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Abstract
We examine the effect of the 2011 collective bargaining agreement (CBA) between the National Football League owners and the Players Association on drafted player compensation. The 2011 CBA made two major changes to the rules governing drafted player compensation. First, a rookie wage scale, based on selection number and round, was introduced. Second, there was a limit placed on compensation growth of 25% of year-one salary. We find the rookie wage scale actually increased the compensation of players selected in the first two rounds of the draft. However, the limit on compensation growth decreased compensation in later years. The overall effect is a significant decrease in the compensation of first-round selections, considering both year-one and year-two salaries.
Keywords: collective bargaining agreement, NFL draft, rookie contracts, compensation
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Introduction
In 1993, the National Football League (NFL) owners and the NFL Players Association (NFLPA) signed a collective bargaining agreement (CBA) that granted NFL players the right to free agency. Players with three years of experience were granted restricted free agency and players with four or more years of experience were granted unrestricted free agency.1 However, the right to free agency was accepted by the owners in exchange for a cap on players' salaries; the salary cap was calculated as a percentage of league revenues. The NFL salary cap is a hard cap, unlike the National Basketball Association (NBA); teams may not exceed the cap.2 The 1993 CBA was extended several times, lasting through 2010. In 2008, the owners opted out of the agreement, which made 2010 the final season under these guidelines; however, 2010 was played without a salary cap. One of the major reasons for the owner opt-out, and subsequent lockout, was a desire to reduce drafted rookie compensation.
The NFL and NFLPA signed a new CBA on August 4, 2011 (National Football League, 2011). The new CBA maintained free agency and the salary cap. However, there was a major change to rookie players' compensation. Under the 1993 CBA, rookie players were free to negotiate their compensation with teams, subject to a rookie salary cap. In response to growing rookie compensation, the new CBA made several changes to the rules regarding drafted rookie compensation. First, all rookie contracts are now...