to a maximum of fifteen years) from the list of eleven (11) sponsorships identified at the time of the stadium’s opening as cornerstone sponsors, in addition to the naming rights partners. For the avoidance of doubt, the NFLPA accepts the NFL’s representation that the sponsorships identified qualified as naming rights and cornerstone sponsorships, and the review contemplated by this Section for those sponsorships is limited to determining the total amounts received from those sponsorships (e.g., there will be no challenge as to whether any of these specific Los Angeles sponsorships identified at the time of agreement meets the definition of a cornerstone sponsor).

    (a)(x)(5)(B)

    After the 2020 League Year, the cornerstone, PSR and naming rights com-ponents of the Baseline Exclusion shall be the total amounts actually received or to be received on an accrual basis by the Chargers and Rams or their respective Stadcos for that year (with any cornerstone and naming rights revenues received in a lump-sum payment amortized over the life of the naming rights/cornerstone sponsorship agreement up to a maximum of fifteen years). Should any of the “original” eleven (11) designated Los Angeles cornerstone sponsorships become unable or unwilling to meet its obligations under the agreement, the Clubs shall have the opportunity to designate a replacement cornerstone sponsorship to meet the stadium funding and financing amounts, up to the same amount of any such sponsorship being replaced.

    (a)(x)(5)(C)

    If the LA Incremental Revenue Exclusion is greater than the Baseline LA Exclusion, then, notwithstanding any other provision of this Agreement, the Local AR from the Los Angeles stadium shall be increased by the difference between the LA Incremental Revenue Exclusion and the Baseline LA Exclusions. Conversely, if the LA Incremental Revenue Exclusion is less than the Baseline LA Exclusion, then the Local AR from the Los Angeles stadium shall be reduced by the same difference.

    (a)(xi)

    Allocations Over League Years. The parties may agree to allocate AR received or to be received on an accrual basis in a particular League Year over one or more other League Years.

    (a)(xii)

    Cancelled Games. If one or more weeks of any NFL season are cancelled or AR for any League Year substantially decreases, in either case due to a terrorist or military action, natural disaster, or similar event, the parties shall engage in good faith negotiations to adjust the provisions of this Agreement with respect to the projection of AR and the Salary Cap for the following League Year so that AR for the following League Year is projected in a fair manner consistent with the changed revenue projection caused by such action.

    (a)(xiii)

    Expense Deductions.

    (a)(xiii)(1)

    No expense deductions shall be permitted to be taken in calculating AR, and all expense deductions that were previously permitted in the calculation of “Total Revenues” or “Defined Gross Revenues” or “Excluded Defined Gross Revenues” shall not be used in calculating AR, except as expressly provided herein.

    (a)(xiii)(2)

    An expense deduction for the reasonable and customary direct costs and initial investment (collectively, “direct costs”) for projects in new lines of business of NFL Ventures may be taken, subject to the following rules:

    (a)(xiii)(2)(A)

    Absent NFLPA approval, there may be no more than three projects in new lines of business to receive deductions in any League Year (i.e., for the 2012 League Year, there can be three projects in new lines of business receiving deductions; for the 2013 League Year, there could be six projects in new lines of business (three that began in 2012 and three that began in 2013).

    (a)(xiii)(2)(B)

    Absent NFLPA approval, a project in a new line of business shall not qualify for this deduction if it has more than $15,250,000 in direct costs in a League Year. This limit shall increase in each League Year after the 20182 League Year by the percentage change in AR.

    (a)(xiii)(2)(C)

    Absent NFLPA approval, there may be no more than $182,989,000 in direct costs across all projects that qualify for the deduction in the 2018 League Year (i.e., a maximum deduction of $91,495,000). For the avoidance of doubt, this Subsection (C) is subject to the requirements of Subsections (A) and (B) above. This maximum deduction amount shall increase each subsequent League Year by the same percentage increase (if any) of AR;

    (a)(xiii)(2)(D)

    The expense deduction for the first three years of any qualifying new line of business project shall be 50% of the direct costs in each such League Year;

    (a)(xiii)(2)(E)

    The expense deduction for years four through five of any qualifying new line of business project shall be 25% of the direct costs in each such League Year;

    (a)(xiii)(2)(F)

    Unless the parties agree otherwise, after five years no further deductions shall be taken for any such project (and revenues from such projects shall be included in AR in the 45% bucket as described below);

    (a)(xiii)(2)(G)

    The NFL shall provide the NFLPA with notice of the projects for which it will take the expense deduction, including the provision of business plans and budgets (subject to reasonable confidentiality and non-compete terms);

    (a)(xiii)(2)(H)

    Pursuant to the provisions of Section 3 below, the Accountants shall review, and the NFLPA shall have audit rights regarding, such deductions to ensure their accuracy and reasonableness;

    (a)(xiii)(2)(I)

    Deductions allowed shall be netted against related revenues, and the netting of expenses cannot result in a negative number (e.g., if 50% of the direct costs for a project exceed its revenues, the AR count for such project shall be zero).

    (a)(xiii)(2)(J)

    For purposes of this Subsection 1(a)(xiii)(2), if the NFL adds additional International Series regular season games (i.e., more than one International Series regular season game in any given League Year), each additional International Series game shall constitute a new line of business project, and further provided that the payment made by the NFL to reimburse the participating Clubs for lost revenue (which payment is included in AR) shall not be included in determining whether such Series is subject to either of the direct cost limits referenced in Subsection (B) or (C) above.

    (a)(xiv)

    Interest. Unless otherwise specified, as used in this Article, “Interest” means interest calculated on an annual compounded basis using the one-year Treasury yields at constant maturities rate as published in The Wall Street Journal on February 1 (or the next date published) of the League Year in which the amount to receive interest accrues, is awarded, or occurs, as the case may be. If this rate is not published in The Wall Street Journal for any reason, the website of the Federal Reserve (http://www.federalreserve.gov) shall be used to obtain the interest rate.

    (a)(xv)

    No Double-Counting. No revenue may be included in AR more than once. All intra-company transactions between or among the NFL, any NFL Affiliate, Clubs, and Club Affiliates shall be eliminated in accordance with GAAP (treating all such transactions on a pro forma consolidated basis) (except as provided in Subsection 1(a)(xiii)(J) above) for purposes of calculating AR. For any joint venture, if AR rights are granted to the venture, which in turn pays the NFL or the Clubs for the rights granted, the value of the rights shall only be included in AR once.

    (a)(xvi)

    Subject to their reasonable business judgment, the NFL and each NFL Team shall act in good faith and use commercially reasonable efforts to increase AR for each playing season during the term of this Agreement and not shift revenues attributable to League Years within the term of this Agreement to League Years after the term. There shall be no obligation to accelerate into League Years within the term of this Agreement revenues attributable to League Years following expiration of this Agreement. In evaluating compliance with this Subsection, the parties and the System Arbitrator shall consider and give substantial weight to the reasonable business judgment of the NFL or the NFL Team but no deference will be applied where the NFL is alleged to have deferred or forgone revenues of $1 billion or more for the purpose of securing leverage in collective bargaining, in which case any finding of non-compliance shall require proof by a clear preponderance of the evidence. The following is a list of decisions in respect of which the business judgment of the NFL or an NFL Team shall conclusively be deemed reasonable: franchise location; stadium capacity or configuration; ticket or suite prices; number and location of games played; whether to outsource or operate a line of business; and whether to accept or decline a sponsorship, advertising or naming rights opportunity. The foregoing list shall not limit in any manner the circumstances in which the business judgment of the NFL or an NFL Team may be deemed reasonable.

    (b)

    Additional Accounting Rules. The calculation of AR shall be further subject to the rules set forth in Section 10 below.

    (c)

    Revenue-related Arbitrators. Wherever this Article provides for a jointly-retained arbitrator to resolve a revenue-related dispute, and if the parties cannot agree on the identity of such arbitrator, the parties shall use the procedures set forth in Article 15, Section 6 to select the arbitrator.

