Glossary Entry: Thirty Percent Rule

The 30% Rule is a requirement that affects contracts that run past the end of the current Collective Bargaining Agreement (CBA). The rule stipulates that a player’s salary cannot rise more than 30% of his salary for the final CBA year in subsequent seasons. This impacts how teams can structure contracts, particularly with respect to backloading deals to save money in the near term.

To show how the rule works, let’s look at Trey Flowers’ contract with the Detroit Lions, signed in the 2019 offseason (all numbers from As 2019 is a “normal” year, the first year of the contract is not affected by the 30% rule. However, 2020 is the final year of the CBA, so subsequent seasons are subject to the rule.

Flowers Contract

The contract was structured to minimize the cap hit in 2019, but the 30% rule limited how progressive Detroit could make the structure after that. Flowers’ salary in 2020—the final year of the current CBA—is $11.125 MM. That means his contract could not increase more than 30% of $11.125 MM, or $3.3375 MM, in any year after that. Flowers’ salary increases $3.25 MM between 2020 and 2021 and between 2021 and 2022, just under the limit. No player could have signed a contract like Flowers’ in 2020, as the dramatic jump from year one to year two would violate the 30% rule.

Note that for purposes of this rule, option bonuses and roster bonuses count as salary. Teams can still skirt the requirement somewhat by using completion bonuses and / or incentives, but the constraints of the 30% rule make it challenging to clear immediate cap space. Note that the rule also applies to contract renegotiations, a challenge in opening short-term cap (as one of the most common methods is converting salary to signing bonus).

For further reading, see Chapter 15 of Crunching Numbers by Jason Fitzgerald and Vijay Natarajan

Leave a Reply

Your email address will not be published. Required fields are marked *