Incentives are written into some contracts to pay a player for reaching certain performance criteria. Incentives come in two varieties – Likely To Be Earned (LTBE) and Not Likely To Be Earned (NLTBE) – each of which has different Salary Cap implications.
Likely To Be Earned Incentives (LTBE) are incentives based on performance levels that were reached in the prior season. LTBEs count against the Salary Cap in the year they are scheduled.
For example, if a RB ran for 1,200 yards last year and he has an incentive that will pay him $100,000 if he runs for 1,000 yards this year, the incentive would be a LTBE Incentive and would count against the Salary Cap this year.
On the other hand, if the RB ran for 1,000 yards last year and he has an incentive that will pay him $100,000 if he runs for 1,200 yards this year, then incentive would be Not Likely To Be Earned (NLTBE) and would not count against this year’s Salary Cap.
If the player does not earn a LTBE Incentive, then the amount of the incentive ($100K in our example) will be credited against the following year’s Salary Cap and the team would have $100K in additional Cap space in the following year.
The opposite happens with NLTBE Incentives. If those are earned, they are charged to the following year’s Salary Cap. In our example, that would mean that the team would have $100K less in Cap space the following year.