  • Section 2. Benefits
    (a)

    “Benefits” and “Player Benefit Costs” mean the aggregate for a League Year of all sums paid (or to be paid on a proper accrual basis for a League Year) by the NFL and all NFL Teams for, to, or on behalf of present or former NFL players, but only for:

    (a)(i)

    Pension funding, including the Bert Bell/Pete Rozelle NFL Player Retirement Plan (as described in Article 53) and the Second Career Savings Plan (as described in Article 54);

    (a)(ii)

    Group insurance programs, including, life, vision, medical, and dental coverage (as described in Article 58 or as required by law), and the Disability Plan (as described in Article 60);

    (a)(iii)

    Injury Protection and Extended Injury Protection, to the extent provided in Article 45, Sections 4 and 9;

    (a)(iv)

    Workers’ compensation, payroll, unemployment compensation, social security taxes, and contributions to the fund described in Article 41, Section 4;

    (a)(v)

    Preseason per diem amounts (as described in Sections 3 and 4 of Article 23) and regular season meal allowances (as described in Article 34);

    (a)(vi)

    Expenses for travel, board and lodging for a player participating in an offseason workout program in accordance with Article 13, Section 6(e)(iv)(3);

    (a)(vii)

    Payments or reimbursements made to players participating in a Club’s Rookie Football Development Program (as described in Article 7);

    (a)(viii)

    Moving and travel expenses (as described in Article 36);

    (a)(ix)

    Postseason pay (as described in Articles 37 and 38) and salary paid to Practice Squad players pursuant to a Practice Squad Contract during the postseason;

    (a)(x)

    Player medical costs (i.e., fees to doctors, hospitals, and other health care providers, and the drugs and other medical cost of supplies, for the treatment of player injuries), but not including salaries of trainers or other Team personnel, or the cost of Team medical or training equipment (in addition, the amount of player medical costs included in Benefits may not increase by more than ten percent (10%) each League Year). Subject to the foregoing, player medical costs shall include one-third of each Club’s expenses for tape used on players and one-third of each Club’s player physical examination costs for signed players (player physical examination costs relating to the Combine or for Free Agents whom the Club does not sign are not included in Player Benefit Costs);

    (a)(xi)

    Severance pay (as described in Article 59);

    (a)(xii)

    The Player Annuity Program (as described in Article 55);

    (a)(xiii)

    The Veteran Salary Benefit (as described in Article 27) and the Four-Year Player Benefit (as described in Article 27, Sections 6 and 9);

    (a)(xiv)

    The Performance Based Pool (as described in Article 28);

    (a)(xv)

    The Tuition Assistance Plan (as described in Article 56);

    (a)(xvi)

    The Gene Upshaw NFL Players Health Reimbursement Account (as described in Article 62);

    (a)(xvii)

    The “88 Benefit” for former players suffering from dementia (as described in Article 57);

    (a)(xviii)

    The Rookie Redistribution Fund (as described in Article 7), and further provided that there shall be no Rookie Redistribution Fund for the 2020 League Year; (xix) The Legacy Benefit (as described in Article 57 of the Prior Agreement), for which the NFL’s funding obligations outside of Player Benefit Costs shall expire after the 2022 League Year, and further provided that the NFL’s $64 million contribution to that Benefit in the 2020 League Year shall not count as a Player Benefit Cost. In the 2021 League Year, the NFL will contribute $32 million to the Legacy Benefit, which shall not count as a Player Benefit Cost. In the 2022 League Year, the NFL will contribute $16 million to the Legacy Benefit, which shall not count as a Player Benefit Cost. The NFL will not have any obligation to make any further contributions to the Legacy Benefit outside of Player Benefit Costs after the 2022 League Year. For purposes of this Subsection only, and only to the extent not already incorporated into or superseded by the provisions of Article 53 of this Agreement, the provisions of Article 57 of the Prior Agreement regarding eligibility for the Legacy Benefit are carried forward without amendment and incorporated by reference in this Agreement as if fully set forth herein;

    (a)(xx)

    The Neurocognitive Disability Benefit (as described in Article 60);

    (a)(xxi)

    The Long-Term Care Insurance Program (as described in Article 61); and

    (a)(xxii)

    Injury compensation-related payments made to players pursuant to Article 38, Sections 4(c) through 4(g);

    (a)(xxiii)

    Stipends pursuant to Article 32 to players traveling to more than one International game outside of North America;

    (a)(xxiv)

    50% of the costs of the administering the Concussion Protocol (as described in Article 39, Section 16);

    (a)(xxv)

    The NFL Player Capital Accumulation Plan (as described in Article 55A);

    (a)(xxvi)

    The Additional Game Check (as described in Article 26), and to the extent not offset by the Rookie Redistribution Fund or the Performance-Based Pool; and

    (a)(xxvii)

    Any other benefit that the Parties agree in writing shall constitute a Player Benefit Cost.

    (b)

    If Benefits that are not currently taxed are subject to a new or materially different federal or state excise tax, the parties will negotiate in good faith about the appropriate adjustment, if any, in Benefits to account for such additional tax. In agreeing to this Section, neither party waives any right to contend that such tax amounts would meet or would not meet the definition of a Player Benefit Cost set forth in this Agreement, and this Section shall not be referred to in any dispute regarding such issue.

    (c)

    Without limitation on any other provision of this Agreement, Benefits will not include (1) salary reduction contributions elected by a player to the Second Career Savings Plan described in Article 54; (2) any tax imposed on the NFL or NFL Clubs pursuant to section 4972 of the Internal Revenue Code for the Bert Bell/Pete Rozelle NFL Player Retirement Plan, and (3) attorneys’ fees, costs, or other legal expenses incurred by Clubs in connection with workers’ compensation claims of players. Benefits for a League Year will be determined by adding together all payments made and amounts properly accrued by or on behalf of the NFL and all NFL Clubs for the above purposes during that League Year, except that Benefits for pension funding and the Second Career Savings Plan will be deemed to be made in a League Year for purposes of this Article if made in the Plan Year beginning in the same calendar year as the beginning of such League Year.

  • Section 3. Accounting Reports & Projections
    (a)

    Special Purpose Letters and AR Reporting.

    (a)(i)(A)

    As provided below, each League Year the parties will be provided with one or more “Special Purpose Letters” by an independent accounting firm (hereinafter “the Accountants”) which report the AR, Player Cost Amount, Team Salary, Cash Spending, and Benefits of each Club and the NFL for that League Year, utilizing information reported by independent Club and League accounting firms, and information obtained by the Accountants through its review procedures. The Accountants shall be a nationally recognized accounting firm jointly appointed by the NFL and the NFLPA. The parties agree to share equally the cost of the Accountants. The Reporting Package to be used by the Clubs and the League in providing information to the Accountants (“Revenue Reports”) in each of the NFL playing seasons covered by this Agreement shall be agreed to by the parties, and shall be reported on a March 31 year-end basis unless otherwise agreed by the parties. The basic review procedures to be performed by the Accountants are set forth below, and may be modified and/or supplemented by mutual agreement of the parties. The engagement of the Accountants shall be deemed to be renewed annually unless the Accountants are discharged by either party during the period from May 1 to July 1 of that year. Each Special Purpose Letter shall be based upon the best available information at the time of its issuance, and shall include a report of adjustments and new information obtained with respect to amounts previously reported for prior League Years.

    (a)(i)(B)

    The amount of any Salary Cap and League-Wide Cash Spending that may apply in a League Year shall be determined at the times and utilizing the Special Purpose Letters and other information described below.

    (a)(ii)

    In the event than any error is found in AR, Benefits, or Player Cost Amount in respect of any League Year subsequent to the 2020 League Year, which, if it had not occurred, would have resulted in any increase or decrease in any Salary Cap in one or more prior League Years, the total amount of any such Salary Cap shortfall or overage, as the case may be, shall be added or subtracted, as the case may be, the next time the Salary Cap is calculated. An inaccuracy in an estimate that was made in a prior League Year shall not be considered an error for purposes of this Subsection, and such estimates shall be reconciled by the Accountants each League Year. In the event that an inaccuracy in an estimate is not reconciled, the failure to do so shall be considered an error for purposes of this Subsection. Any individual errors proposed for correction pursuant to this Subsection that are greater than $25,000 must be substantiated by evidence and be reviewed with the NFL, the NFLPA, and the Accountants prior to the correction being made. Any dispute regarding such corrections shall be subject to the procedures that apply under Subsection (viii) below.

    (a)(iii)

    To the extent that the amounts and information set forth in a Special Purpose Letter indicates that the amount of any Salary Cap for any prior League Year within the term of this Agreement should have been different from the amount actually utilized, any such difference shall be credited or deducted, as the case may be, to the next Salary Cap to be set, with Interest. Any such adjustment in the Final League Year shall be immediate.

    (a)(iv)

    The Accountants shall review the reasonableness of any estimates included in any Club’s Revenue Reports in the League Years covered by this Agreement and may make such adjustments in such estimates as they deem appropriate. To the extent that the actual amounts of revenues received or expenses incurred differ from such estimates, adjustments shall be made as provided in Subsection (ii) above.

    (a)(v)

    The Accountants shall receive, in connection with their duties: (1) access to and copies of the Local Accountant workpapers with respect to the Schedule described in Appendix F; and (2) access to the financial audit workpapers of the Local Accountants or League Office (to the extent necessary), provided that any information derived from the access described in this clause (2) will be held in confidence and will not be part of any file subject to NFLPA review.

    (a)(vi)(A)

    The NFL will use its best efforts to ensure that any contract between the League, any Club, or any Club Affiliate, and any third party in connection with the sale or marketing of any source of AR shall include terms that provide to the Accountants and the NFLPA access to any and all financial and contractual information and documents in the possession, custody, or control of such third party to which the Club, Club Affiliate, or any other entity controlled by the owner of the Club has any right to any access, relating to such revenue source or any other financial or contractual relationship or transaction between such third party and the League, the Club involved in the sale or marketing of such revenue source, any Affiliate of that Club, or any of that Club’s owners. In each case such access shall be subject to and limited by the rules set forth in this Agreement or otherwise agreed to by the parties regarding the dissemination of information provided to the Accountants and the NFLPA pursuant to the audit process. If the NFL, despite its best efforts, cannot ensure such access, the NFLPA shall have the right to obtain an order against the Club or Club Affiliate requiring that such access be allowed.

