The new year represents a new era for the NFL and its players. It will be the first time NFL clubs will go without salary restrictions since 1993, the date the new Collective Bargaining Agreement was put into place. Part of that deal included the removal of the minimum floor teams were required to spend on players.
In 2009, the minimum salary floor for the NFL is about $108 million, which must be spent on players’ salaries. In 2010, if no new deal is struck before the season kicks off and the league has guaranteed income from its multimedia and advertising partners, there’s little incentive for owners to spend money on player salaries. I predict that owners will bring spending down to the $90-million range on average.
Remember, when these triggers were negotiated into the CBA, they were there to incentivize both sides to get a deal done. The cap was put in place to prevent rich big-market teams from buying up the best free agents, a la the Yankees, and buying Super Bowls every year. The minimum floor was put in place to encourage small-market teams, and some of the old guard penny-pinching owners, to contribute to players’ salaries and keep their organizations competitive.
Times have changed! Economics have changed! Fears are gone!
When the 11th-hour deal was struck on the CBA extension, a majority of owners felt it was forced down their throats. But they also knew that labor peace was the most important component for keeping the revenue momentum going.
When they received their first revenue-sharing checks from the league after the new deal, they had, on average, about an $8-million net haircut taken right off the top, even though gross revenues increased significantly. As one seasoned team president put it, “They were pissed!”
The percentage increase to the players’ salary pool meant a direct hit to their bottom line, and they felt it right away. They’ve been groaning about it ever since.
For the first times in years, or maybe ever, the league has seen revenues flattened because of the shaky economy. So owners, especially those with long-term debt on their stadiums, are ready to fight back and pick up cash where they can. The expiration of the floor will bring this opportunity for owners to cut spending and “get some of their money back,” as one GM put it to me.
The fear of giving other teams an advantage on buying up and locking up premium players is gone. Dan Snyder, an agent’s owner, has proven that money does not buy championships. So the tendency will be for owners to not spend aggressively on free agents (if at all) and release highly compensated older players making $4 million or more. If each team reduces its payroll by $20 million on average, $640 million will evaporate from the players’ payroll. This, my friends, is incentive for the players association to get a deal done before next season. I doubt, however, that you’ll see much motivation coming from the owners to do so, despite the best efforts of the commissioner. If I’m only half right, then we’ll still see $320 million evaporate right into the owners’ pockets. Some owners actually have already changed their methods and tightened their wallets, refusing to give their GMs the needed capital to keep and procure the best talent available.
Now, don’t get me wrong. Dan Snyder, Jerry Jones and a handful of others will do their best to field great teams and lock up their top talent -- and they may still spend aggressively. Savvy owners will even look to 2010 as an opportune time to build for the coming years. However, keep in mind that there may be fewer free agents available than any year since 1994.
The one team that may benefit most is the Green Bay Packers. Remember, they don’t have one owner; they’re run in the interest of fielding the best product and using their cash, which they have plenty of, to do so.
Most fans are perceptive enough to know if their teams are spending wisely and sufficiently on players. Owners whose 2010 salary pools dip well below $108 million may find themselves fielding calls and reading emails from disgruntled ticket buyers demanding they get a team worth rooting for.
At the very least, 2010 will prove to be an interesting year in the NFL.
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