Roster bonus
Encyclopedia
A roster bonus is a feature that may be included in a professional sports player contract
.
A roster bonus is conditional, unlike a signing bonus
. The latter is received upon the initial signing of the contract and is generally the player's regardless of future events. The roster bonus, however, is paid only if a player is still on the active roster of the team at a specific future date. This feature is mostly used in North America
in National Football League
contracts. Most NFL roster bonuses have trigger dates of either March 1 or June 1 of a specific future year. If the player is on the team's roster as of that date, the entire amount of the bonus must be paid, even if he is released the next day.
The roster bonus has a very specific effect on a team's "salary cap
," the amount of its payroll that counts toward the money permitted by league agreement. The fact that it postpones much of the salary cap impact of a new player is one of the reasons it has become a popular contract feature, especially in the contract of highly-compensated star players, but also as a way of recognizing and incentivizing mid- and lower-salaried players as well.
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
.
A roster bonus is conditional, unlike a signing bonus
Signing bonus
A signing bonus or sign-on bonus is a sum of money paid to a new employee by a company as an incentive to join that company. They are often given as a way of making a compensation package more attractive to the employee, e.g., if the annual salary is lower than he or she desires...
. The latter is received upon the initial signing of the contract and is generally the player's regardless of future events. The roster bonus, however, is paid only if a player is still on the active roster of the team at a specific future date. This feature is mostly used in North America
North America
North America is a continent wholly within the Northern Hemisphere and almost wholly within the Western Hemisphere. It is also considered a northern subcontinent of the Americas...
in National Football League
National Football League
The National Football League is the highest level of professional American football in the United States, and is considered the top professional American football league in the world. It was formed by eleven teams in 1920 as the American Professional Football Association, with the league changing...
contracts. Most NFL roster bonuses have trigger dates of either March 1 or June 1 of a specific future year. If the player is on the team's roster as of that date, the entire amount of the bonus must be paid, even if he is released the next day.
The roster bonus has a very specific effect on a team's "salary cap
Salary cap
In professional sports, a salary cap is a cartel agreement between teams that places a limit on the amount of money that can be spent on player salaries. The limit exists as a per-player limit or a total limit for the team's roster, or both...
," the amount of its payroll that counts toward the money permitted by league agreement. The fact that it postpones much of the salary cap impact of a new player is one of the reasons it has become a popular contract feature, especially in the contract of highly-compensated star players, but also as a way of recognizing and incentivizing mid- and lower-salaried players as well.