    (a)(vi)(B)

    For any future Super Bowl bid, the NFL shall require Super Bowl Host Committees to commit to the following, should the bid be awarded to that City/Host Committee:

    (a)(vi)(B)(1)

    Designate an executive level member of the Host Committee to be responsible for Host Committee Salary Cap Accounting purposes. Designated individual must be available to provide answers to questions from the parties for a period of at least six months following the Super Bowl. The Host Committee shall be subject to audit by the NFLPA Auditor during this six-month period.

    (a)(vi)(B)(2)

    Within three months following the Super Bowl, provide a declaration with a detailed list of events/services that occurred in connection with the Super Bowl by the Host Committee.

    (a)(vi)(B)(3)

    Retain an independent, third-party certified public accounting firm to prepare a detailed schedule of the Host Committee’s expenses incurred for production of Super Bowl events (e.g., NFL Honors, NFL House, Tailgate, NFL Experience and Super Bowl game), providing detail similar to the Minnesota Super Bowl Host Committee closing financial report, for review by the parties. Such report shall include copies of: (i) all vendor expenditure contracts entered into by the Host Committee in connection with Super Bowl (e.g., game-day security, game-day traffic control); (ii) all Super Bowl Host Committee state and local tax returns; and (iii) documents establishing all deliverables provided by the Host Committee to the NFL and/or NFL Clubs.

    (a)(vi)(C)

    The NFL shall also use its best efforts to obtain this information for Super Bowls already awarded.

    (a)(vi)(D)

    At present, the NFL Draft does not have a Host Committee or equivalent entity. Should that change during the term of this Agreement, the terms of Subsection (B) and the mutual reservation of rights in Subsection (E) as to whether any Draft-related revenue should be considered AR shall apply to the NFL Draft Host Committees.

    (a)(vi)(E)

    The scope of any additional AR to be included with respect to Super Bowl Host Committees shall be expressly left open, with both parties reserving their rights.

    (a)(vii)

    Reasonably prior to the issuance of a Special Purpose Letter, the Accountants shall, as set forth in Appendix F attached hereto, notify designated representatives of the NFL and the NFLPA: (1) if the Accountants have any questions concerning the amounts of revenues reported by the Clubs or any other information contained in the Revenue Reports submitted by the Clubs; and (2) if the Accountants propose that any adjustments be made to any revenue item or any other information contained in the Revenue Reports submitted by the Clubs.

    (a)(viii)

    In the event of any dispute concerning the amounts (as opposed to includability or the interpretation, validity or application of this Agreement) to be included in the Revenue Reports, including any dispute concerning any findings or determinations concerning expenses made by the Accountants related to Subsection 1(a)(xiii)(2) above that cannot be resolved among the parties (hereinafter referred to as “Disputed Adjustments”), such dispute shall be resolved by the Accountants after consulting and meeting with representatives of both parties. Notwithstanding the foregoing, either party shall have the right to contest, by commencing a System Arbitrator proceeding pursuant to this Agreement, any Disputed Adjustments made by the Accountants, whenever such Disputed Adjustments for all Clubs are adverse to the party commencing the proceeding in an aggregate amount of $5 million or more in any League Year covered by this Agreement. If the Disputed Adjustments for all Clubs are adverse to the party commencing the proceeding in an aggregate amount of $5 million or more but less than $10 million, the parties agree that: (1) the hearing will take place on an expedited basis and will not last longer than one full day, provided, however, that if, despite the reasonable efforts of the parties, the hearing cannot be completed in one day, the hearing shall continue, unless the parties otherwise agree, day-to-day until concluded; and (2) if the party that brings the proceeding does not substantially prevail after the hearing, then that party shall pay the reasonable costs and expenses, including attorneys’ fees, of the other party for its defense of the proceeding. The immediately preceding sentence shall have no application to System Arbitrator Proceedings in which the Disputed Adjustments for all Clubs adverse to the party bringing the proceeding equal or exceed $10 million. All other disputes among the parties as to the interpretation, validity, or application of this Agreement, or with respect to any Salary or Benefits amount included in a Revenue Report, shall be resolved by the System Arbitrator appointed pursuant to this Agreement, as set forth in Article 15.

    (a)(ix)

    After receiving a Final Special Purpose Letter, the NFLPA shall have the right, upon reasonable notice and at its own expense, to conduct an audit of the League and any of its Clubs to further verify the accuracy of the information in such Final Special Purpose Letter through an auditor hired by the NFLPA (subject to notification and approval by the NFL, not to be unreasonably withheld) (the “NFLPA Auditor”). A representative of the NFL shall accompany the NFLPA Auditor on any site visits during any such audit, but shall not interfere with the conduct of the audit. The NFLPA Auditor shall make diligent efforts to complete its report no later than sixty (60) days prior to the scheduled issuance of the next Final Special Purpose Letter so that the Accountants and the parties may address any issues in advance of such next Final Special Purpose Letter. The Clubs shall provide reasonable cooperation in the audit process. The NFLPA Auditor may copy documents it reviews in the course of its audits and maintain copies of documents reviewed in its office. Other than as set forth in this Subsection, the NFLPA Auditor may not show any such copies to anyone other than its partners, employees, and agents. The documentation made available and the information contained therein shall be held in strict confidence and may be discussed only with individuals authorized in this Subsection, or as jointly authorized by the NFL and the NFLPA. The NFLPA Auditor may prepare one or more written or oral reports for the use of the NFLPA in connection with this Agreement, which may refer to and discuss the contents of documents reviewed, but which may not include copies of any such documents. Any such report shall not be referred to or distributed to anyone outside of the NFLPA or the NFLPA Auditor for any other purpose. If the NFLPA determines in the exercise of its judgment that matters discussed in the NFLPA Auditor’s report may indicate a violation of this Agreement, then the NFLPA Auditor may show (but not provide) a copy of such documents (or portions thereof) that it considers in the exercise of its judgment to be relevant to such potential violation to counsel for the NFLPA, the Executive Director and General Counsel of the NFLPA, up to three NFLPA staff personnel (whose authority to receive such information shall be disclosed in advance to the NFL) and up to three members of the NFLPA Executive Committee (whose authority to receive such information shall be disclosed in advance to the NFL). In addition, a copy of such documents may be presented to the System Arbitrator and/or a court in any proceeding to enforce this Agreement. At least four (4) business days prior to commencing any such proceeding based upon such documents, the NFLPA will advise the NFL of the alleged violation upon which the proceeding would be based; the parties shall stipulate to reasonable protective order terms and conditions to protect the confidentiality of such information. Except in connection with a proceeding as described in the preceding sentence, the NFLPA, its representatives and agents shall not refer to or distribute such copies to anyone outside of their organizations for any other purpose.

    (b)

    Projected AR, Projected Benefits, True-Ups, and Timetable.

    (b)(i)

    Prior to the start of each League Year, the parties will meet for the purpose of agreeing upon the projections to be used to determine Projected AR and Projected Benefits, including incremental stadium-related revenues from the opening or any new stadium or major renovation of an existing stadium, or any known modifications of an existing stadium lease, and contracted revenues and/or percentage adjustments to be used for League Media, NFL Ventures/Postseason, and Local AR from the prior League Year. In the absence of agreement of the parties otherwise, Projected AR shall be projected on the basis of: (A) for League Media AR, on the basis of the League Media contracts; (B) for NFL Ventures/Postseason AR, on the basis of League-level contracts and year-over-year growth rates for such AR not specified in a League-level contract; and (C) for Local AR, (1) for gate, on the basis of the average prior-year ticket price (taking into account any announced price increases or decreases for the upcoming season) multiplied by the actual prior-year attendance (adjusted to account for any new or significantly renovated stadiums, relocations, or expansions); and (2) for all other Local AR, on the basis of the year-overyear growth rates, or, in the absence of agreement on the growth rate, on the basis of the annual percentage increase for such revenues over the prior four League Years (using a compound annual growth rate), in either case adjusted to account for any new or significantly renovated stadiums, new revenue streams, relocations, or expansions. Projected Benefits shall be any Benefits projected to be paid (or properly accrued) in the applicable League Year pursuant to this Agreement, provided that if the amounts to be paid for any Benefit during the next League Year are not reasonably calculable, then, for the purposes of calculating Projected Benefits, the projected amount to be paid for the Benefit shall be the amounts expended by NFL Teams for the same Benefit in the prior League Year.

    (b)(ii)

    Based on the meeting described in Subsection (i), the Accountants shall prepare an Initial Special Purpose Letter based on the Clubs’ January reporting submissions that will set forth Projected AR and Projected Benefits for the upcoming League Year and an initial calculation of actual AR and actual Benefits from the prior League Year. Following the method set forth in Section 6 below, any difference between the Salary Cap from the prior League Year and the Salary Cap that would have applied in that League Year had the updated AR and Benefits information been used as Projected AR and Projected Benefits when that Salary Cap was set shall be a “True-Up,” to be credited or deducted, as the case may be, in the calculation of the Salary Cap for the upcoming League Year using the method set forth in Section 6. Any such True-Up shall include Interest.

