Breaking Down Major League Rookie Salaries

April 30, 2021

written on behalf of Feigenbaum Law

The NFL wrapped up the first night of its draft on Thursday, with the second round set to take place this evening. Those fortunate and talented enough to have been selected in the first round are facing a life-changing opportunity both in their sport and financially. We thought this would be a good opportunity to explain how NFL rookie contracts work and how they compare to the other major sports.

NFL rookie salaries explained

The NFL’s rookie wage scale was enacted in the 2011 agreement between the league and the NFL Players’ Association (NFLPA). The rookie pay scale sees the first draft pick getting the greatest amount of money, with each subsequent pick getting slightly less than the one before it. This year’s first pick went to the Jacksonville Jaguars, who selected quarterback Trevor Lawrence. Like all rookie contracts, his pay is broken down into a salary and a signing bonus. Lawrence will receive about $37 million in total, with $24.2 million coming in the form of a signing bonus. Meanwhile, the last player selected in the first round can expect a salary of $11.2 million, of which $5.5 million is a signing bonus. NFL rookie contracts are set at four years, and players cannot renegotiate during the first three years of the contract.

How do NFL rookie contracts compare to the NBA?

A CBS Sports story from 2019 stated that NFL running back Todd Gurley said many NFL rookies are jealous of the contracts signed by rookies in the NBA. One of the biggest sore points for NFL rookies is that their contracts aren’t guaranteed, meaning that if they become injured, they miss out on pay. In the NBA, rookie contracts are fully guaranteed for two years.

NBA rookie contracts have a floor and ceiling which are determined by the position a player is drafted in. Contracts can be signed for as little as 80% of the salary or as much as 120%.

Another difference between the two leagues is that in the NBA teams have an option to renew contracts in the third and fourth years, with salaries increasing in each. Extensions can also be negotiated in the third season, with a maximum length of four additional years.

While NFL players may be envious of guaranteed money available to NBA players, the best players in the NFL can expect to make a lot more than NBA players down the road. That’s because the NBA’s salary cap has more limitations than that in the NFL.

What about the NHL and MLB?

Major League Baseball and the NHL do not have separate rookie pay scales. In baseball, there is a league minimum, which was set at $570,500 this season. According to this article, teams can determine what a player’s salary will be during the first three to four years, usually settling on something close to the league minimum. In the last 304 days of a rookie contract, the player and the team can each write down their desired salary, and a third party chooses one of them, though a player can also be let go to free agency.

Meanwhile, in the NHL, rookies are usually signed to two-way contracts, which means their salary will decrease if they play in the minors, and increase when called up to the majors. Rookie salaries can be $925,000 at most, with a floor of $700,000.

At Feigenbaum Law, we provide a range of cross-border tax services to top athletes and entertainers in Canada and the US. Our experience and extensive knowledge of both countries’ tax systems have made us trusted advisors to producers, writers, musicians, actors, directors, professional athletes, agents, coaches, and managers who routinely come to us for assistance with their tax and legal work. Our services are always personalized and confidential. Contact us to learn more about how we can help or call us at (905) 695-1269 or toll free at (877) 275-4792.

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