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Delay in performance-based pay raises tax concerns


Rumors have been circulating for days that, in order to push the 2013 salary cap to $123 million per team, the NFLPA agreed to delay by two years the issuance of checks for performance-based pay earned in 2013.

NFLPA spokesman George Atallah tells Liz Mullen of SportsBusiness Daily that, indeed, payment for 2013 performance-based pay will come in March 2016 and not in March 2014.

The delayed payment was aimed at helping to nudge this year’s salary cap from $120.6 million to $123 million. “In the early years of this [labor] deal, where revenues were not growing at the rate we expect them to grow when the television money comes in, we engaged in a process to smooth the salary cap,” Atallah said.

Most of this year’s increase comes from an increase in revenues, Atallah added.

But there’s a potential problem with the deferral of the performance-based pay. Multiple teams are concerned, we’re told, that players will face significant tax bills in 2014 for money earned but not actually received. This possibility applies most dramatically to young, minimum-salary players who end up becoming starters and earning large amounts of performance-based pay.

There’s a chance that the tax liability will attach only when the money is actually paid by the teams. For now, teams are indeed concerned that the two-year deferral could create tax burdens that players won’t be able to afford.