    (b)(iii)

    No later than August 30 of each League Year, the Accountants shall prepare a Final Special Purpose Letter based on the final reporting packages from the League and the Clubs from the prior League Year, that shall set forth (A) the final calculation of actual AR for the prior League Year, (B) the final calculation of actual Benefits for the prior League Year, and (C) the League-Wide Cash Spending for the prior League Year. Following the method set forth in Section 6 below, any difference between: (1) the Salary Cap from the prior League Year as adjusted by any True-Up made after the Initial Special Purpose Letter pursuant to Subsection (ii) above; and (2) the Salary Cap that would have applied if the AR and Benefits from the Final Special Purpose Letter had been used as Projected AR and Projected Benefits when that Salary Cap was set, shall be a further “True-Up,” to be credited or deducted, as the case may be, in the calculation of the Salary Cap for the upcoming League Year using the method set forth in Section 6. Any such further True-Up shall include Interest. For the 2020 League Year only, Projected AR shall contain the NFL’s good faith estimate of $150 million for the revenues that will be generated by the addition of the two playoff games for the 2020 NFL season referenced in the letter dated March 3, 2020 between the NFL and the NFLPA on this subject. If, but only if, such additional playoff games are not added in 2020, then there will be no true-up for this projection.

    (b)(iv)

    In the Final League Year, the Accountants shall issue the Final Special Purpose Letter by May 1st of the Final League Year, and any True-Up related to the Final League Year shall be implemented immediately.

    (b)(v)

    Notwithstanding the foregoing or anything else in this Agreement, if, after the initial calculation of Projected AR for a League Year, a new League-wide television contract is entered into for that League Year, such amounts shall be substituted for the amount for League-wide television revenues previously included in Projected AR. In addition, if one or more new Clubs are scheduled to be added to the NFL during the next League Year as one or more expansion Clubs, Projected AR will include an additional projection of AR determined in a manner agreed to by the parties. In all of the events described in this Subsection, the Accountants shall calculate a revised Projected AR, Projected Benefits, and Projected Player Cost Amount within fourteen (14) days of the triggering event, and the Salary Cap shall immediately be adjusted accordingly, utilizing the method set forth in Section 5.

    (b)(vi)

    In the event that the NFLPA exercises any right to reduce or freeze or increase certain Benefits, Projected Benefits (and the Salary Cap) shall be adjusted immediately to reflect such changes.

    (b)(vii)

    In the event the amount of Projected Benefits is adjusted pursuant to: (1) Subsection (vi) above; (2) the dispute resolution procedures of Article 52, Section 4; (3) agreement of the parties; or (4) as otherwise permitted by this Agreement, then the Salary Cap shall be immediately recalculated to reflect the adjustment in Projected Benefits.

  • Section 4. Stadium Credit
    (a)

    For each League-approved stadium project other than Los Angeles beginning on or after the effective date of this Agreement, there shall be a credit of fifty percent (50%) of the private cost (whether incurred by a Club, Club Affiliate, or the League) to construct or renovate the stadium, or seventy-five percent (75%) of such cost for stadium construction or renovation in California, which cost shall include financing costs, amortized over a maximum of 15 years using an agreed-upon rate based on the NFL’s longterm borrowing cost to fund or support stadium construction, beginning in the League Year before such new stadium opens. The aggregate credit for all such approved projects for each League Year shall be part of the “Stadium Credit.” For purposes of this Subsection, the private cost shall not include any revenues that are excluded from AR related to the project pursuant to Section 1(a)(vi)(1), 1(a)(vii)(1) or 1(a)(viii)(1) above.

    (b)

    In each League Year, the Stadium Credit shall also include an amount equal to 70% of:

    (b)(i)

    Any PSL revenues excluded from AR pursuant to Subsection 1(a)(vi)(1) above, net of amounts specified in Subsection 1(a)(i)(1) above, and amortized over a maximum of 15 years with Interest, beginning in the League Year before the new stadium opens or the renovation is completed;

    (b)(ii)

    Any PSR revenues excluded from AR pursuant to Subsection 1(a)(vii)(1) above, net of amounts specified in Subsection 1(a)(i)(1) above, beginning in the League Year in which the new stadium opens or the renovation is completed;

    (b)(iii)

    Any naming/cornerstone revenues excluded from AR pursuant to Subsection 1(a)(viii)(1) above, with any lump-sum payments amortized over the life of the naming/cornerstone rights agreement up to a maximum of 15 years, beginning in the League Year the new stadium opens or the renovation is completed.

    (c)

    The Stadium Credit shall also include 50% of the cost of capital expenditures incurred during such League Year in any stadium that relate in any way to the fan experience at such stadium (regardless of when the stadium was constructed or renovated), amortized over five years (except for video boards, which shall be amortized over seven years), with Interest, such costs to be verified as capital expenditures by the Local Accountants and the Accountants using GAAP.

    (d)

    Notwithstanding the foregoing, absent NFLPA approval, the Stadium Credit may not equal an amount greater than 1.5% of Projected AR or AR for that League Year (the “Stadium Credit Threshold”).

    (e)

    If the sum of the amounts described in Subsections (a)–(c) above would result in a Stadium Credit that would exceed the Stadium Credit Threshold, then the Stadium Credit shall be an amount equal to the Stadium Credit Threshold, unless the parties have agreed otherwise.

    (f)

    Cap Effect Guarantee.

    (f)(i)

    In the event that the Stadium Credit was initially calculated to exceed the Stadium Credit Threshold, then for any individual stadium for which PSL, PSR, naming/cornerstone revenues were excluded from AR for that League Year, and to the extent that such revenues were excluded, and which excluded revenues were not included in the calculation determining that the Stadium Threshold had been reached, the “Incremental Cap Effect” from such stadium shall exceed the “Exclusion Cap Effect” by 125%. In the event that the Incremental Cap Effect does not exceed the Exclusion Cap Effect by 125% (a “Shortfall”), then an additional amount shall be imputed into AR sufficient to eliminate the Shortfall in the Salary Cap.

    (f)(ii)

    For purposes of this Subsection, “Exclusion Cap Effect” equals 40% of the amount of revenue excluded from AR. “Incremental Cap Effect” equals 40% of the “Incremental AR” from the stadium in question. “Incremental AR” means the difference between the AR generated from the stadium in question as compared to the “Base AR.” “Base AR” means the AR generated from such stadium or its predecessor in the year prior to the completion of the construction or renovation (the “Base Year”); if PSR revenues are being excluded from AR for such stadium, Base AR shall not include any PSR revenues from the Base Year.

    (f)(iii)

    For example, if in the 2018 League Year the Stadium Credit is calculated initially to be more than 1.5% of AR (i.e., to have reached the Stadium Credit Threshold), and if Stadium A had an amortized PSL exclusion of $20 million that was not part of the Stadium Credit Threshold, then the Exclusion Cap Effect of Stadium A would be $8 million (40% of $20 million). Under this Subsection, for this League Year, the League would “guarantee” that the Incremental Cap Effect from Stadium A would not be less than $10 million (e.g., 125% of $8 million). If the actual Incremental AR from Stadium A resulted in an Incremental Cap Effect of $8 million, then $5 million in additional AR would need to be imputed for the 2018 League Year to resolve the $2 million Shortfall so that the net Cap Effect from Stadium A would be $10 million. (If, on the other hand, the $20 million PSL exclusion was included in the Stadium Credit (that is, if 70% of $20 million is part of the 1.5% Stadium Credit being taken for the 2018 League Year), then Stadium A is not subject to the Cap Effect Guarantee, but any PSL exclusions for other stadiums not included in the Stadium Credit would be subject to the Cap Effect Guarantee. For the avoidance of doubt, this calculation will be done every year such excluded revenues are subject to the Cap Effect Guarantee.)

    (g)

    For purposes of this Section, for any PSL revenues subject to the Cap Effect Guarantee the amortization period for the exclusion shall begin in the League Year in which the new or renovated stadium opens.

    (h)

    For purposes of this Section, amounts shall count toward the Stadium Credit Threshold on a chronological basis (e.g., the portion of the Stadium Credit associated with the first League-approved project after the effective date of this Agreement shall be the first amounts included in the calculation of the Stadium Credit Threshold). Within each project, first the amount pursuant to Subsection (a) above shall be calculated, followed by any amount attributable to an AR exclusion as described in Subsection (b).

