I had a question about this in the comments of one of the cap posts and thought it would make a good topic. I think most people have realized I have a page on the site that provides estimates for each teams Rookie Pool, which provides estimates for the cap costs of each player that will be drafted in the 2013 NFL draft. The salary cap has so many parts that it can be confusing at times and I think this just adds another layer of confusion to some and how it affects the salary cap and free agency. So lets examine in a bit more detail.
What is the “Rookie Pool”?
In the old CBA the NFL had a cap on how many cap dollars could be spent on rookies during their first season in the NFL. This was called the “Entering Player Pool” and was generally considered the “Rookie Pool” or “Rookie Salary Cap”. The league allowed a players cap hit to rise by 25% of his first years cap charge which in theory would keep rookie salaries in check. However, in practice it was not the case as teams and agents used all types of neat little cap mechanisms to render the 25% rule invalid, especially for highly drafted players. This was a major renegotiating point in the new CBA.
Per the current CBA each NFL team is allotted a maximum amount of dollars to spend on their draft picks not only in year 1 cap charges, but also in total value. Those loopholes that existed in the prior CBA were all eliminated and thus rookies are limited to increases that equal 25% of their first years cap charge. The new CBA refers to these allocations as the “Total Rookie Allocation” and “Year One Rookie Allocation”. The values for each team are determined by the position the player is drafted. I just call them “Rookie Pools” because I’m used to using that term.
While the formula itself is a secret for calculating the charges those of us who track the numbers are able to get a good idea of how the process works. In general its an exponential decay where there is rapid drops at the top of the draft in terms of value and minimal drops as you get into the 3rd and 4th round of the draft. This gives us a good idea at forecasting the charges, though the NFL and NFLPA made it a bit easier due to the way that they grow the rookie pool.
The various rookie pools grow (or fall) by the same percentage as the salary cap. To illustrate we will take a player drafted in round 7 in 2012 that had a year one rookie pool number of $402,000 which would mean they earned $390,000 in base salary and $12,000 in bonus prorations. The 2013 cap grew by 1.99% which would make that players allotment in 2013 grow to $410,000. Sounds simple except the problem with that formula is that it fails to take into consideration the basic increase in minimum salary for a player per CBA rules. Our new minimum salary is $405,000. That would leave just $5,000 in prorated bonus money to be spent on the player drafted in an identical slot.
I think all sides agree that with a rising cap it would be unfair for a player drafted in 2012 to earn a bonus that is $23,000 more than the player earns in 2013. So basically what the league has appeared to do is freeze the bonus payments and so that there is no loss of guaranteed salary as long as the salary cap is rising. My assumption is the same will occur this year. The only real growth in rookie salaries will be for players selected in the first two rounds who will have a $15,000 or so higher Year 1 cap hit that allows them to earn slightly higher raises due to the 25% rule. Beyond the 2nd round the 25% rule is not a factor and limited growth will occur. In the future the cap will need to rise by around 3.7% for the bonus money to really rise over a prior year when taking into account minimum salary growth of $15,000 per year.
So keeping all of this in mind we should get a pretty decent idea, barring some big changes by the League, as to what each team will spend on their rookies.
How does the “Rookie Pool” affect the Salary Cap
This is probably the most confusing aspect for most people. Some people this its additional money added on top of the salary cap which is not the case at all. The “Rookie Pool” is a cap within the salary cap. It is essentially money that your team needs to place aside for your rookies. It is not added to your salary cap at all.
The Chiefs (pretending there is no trade for Alex Smith) would have an allotment of around $7.445 million for their rookie class. What that means is that at the end of the preseason, assuming all their rookies make the club, the Chiefs will need to devote $7.445 million in cap dollars to their rookies. So if the Chiefs had a salary cap of $123 million their effective cap space for spending is only $115.55 million in 2013.
However when reading this it is easy to jump to conclusions that the Chiefs need to be $7.445 million under the cap today just to sign rookies. Not exactly. We need to remember that in the offseason the salary cap is based on the “Rule of 51” which means only the top 51 cap charges (plus dead money) count towards a teams salary cap. Most teams have more than 51 players under contract. The Chiefs have 55.
This means that each of the Chiefs 7 draft selections will displace a player who is currently counting towards the salary cap limit. Most of these players earn $405,000. So if you have 51 or more players under contract here is the general rule as to how you calculate the net cap space that is being eaten up by your rookie pool:
Year One Rookie Pool – (405,000 x number of draft picks)
For KC that is equal to just $4.61 million a big difference between the $7.445 million we first thought we needed to set aside. So is the Chiefs have at least $5 million in cap room they can sign free agents and not need to worry about their rookie dollars being compromised. If you are a team with less than 51 players that you will need to adjust your calculation accordingly to
Year One Rookie Pool – (405,000 x (number of draft picks – (51- players under contract) )
These are your net cap space requirements for rookies or what I would call your “Effective Rookie Pool”.
So How Much Real Cap Space Does My Team Have?
A good way to determine how much cap room your team likely has to spend is to take our salary cap space estimates and then subtract your “Effective Rookie Pool”. While I know our numbers wont be perfect for most teams they should at least be a good indicator of cap space for most of the teams in the NFL. We’ll always strive to be better so any help is always appreciated. Feel free to post, email or tweet any further questions.