Economics source of contention in NFL
As they continue to check off items on their return-to-football-amid-apandemic checklist, negotiations between NFL Players Association executives and the league’s owners roll along.
The sides have reached agreements on the bulk of crucial health and safety protocol elements. A few key health-related aspects – such as the deadline and conditions for players who choose to opt out of the season should they fall into a high-risk COVID-19 category – remain in need of resolution
However economics continue to represent a significant point of contention between owners and players. Each side has an eye on the short term and another on the long haul.
Yet the perspectives of each camp contrast drastically, hindering progress.
Standing in the way of compromise is the owners’ stance that both parties must share the anticipated financial burden and belief that the shortfall should be addressed immediately. Players disagree.
Money matters don’t seem likely to prevent the start of a 2020 season (according to the collective bargaining agreement’s parameters, the owners can’t stage a lockout, nor the players a strike). However, the outcome of these negotiations will have lasting implications that could greatly change the complexion of the league’s rosters and future free agent markets.
No one denies that a full football season without the normal complement of fans will equate to significant losses for America’s most prominent and profitable professional sports league. Yes, the NFL makes the bulk of its revenue from broadcast deals. However, according to figures presented to player representatives by the union this offseason, empty or near-empty stadiums could translate into a loss of $3 billion for an industry that typically generates roughly $16 billion in annual revenue.
To help soften the expected coronavirus-induced monetary blow, owners
had proposed holding 35% of player salaries in escrow. The union wanted no part of such a deal, players contending they’re already subjecting themselves and their families to great health and safety risks by playing and traveling during the pandemic.
Owners have since abandoned that idea but remain adamant they shouldn’t be the only ones to absorb a financial hit, two people familiar with the negotiations told USA TODAY Sports. They requested anonymity due to the sensitivity of the ongoing talks.
Owners are now suggesting a decrease to this year’s salary cap by roughly $8 million while eliminating roughly $17 million in benefits – including the performance-based pay system which rewards productive late-round draft picks or undrafted rookies for exceeding their compensation level – in 2020 and 2021.
Because the annual salary cap is determined by the previous year’s revenue, the NFL’S 32 teams could be looking at a loss of roughly $70 million apiece against the cap in 2021.
That would hamstring teams that structured contracts in accordance with the current cap figure of $198.2 million and the expectation that revenue would continue climbing in future years. Some players who just signed contracts might find themselves released this year or next. And if the next cap does dip below $130 million, several high-priced stars might be hitting the street. Owners are currently willing to spread out any cap shortfall over the next two years but no further. They prefer this plan because it operates in accordance with the salary cap rules laid out in the CBA: Revenue goes up in one year, cap goes up the next; revenue goes down, the cap goes down the next.
But players view such drastic cap drop-offs as unnecessary considering any decrease could be spread over a longer period.
The NFLPA proposal of smoothing a cap crunch over the next nine years would enable the league and market to continue operating in a stable manner – while also better insulating players financially if revenue does indeed drop precipitously.
Many players and their representatives suspect owners are trying to suppress future compensation, especially if the market is flooded by cap casualties in 2021 who might have no choice but to sign cheap, short-term deals heading into 2022.
Meanwhile, future broadcast revenue is expected to continue soaring – meaning owners’ profits ultimately will as well.
That further fuels the players’ skepticism and determination to ensure they avoid leaving themselves unprotected.
The owners are confident wealthier and brighter days await just on the other side of the pandemic – which is why the players refuse to be left in the dark.