  • Section 5. Joint Contribution Amount

    For each League Year, each NFL Club shall contribute 1/32 of the Joint Contribution Amount for that League Year, 47.5% of which total Joint Contribution Amount shall reduce the Player Cost Amount (by acting as a credit against AR). For the 2020 League Year, the Joint Contribution Amount shall be $85.323 million, of which: (a) 40% shall be dedicated, as determined by the NFLPA, among the Former Players Benefit Trust (for healthcare or other benefits, funds, or programs for retired players), Former Player Labor–Management Cooperation Committee Trust, Former Player Life Improvement Plan (as described in Article 63), and the Non-vested Former Player Wellness Plan (as described in Article 63A) or any other former player benefits programs at the discretion of the NFLPA; (b) 20% shall be dedicated to the Player Care Foundation, Gene Upshaw Player Assistance Trust Fund, and/or other charitable organizations providing similar charitable services to former players in financial need, as agreed to by the parties; (c) 20% shall be dedicated to medical research, as agreed to by the parties; and (d) 20% shall be dedicated to other charities as determined by the NFL, including the NFL Foundation and/or Youth Football or successor organizations. With respect to the 20% portion that shall be dedicated to medical research, the parties have agreed that; (1) for the 2020 League Year, this portion shall be allocated equally between the NFL and the NFLPA, in their respective discretion, for medical research, consistent with the August 20, 2013 side letter ; and (2) for the 2021–2030 League Years, this portion shall be allocated one-third to the Joint Engineering Committee, one-third to the NFLPA to be used in its discretion for medical research, and one-third to the NFL to be used in its discretion for medical research. The Joint Contribution Amount shall increase by 5% each subsequent League Year, and the allocation described in the preceding sentence shall be adjusted pro rata to reflect such increase. In the event that the Joint Contribution Amounts dedicated pursuant to this Subsection are not spent or used in their entirety in the specified League Year, any such remaining amounts shall remain available in future League Years to be used only pursuant to the identified categories above. (In no event, however, shall any remaining Joint Contribution Amounts from a prior League Year be trued up for purposes of the calculation of the Salary Cap.).

  • Section 6. Calculation of the Player Cost Amount and Salary Cap
    (a)

    Revenue Buckets. AR shall be subdivided into three categories for purposes of calculating the Player Cost Amount and Salary Cap: (1) League Media AR; (2) NFL Ventures/Postseason AR; and (3) Local AR.

    (a)(i)

    League Media. League Media AR shall consist of the revenues arising from (1) television rights sold or licensed either nationally or packaged on a regional basis for the telecast or broadcast of live or near-live transmission of entire or near-entire NFL games (but not highlights) via broadcast or cable television, satellite, internet, or other media (but not for up to sixteen regular season games telecast or broadcast by the NFL Network); (2) international television rights for live and delayed games; (3) national terrestrial, satellite, and internet radio; and (4) the Copyright Royalty Tribunal. For the avoidance of doubt, as of the 2019 League Year the only revenues that would fall into category (1) are the rights fees paid by FOX (for the NFC afternoon package and the Thursday Night Football package), CBS (for the AFC afternoon package), ESPN (for the Monday Night Football package, but not for the digital and international rights, which shall be in the Ventures bucket), and NBC (for the Sunday Night Football package) (in each of the foregoing cases, following the allocation of rights fees as set forth in the parties’ side letter agreement of February 8, 2018), DIRECTV (for the Sunday Ticket package, but not for the separate NFL Network carriage agreement), Verizon (but, without prejudice to the parties’ positions on any other issue, only for the revenues associated with the right to sell advertising during live NFL games, and not for revenues associated with any other rights, which are included in the NFL Ventures/Postseason Bucket), and Amazon (for the digital simulcast rights for the FOX Thursday Night Football package, but not for the SVOD content and other ancillary rights which are included in the NFL Ventures/Postseason Bucket); the only revenues that would fall into category (3) are the rights fees paid by Westwood One (for the national terrestrial radio package), Sirius (for the national satellite radio package), and Tune-In (for the national Internet radio package).

    (a)(ii)

    NFL Ventures/Postseason. NFL Ventures/Postseason AR shall consist of: (A) revenues (other than those described in Subsection (i) above) arising from the operation of postseason NFL games received or to be received by the NFL or NFL affiliates (as opposed to by Club or Club Affiliates); and (B) revenues (other than those described in Subsection (i) above) arising from operation of NFL-affiliated entities (including without limitation NFL Ventures, NFL Network, NFL Properties, NFL Enterprises, NFL Productions, and NFL Digital (including NFL.com and NFL Mobile). For the avoidance of doubt, revenues in this category include without limitation: (1) all revenues of NFL Network, including those related to the broadcast, telecast or distribution of live NFL games and the RedZone channel; and (2) the revenues of NFL Ventures/NFL Digital from the agreement with Verizon (other than as described above); the revenues of NFL Ventures/NFL Digital from the Game Pass product (to the extent that it only distributes out-of-market games); the revenues from NFL Ventures/NFL Films from the NFL Films agreement with ESPN; in each of the cases listed after (2) above, as such agreements existed as of the 2019 League Year.

    (a)(iii)

    Local. Local AR shall consist of all AR received or to be received by the Clubs or Club Affiliates and not included in League Media AR or NFL Ventures/Postseason AR. For the avoidance of doubt, Local AR shall include revenues from the sale or license by Clubs of preseason game television rights.

    (a)(iv)

    Bundled Rights. If, in future League Years, League Media rights are bundled and sold or licensed with other rights that would be within the Ventures or Local AR “bucket,” the parties will discuss in good faith the appropriate bucket allocation of the revenues for such rights. In the absence of agreement, the issue shall be resolved by an “Allocation Arbitrator,” who shall be jointly selected by the parties. The parties shall each propose an allocation to the Allocation Arbitrator, who will decide which proposed allocation to adopt (i.e., a “baseball-style” arbitration). This Subsection shall not apply to any of the current contracts specified in Subsections (i) and (ii) above.

    (a)(v)

    No Migration. No AR may be included in more than one of these categories, and all AR must be included in one of these categories. Revenue for substantially similar rights, services, sales, etc. as for the 2019 League Year shall not migrate into another revenue bucket in subsequent League Years regardless of the entity which receives or generates the AR in such subsequent League Years.

    (b)

    [Omitted].

    (c)

    Player Cost Amounts. For each League Year, the Player Cost Amount and Salary Cap shall be calculated using the information from the Special Purpose Letters in the following four-step manner:

    (c)(i)

    Calculation of the Projected Player Cost Amount. The Player Cost Amount shall be calculated initially as the sum of: (1) 55% of projected League Media AR; (2) 45% of projected NFL Ventures/Postseason AR (other than AR from new line of business projects pursuant to Subsection 1(a)(xii)(2) above); (3) 40% of projected Local AR; and (4), if applicable, 50% of the net AR for new line of business projects pursuant to Subsection 1(a)(xiii)(2) above; less (5) 47.5% of the Joint Contribution Amount.

    (c)(ii)

    Bands.

    (c)(ii)(A)

    If, in the 2020 League Year, the Player Cost Amount before application of the Stadium Credit is greater than 48.5% of Projected AR then the Player Cost Amount shall be reduced to 48.5% of Projected AR. If, in the 2020 League Year, the Player Cost Amount is less than 47% of Projected AR, the Player Cost Amount shall be increased to 47% of Projected AR.

    (c)(ii)(B)

    If, in the 2021–2030 League Years, the Player Cost Amount before application of the Stadium Credit is greater than 48.5% of Projected AR then the Player Cost Amount shall be reduced to 48.5% of Projected AR. If, in any of these League Years, the Player Cost Amount is less than 48% of Projected AR, the Player Cost Amount shall be increased to 48% of Projected AR.

    (c)(iii)

    Application of Stadium Credit. The Player Cost Amount shall be reduced by the Stadium Credit, provided that, after application of the Stadium Credit, the Player Cost Amount shall not be below: 47% of Projected AR for the 2020 League Year; or 48% of Projected AR for the 2021–2030 League Years. If, in the 2020 League Year, application of the Stadium Credit and/or the LA Exclusion (as described above) would result in a Player Cost Amount below 47% of Projected AR, then the Player Cost Amount shall be increased to 47% of Projected AR. If, in the 2021–2030 League Years, application of the Stadium Credit and/or the LA Exclusion (as described above) would result in a Player Cost Amount below 48% of Projected AR, then the Player Cost Amount shall be increased to 48% of Projected AR.

    (c)(iv)

    Media Kicker. In any League Year in which the NFL elects to have a 17game regular season and has negotiated “New Media Contracts” (as defined below) (a “Covered Season”), the Player Cost Amount (as calculated pursuant to Subsections (i)– (iii) above) may be increased by the Media Kicker. As set forth below, the Media Kicker will apply in a Covered Season in which the “Average Annual Value” of the “New Media Contracts” exceeds a certain threshold. The amount of the Media Kicker will be calculated in accordance with the process set forth in this Subsection.

    (c)(iv)(A)

    Definitions. For purposes of this Subsection:

    (c)(iv)(A)(1)

    “Current Average”: The average annual League Media AR for the 2014– 2022 seasons. For purposes of determining the Current Average, League Media AR shall mean the revenues from television rights sold or licensed either nationally or packaged on a regional basis for the telecast, broadcast, or streaming of live or near-live transmission of entire or near-entire NFL games (but not highlights) on broadcast, cable, satellite, internet, or other media (but not for up to sixteen regular season games telecast or broadcast by the NFL Network) from: (i) ESPN (for the Monday Night Football Package); (ii) CBS (for the Sunday afternoon package); (iii) FOX (for the Sunday afternoon package and the Thursday Night Football broadcast package); (iv) NBC (for the Sunday Night Football package) (in cases (i)–(iv) using the allocations from those contracts as set forth in the Parties’ February 8, 2018 side letter agreement); (v) DIRECTV (for the Sunday Ticket package); (vi) Verizon (for the value of the rights to stream live games, but not for highlights, ancillary programming, sponsorships, enhancements, or ad sales on NFL Network); and (vii) live- or near-live entire or near-entire game content delivered via digital simulcast or streaming (e.g., “all access” / “Over-The-Top” (“OTT”) products). The parties agree that the Current Average is $7.357 billion.

    (c)(iv)(A)(2)

    “New Media Contracts”: The contracts (or portions thereof) for television rights entered into after the 2020 League Year for the 2020 League Year or beyond sold or licensed either nationally or packaged on a regional basis for the telecast or broadcast of live or near-live transmission of entire or near-entire NFL games (but not highlights) on broadcast, cable, satellite, internet, or other media (but not for up to seventeen regular season games telecast or broadcast by the NFL Network) substantially similar in scope to such rights for up to a 17-game season in the contracts from which the Current Average described above is derived. The same allocations from the parties’ February 8, 2018 side letter agreement will apply to the determination of the value of the New Media Contracts. The NFL has committed to negotiate at least one New Media Contract for the 2021 League Year should the NFL elect to have a seventeen-game regular season in the 2021 League Year.

    (c)(iv)(A)(3)

    “Average Annual Value” (“AAV”): The Average Annual Value for the New Media Contracts is determined by dividing the total League Media AR from those contracts (using the definitions and method described in Subsection (2) above) by the number of seasons covered by those contracts. Average Annual Value will be recalculated upon any negotiation or renegotiation of a New Media Contract during the term of this Agreement. In the event that a New Media Contract (in whole or in part) covers a partial season, the revenue for such season for purposes of the new AAV calculation shall be determined based on a full-year equivalent value. In the event that there are New Media Contracts of different lengths, the AAV of the New Media Contracts as a whole shall be determined by calculating the AAV of each component contract over the term of that contract and summing the total.

    (c)(iv)(A)(4)

    “Kicker Threshold”: For the purpose of the calculation of the Media Kicker, the Parties agree to set thirty-five percent (35%) as the threshold deal-over-deal average increase for new media agreements. In other words, the Kicker Threshold is 135% of the Current Average, or $7.357 × 135%, or $9.932 billion. In order for the Media Kicker to apply in a Covered Season, the actual AAV of the New Media Contracts must exceed the Kicker Threshold.

    (c)(iv)(B)

    Calculation. The Media Kicker shall be calculated using the following steps:

    (c)(iv)(B)(1)

    Subtract the Current Average from the AAV of the New Media Contracts, divide by the Current Average, multiply by 100, and round the result to the nearest onehundredth to determine the “Actual Deal-Over-Deal Average Increase” or “ADODAI,” which is expressed as a percentage. If ADODAI is less than or equal to 35%, then there will be no Media Kicker.,

    (c)(iv)(B)(2)

    If the ADODAI is greater than 35%, determine the applicable Kicker Player Cost Percentage (“Kicker PC %”) using the Slotted Player Cost % Methodology reflected in Appendix AA.

    (c)(iv)(B)(3)

    Multiply the Kicker PC % by Projected AR for the League Year to determine the “Kicker Value” (subject to a True-Up based on any difference between Projected AR and actual AR, as provided for in Subsection (C) below).

    (c)(iv)(B)(4)

    Increase the Player Cost Amount by the Kicker Value. As indicated in Appendix AA (“Slotted PC %”), by way of illustration, without limitation: (i) if the ADODAI is 60%, then the Kicker Value will increase the Player Cost Amount for each season covered by the New Media Contracts to 48.5% of AR prior to application of any Kicker Bank as described in Subsection (F) below; (ii) if the ADODAI exceeds 60%, then the NFL shall be entitled to a recoupment as described in Subsection (5) below; (iii) if the ADODAI is 75%, then the Kicker Value will increase the Player Cost Amount for each season covered by the New Media Contracts to 48.5% of AR prior to: (1) the recoupment described in Subsection (5) below; and (2) application of any Kicker Bank as described in Subsection (F) below; (iv) if the ADODAI is 100%, then the Kicker Value will increase the Player Cost Amount for each season covered by the New Media Contracts to 48.6% of AR prior to: (1) the recoupment described in Subsection (5) below; and (2) application of any Kicker Bank as described in Subsection (F) below; (v) if the ADODAI is 110%, then the Kicker Value will increase the Player Cost Amount for each season covered by the New Media Contracts to 48.7% of AR prior to: (1) the recoupment described in Subsection (5) below; and (2) application of any Kicker Bank as described in Subsection (F) below; and (vi) if the ADODAI is 120%, then the Kicker Value will increase the Player Cost Amount for each season covered by the New Media Contracts to 48.8% of AR prior to: (1) the recoupment described in Subsection (5) below; and (2) application of any Kicker Bank as described in Subsection (F) below.

    (c)(iv)(B)(5)

    If the ADODAI is greater than 60% of the Current Average, then the NFL shall be entitled to a “recoupment” of a portion of the Media Kicker (“Kicker Credit”) related to the ADODAI “corridor” between 60–70%, calculated in accordance with the agreed-upon methodology (“Kicker Credit Calculation”). In such circumstances, the Player Cost Amount will be reduced by the applicable Kicker Credit, provided that such recoupment cannot reduce the Player Cost Amount below 48.4% of AR prior to application of any Kicker Bank as described in Subsection (F) below. The Kicker Credit shall be calculated on an annual basis; the actual amount of the Kicker Credit in each League Year will be determined by applying this methodology to the total amount of AR for that League Year.

    (c)(iv)(B)(6)

    If the ADODAI exceeds 120%, there will be no additional amounts added to the Media Kicker (i.e., the Media Kicker will be calculated as if the ADODAI was 120%), prior to application of any Kicker Bank as described in Subsection (F) below.

    (c)(iv)(C)

    True-Ups. Calculations related to the Media Kicker will be subject to the same True-Up procedures as other True-Ups in Article 12 based on differences between Projected and actual AR. To the extent that the Media Kicker based on Projected AR is greater or lesser than the Media Kicker later calculated based on actual AR for that League Year, the difference (positive or negative) shall be applied as a True-Up to the next Salary Cap (except as provided in the Final League Year as set forth in Section 3(b)(iv)).

    (c)(iv)(D)

    No Acceleration Into this Agreement. If one or more of the New Media Contracts extend beyond the term of this Agreement, there shall be no acceleration of revenues into the League Years covered by this Agreement, and the Media Kicker calculation shall cease as of the last League Year covered by this Agreement, provided that the NFLPA reserves the right to challenge whether the revenues for rights for seasons after this Agreement are significantly disproportionate to the revenues for rights for seasons within this Agreement (taking into account the time-value of money and any differences that may exist in the scope of rights for seasons within and seasons after this Agreement) and were negotiated in that manner for a principal purpose of reducing the Media Kicker. If the NFLPA establishes the foregoing by a clear preponderance of the evidence, then the System Arbitrator shall have the authority to reallocate any amounts into the Media Kicker calculation that are found to be improperly attributed to League Years after the end of this Agreement.

    (c)(iv)(E)

    Amended Contracts for Non-Covered Seasons. If, after the start of the 2020 League Year, the NFL negotiates any New Media Contracts that do not contemplate or reflect a 17-game regular season, and the NFL subsequently negotiates New Media Contracts with the same counterpart(ies) for any Covered Season, any incremental television revenues from the first set of such New Media Contracts will be included in, and sloped in the same manner as, the AAV from the second set of such New Media Contracts for purposes of determining the Media Kicker.

    (c)(iv)(F)

    Multiple Rounds of New Media Contracts. If there are multiple rounds of New Media Contracts, the Media Kicker will be “reset” upon execution of the second (or any subsequent) round of New Media Contracts in the following manner:

    (c)(iv)(F)(1)

    Determine the AAV of the New Media Contracts as a whole (i.e., divide the total League Media AR in those contracts for any Covered Season under this Agreement by the total number of Covered Seasons under this Agreement covered by those contracts).

    (c)(iv)(F)(2)

    Subtract the Current Average from the resulting, updated AAV from Subsection (1), divide by the Current Average, multiply by 100, and round the result to the nearest one-hundredth to determine the overall ADODAI.

    (c)(iv)(F)(3)

    If this ADODAI is greater than 35%, determine the applicable Kicker Player Cost Percentage (“Kicker PC %”) using the Slotted Player Cost % Methodology reflected in Appendix AA.

    (c)(iv)(F)(4)

    Multiply the Kicker PC % by Total AR for the current League Year and any prior League Years covered by the New Media Contracts to determine the revised “Kicker Value” for each such League Year.

    (c)(iv)(F)(5)

    Determine the applicable Kicker Credit (if any) for the current League Year and any prior League Years covered by the New Media Contracts using the updated ADODAI.

    (c)(iv)(F)(6)

    For any prior League Years, determine the amount (if any) of the Kicker Bank that results by subtracting the sum of the original Kicker Value and Kicker Credit from the sum of the revised Kicker Value and Kicker Credit for that League Year. The Kicker Bank for any League Year can be either a positive or negative number. The Cumulative Kicker Bank is the sum of the Kicker Banks for each prior League Year.

    (c)(iv)(F)(7)

    For the current League Year, increase the Player Cost Amount by the Kicker Value, then reduce it by the Kicker Credit, and then adjust it by a percentage of the Cumulative Bank, which percentage shall be the same percentage as the AR from the New Media Contracts in that League Year is to the total value of the New Media Contracts with respect to League Years under this Agreement (e.g., if the AR from the first League Year covered by the New Media Contracts is 10% of the total value of the New Media Contracts with respect to League Years covered by this Agreement, then 10% of the Cumulative Bank (whether that is a positive or negative number) shall be applied in that first League Year). For the avoidance of doubt, the Kicker Bank (which operates in effect as a “trueup”) can result in a final Player Cost Amount that exceeds the ceiling or is lower than the floor that would otherwise apply.

    (c)(iv)(F)(8)

    In the event a new round of New Media Contracts would not result in an increase (or decrease) in the Salary Cap of $100,000 or more (per Club), the reset of the Media Kicker shall be deferred until any subsequent round meets that threshold.

    (c)(v)

    Salary Cap. The Salary Cap for a League Year shall be the Player Cost Amount for that League Year less Projected Benefits for that League Year, divided by the number of Clubs in the League in that League Year, adjusted by any applicable True Up.

  • Section 7. [Omitted]
  • Section 8. Guaranteed League-Wide Cash Spending
    (a)

    [Omitted].

    (b)

    For each of the following multi-League-Year periods 2017–2020 (four League Years) 2021–2023 (three League Years), 2024–2026 (three League Years), and 2027–2030 (four League Years), there shall be Guaranteed League-Wide Cash Spending of 95% of the Salary Caps for such League Years for each such period multiplied by the number of Clubs in the League during each such period. (Appropriate adjustments will be made if the number of Clubs in the League increases during each such a period.) (For example, if the Salary Caps for the 2024–2026 League Years were $180, 3200, and 220 million, respectively, the Guaranteed League-Wide Cash Spending over that four-year period would be $ 18.24 billion (95% of $600 million total Caps times 32 Clubs)).

    (c)

    Cash Spending in a League Year shall consist of the sum of: (1) total Paragraph 5 Salary amounts earned or paid or committed to be paid to players; (2) signing bonus amounts earned or paid or committed to be paid to players (including amounts treated as signing bonus) without regard to proration and applying the valuation rules that apply to deferred Salary specified in Article 13, Subsections 6(a)(ii) and 6(d)(iii); and (3) any other non-Benefit amounts earned or paid or committed to be paid to players in that League Year (applying the valuation rules that apply to deferred Salary specified in Article 13, Subsections 6(a)(ii) and 6(d)(iv)) including, but not limited to, incentives, roster bonuses, reporting bonuses, offseason workout bonuses, weight bonuses, grievances settled, grievance awards, injury settlements or Paragraph 5 Salary advances. League-Wide Cash Spending shall consist of the aggregate of all Cash Spending in a League Year. Team Cash Spending, for each respective Club, shall consist of all Cash Spending by such Club.

    (d)

    Any shortfall in the League-Wide Cash Spending at the end of a period in which it applies (e.g., at the end of the 2020, 2023, 2026, or 2030[] League Years) shall be paid on or before the first September 15 after the end of such League Year directly to the players who were on a Club roster at any time during the season(s), pursuant to reasonable allocation instructions of the NFLPA. Any shortfall shall be reduced by any Minimum Team Cash Spending shortfall payments made for such League Years pursuant to Section 9 below.

  • Section 9. Minimum Team Cash Spending
    (a)

    For the four-League Year period covering the 2017–2020 League Years, there shall be a guaranteed Minimum Team Cash Spending of 89% of the Salary Caps for such period.

    (b)

    For each of the following multi-League-Year periods 2021–2023 (three League Years), 2024–2026 (three League Years), and 2027–2030 (four League Years), there shall be a guaranteed Minimum Team Cash Spending of 90% of the Salary Caps for such periods.

    (c)

    Any shortfall in the Minimum Team Cash Spending at the end of a League Year in which it is applicable (i.e., the 2020, 2023, 2026, or 2030 League Years) shall be paid, on or before the next September 15, by the Team having such shortfall, directly to the players who were on such a Team’s roster at any time during the applicable seasons, pursuant to the reasonable allocation instructions of the NFLPA.

    (d)

    Nothing contained herein shall preclude a Team from having Cash Spending in excess of the Minimum Team Cash Spending, provided that the Team complies with the accounting rules of the Salary Cap set forth in Article 13.

    (e)

    If the NFL agrees, or a final judgment or award is entered by the System Arbitrator, that a Team has failed by the end of an applicable League Year to make the payments required to satisfy a Team’s obligations to pay the Minimum Team Cash Spending required by this Agreement, then, in the event the Team fails promptly to comply with such agreement, judgment or award, the NFL shall make such payment on behalf of that Team (such funds to be paid as salary directly to the players on such Team at the direction of and pursuant to the reasonable allocations of the NFLPA).

  • Section 10. Additional AR Accounting Rules

    The following accounting rules apply in addition to those set forth above. Absent an express provision to the contrary, all accounting rules applied prior to the 2011 League Year continue in effect, regardless of whether or not they are set forth or referenced in this Agreement.

    (a)

    Multiyear Contracts/Lump-Sum Payments.

    (a)(i)

    In the event that the NFL or an NFL Affiliate or a Club or Club Affiliate receives or has received a lump sum payment for sponsorship or other rights for or with respect to multiple years, which revenues would otherwise constitute AR, such revenues shall be allocated among such years according to one of the following methods which the NFL may elect prior to the initial allocation of each respective lump sum payment: (A) in equal annual portions over a period of five (5) years or the duration of the rights, whichever is shorter; or (B) in equal annual portions over a period of ten (10) years or the duration of rights, whichever is shorter; provided that Interest from the League Year the revenues are received until the League Years the revenues are allocated into AR shall be imputed and included in AR in equal portions over such periods.

    (a)(ii)

    If the NFL or an NFL Affiliate or a Club or a Club Affiliate enters into a multiyear contract pursuant to which revenues are to be received in different League Years, the contract’s attribution of revenues to specific years shall not control the allocation of the revenues if the allocation is inconsistent with the schedule for receipt of such revenues. In that case, such revenues shall be allocated to the League Years in which they are received or to be received, unless the amount received or to be received in any League Year is grossly disproportionate to the pro rata portion of the total amount to be paid, in which case the rule set forth in Subsection (i) above shall apply.

    (a)(iii)

    Notwithstanding Subsections (i)–(ii) above, any remaining allocation of TR from lump sum payments under the Prior Agreement to the League Years of this Agreement shall be included as AR.

    (b)

    Sponsorship Revenues.

    (b)(i)

    In the event that a Club provides tickets to any individual or entity having a sponsorship relationship with the Club (including tickets provided pursuant to any sponsorship contract), the face value of such tickets may be excluded from AR only if the tickets are excluded from AR under Section 1(a)(ii)(2)(D). In any case, all sponsorship revenue from sponsors (whether cash or barter) less only the face value of any tickets provided by the Club which are otherwise included in AR shall be included in AR (i.e., a revenue amount that a Club receives from a sponsor in connection with the sponsor receiving tickets shall not be counted more than once).

    (b)(ii)

    In the event that a Club provides tickets to any individual or entity not having a sponsorship relationship with the Club, and the Club receives anything of value from such individual or entity, then the fair market value of the consideration received by the Club (whether cash or barter), less only the face value of any tickets provided by the Club which would otherwise be included in AR, shall be included in AR.

    (b)(iii)

    Charitable contributions made by sponsors or other entities that have a commercial relationship with a Club, to charitable entities affiliated with or designated by a Club (e.g., charitable foundations), pursuant to a contract with the Club, are Club revenues, and shall be classified as AR or non-AR, as appropriate, except if the commercial relationship is a relationship between a Club and a player.

    (b)(iv)

    If a national sponsor is obligated under the terms of the national contract to activate on the local level, and so long as the obligation in the national contract is not either (A) to all Clubs in the League, or (B) required to be activated with 20 or more Clubs, such activation revenues shall be included in the Local AR category. (For example, if the national contract requires the sponsor to activate $10 million of Club-level sponsorship but does not specify a specific number of Clubs for which activation must occur, then such activations shall be included in AR in the Local AR category.)

    (c)

    Advertising-Barter Transactions.

    (c)(i)

    Subject to Subsections (ii)–(iv) below, the value assigned to revenue from barter transactions associated with advertising is to be based on the rate cards, and all other non-ticket barter transactions are to be valued at the fair market value of the goods or services received.

    (c)(ii)

    For local radio and television promotions that are non-guaranteed (i.e., the station has the unilateral discretion to extinguish the Club’s right to the promotion), the value assigned to revenues associated with such promotions will be zero, unless (a) such promotions have a stated value in the contract, in which case the assigned value will be twenty-five percent (25%) of the stated value, or (b) the lack of a stated value is grossly disproportionate to the actual value. Any promotion that a Club may sell or otherwise transfer to a third party is agreed to be guaranteed, notwithstanding any other terms of the contract.

    (c)(iii)

    For local radio and television promotions that are guaranteed, the value assigned to revenue associated with such promotions will be one hundred percent (100%) of rate card, or the stated amount in the contract where the contract specifies a stated dollar amount of advertising which the Club may draw against.

    (c)(iv)

    Where the total revenue value provided by a Club in a barter transaction associated with advertising is greater, using rate card valuation, than the revenue value received by the Club, and where the Club is transferring to an unrelated party its rights to advertising, and where the goods and services received by the Club in the barter transaction have been valued at fair market value, the assigned value for the advertising provided by the Club may be reduced by the Accountants from the rate card valuation on a pro rata basis, where such reduction is needed to make the value of the goods and services provided by the Club equal to the value of the goods and services it received.

    (d)

    In-Kind Provisions. The value of in kind provisions to the League office under contracts made by NFL Ventures or its subsidiaries (e.g., airline tickets) will not be included in AR, up to a maximum of $20 million for the 2020 League Year. This “cap” shall increase in each subsequent League Year at the same rate as AR. The value of any such in-kind provisions over the “cap” shall be included in AR at 90% (as with any other barter). The value of in kind provisions distributed or provided to Clubs under such contracts will be included in AR; the value of such provisions will be based upon actual usage or consumption by each Club (the Clubs will be responsible for tracking such usage or consumption). Nothing in this provision is intended to affect the parties’ agreement that production costs shall not be considered an “In-Kind” provision.

    (e)

    Luxury Boxes, Suites and Premium Seating. Any revenues derived from or to be derived from any sale or conveyance of any right to revenue from luxury boxes, suites or premium seating that the NFL and NFLPA do not agree to treat as a PSL will be included in AR on a straight line amortized basis over the period of time covered by the sale or conveyance of such rights, up to the maximum useful life of the luxury boxes, suites or premium seating. Any revenues derived from or to be derived from the multiyear lease or sale of luxury boxes, suites or premium seating, as a prepayment or otherwise, will be included in AR on a straight-line amortized basis over the period of time covered by the multiyear lease or sale of such seating. If the Club or Club owner is required as part of the transaction to provide to the other party to the transaction with tickets to nonfootball events, the face value or fair market value of such tickets, whichever is lower, will not be included in the allocation.

    (f)

    Naming Rights/Pouring Rights.

    (f)(i)

    If a Club or a Club Affiliate receives revenue in cash or barter for or in respect to pouring rights, such revenues shall be included in AR except to the extent set forth below.

    (f)(ii)

    If a Club or Club Affiliate receives revenues in cash or barter for or in respect to pouring rights at a stadium that serves as a venue for both the Club and Major League Baseball or Soccer, the proportion of such revenues to be included in AR shall be limited to: (A) for a Club or Club Affiliate that does not own or operate the stadium, any such revenues received by the Club or Club Affiliate from an unrelated third party, net of any revenues transferred to, or received by the Club or Club Affiliate from, the MLB tenant in connection with such pouring rights revenues (for example, if, in connection with a pouring rights transaction, the Club receives $500,000 from an unrelated third party which owns and operates the stadium, transfers $300,000 in revenue to the MLB tenant, and receives real estate to be used as a parking lot with a value of $150,000 from the MLB tenant, $350,000 shall be included in AR); and (B) for a Club or Club Affiliate that owns or operates the stadium, any such revenues received by the Club or Club Affiliate multiplied by a fraction, the numerator of which shall be the total attendance for all NFL games in the facility during the League Year in question (the “NFL Attendance”) and the denominator of which shall be the sum of the NFL Attendance in the League Year in question plus the total attendance at all MLB games, if any, in the facility during the League Year in question. In no case shall there be any double-counting of revenue.

    (f)(iii)

    If a Club or a Club Affiliate receives revenue in cash or barter for or in respect to naming rights, such revenues shall be included in AR except to the extent set forth in Subsection (ii) above or (iv) below.

    (f)(iv)

    If a Club or Club Affiliate receives revenues in cash or barter for or in respect to naming rights at a stadium that serves as a venue for both the Club and Major League Baseball, the proportion of such revenues otherwise eligible for inclusion in AR (the “eligible revenues”) shall be limited to: (A) for a Club or Club Affiliate that does not own or operate the stadium, any eligible revenues received from an unrelated third party, net of any revenues transferred to, or received by the Club or Club Affiliate from, the MLB tenant in connection with such naming rights revenues (see above); and (B) for a Club or Club Affiliate that owns or operates the stadium, sixty percent of eligible revenues received by the Club or Club Affiliate. In no case shall there be any double-counting of revenue.

    (f)(v)

    The parties agree that to “operate” a stadium for purposes of this Subsection (f) means that the Club or Club Affiliate has the right to receive all naming and pouring rights revenues.

    (g)

    Multi-Use Stadiums.

    (g)(i)

    When a Club plays its home games in a multi-use stadium (e.g., the stadium is used for both NFL games and Major League Baseball or Soccer games) that is owned, operated, or leased by the Club or Club Affiliate, signage revenues which are received by the Club or a Club Affiliate in consideration for the right to display such signage during both NFL games and Major League Baseball games shall be allocated based on the total attendance in the stadium during the baseball and NFL seasons beginning in the same year (e.g., the 2020 baseball season and the 2020–21 NFL season). If a multi-use stadium is not used for Major League Baseball games or the revenues are received from an unrelated third party which owns, operates or leases the stadium, no allocation shall be made between the various sports and the entire amount of signage revenues received by the Club and/or Club Affiliate shall be included in the appropriate year(s).

    (g)(ii)

    Clubs may receive luxury box or PSR revenues in excess of ticket revenues subject to gate receipt sharing among NFL Clubs, when such revenue might also be attributable in part to the purchaser’s right to use the luxury box to attend nonfootball events, such as baseball, if such right is included in the purchase of the box from the Club. When a Club receives revenues in excess of ticket revenue subject to gate receipt sharing among NFL Clubs from the sale of luxury box rights which also permit the purchaser to attend Major League Baseball (or, in the case of the New England Patriots only, Major League Soccer) games, a weighted allocation shall be made of such revenue between AR and baseball- or soccer-related revenue, pursuant to the allocation method the parties agreed upon on October 20, 1994, based upon the respective ticket prices of the football and baseball (or, for the New England Patriots only, soccer) tickets. No allocation shall be made, and the full amount of the revenues will be included in AR, to the extent that the purchaser also has the right to use the box to attend nonfootball events other than Major League Baseball (or, for the New England Patriots only, Major League Soccer). The allocation method agreed to by the parties will not affect the inclusion in AR of the ticket revenue subject to gate receipt sharing among NFL Clubs.

    (h)

    Off-Site Games. AR shall not include reimbursed travel expenses for Clubs playing in offsite games (non American-Bowl). Home Team travel expenses incurred by the League Office for the International Series game shall be netted against the revenue from such game prior to its inclusion in AR except to the extent that such deduction has already occurred pursuant to Subsection 1(a)(xiii)(2).

    (i)

    Scrimmages/Training Camp/Coach’s Show. Revenue from scrimmages and training camps; and broadcast revenue from a Coach’s show or pre-game and post-game show received by a Club will be included in AR. However, revenue from scrimmages or training camps that are donated to charities will not be included in AR. (j) Player Fines. If a player fine is a deduction from a player’s salary which is never paid (and thus not included in a W-2), it is not included in Salary or AR. If a fine is paid by the player, either as a deduction from gross salary or in a separate payment, it is counted as Salary. If the Club gives a fine to charity, it is not included in AR. If the Club spends a fine on behalf of all players for specific purposes that it (or any other Club) had previously earmarked as being paid by fine money for the benefit of all players (such as player parties), and the players were (and are) expressly notified of such specific earmarking, the fine is not included in AR. If the Club keeps a fine, it is included in AR. Any fine assessed by and paid to the League is not included in AR.

    (k)

    In-House Media Pro Rata Allocations. If a Club operates a media business in-house and receives revenues, some of which would be AR and some of which would not be AR, the parties shall agree upon allocation of such revenues for inclusion in AR. If the parties cannot agree, the issue shall be resolved by a jointly-retained arbitrator who has experience in the media business. The current methodology utilized by the Washington Redskins to allocate the percentage of Red Zebra revenues that are NFL footballrelated shall continue for Red Zebra absent agreement of the parties otherwise.

    (l)

    Charitable Auction Proceeds. Any auction proceeds that are dedicated to charities not affiliated with any Club or Club Affiliate shall not be included in AR.

    (m)

    Revenue Sharing. Revenues in any revenue sharing pool established by the League, shall, for AR accounting purposes be included only once.

    (n)

    Concessions / Merchandising Agreements. Beginning with concession and merchandising agreements entered into for the 2020 League Year, the determination whether a Club-related concession or merchandising business (or, for a League-related concession or merchandising business, only for revenues from operations located at the Super Bowl or NFL Draft, and not for any other revenues) is considered inhouse or outsourced for the calculation of AR shall be determined based upon an assessment of: (1) inventory risk; (2) allocation of profit and which party bears the risk of loss; (3) operational control; (4) responsibility for fulfillment; and (5) final pricing authority, with no individual factor controlling. In the event that the NFL and the NFLPA cannot reach agreement on the outcome, the issue shall be determined by a neutral accounting expert mutually appointed by the parties to make such determination, which determination will be final and binding. The neutral accounting expert shall have authority to order discovery and receive evidence from the parties that he or she deems appropriate. In any such proceeding, no reference shall be made to GAAP or any other outside accounting standard determined by any third party.