The 2009 Salary Cap will include more than $4 million in additional room above the established $123M Cap as a result of a rule established in the most recent Collective Bargaining Agreement signed in March 2006.
The increase derives from a little-known but extremely important device in the CBA called the Cap Adjustment Mechanism (CAM). The CAM is tied to percentages of total football revenues (TR) of all NFL teams, with a triggering percentage from 2008 of 59.5 percent of TR. The CAM works this way:
In the event league-wide spending on players – on a cash basis – exceeded the 59.5 percent of TR, that amount of the difference would have been divided proportionately among all teams and added as a charge against the Cap for the remaining capped years, resulting in a lower 2009 Salary Cap. This, however, did not take place.
Conversely, the CAM operates in a way that in the event league-wide spending on players – on a cash basis – is less than the 59.5 percent threshold, the difference becomes a credit to each team’s Cap over the remaining capped years, resulting in higher allotments for 2009 spending.
In a normal year, the CAM credit would have been spread out over multiple years. However, with the early termination of the CBA and the pending uncapped year in 2010, the entire CAM credit now operates solely in 2009, resulting in a $4.05M CAM credit per team, or team spending allotments of over $127M, all of this prior to other credits that teams may have.
The CAM was designed to ensure cash-to-Cap spending and balance to each side in the event spending was disproportionate in given years. With league-wide spending coming in below the trigger in every year of the deal thus far, the Cap continues to rise, an interesting dichotomy against the weary economic backdrop we find ourselves in.
The CAM adjustment was a godsend for a few teams fighting to come into compliance by tonight. All teams are now in compliance, although a couple are still very close to the border.
Conversely, in creating an additional $128M of room to spend over the 32 teams, the CAM credit has added to the unprecedented amounts of Cap room teams have, with the added issue of heading into an uncapped year where Cap room will be an irrelevant issue.
Interesting times in Caponomics around the NFL as we head into the spending season at midnight eastern tonight.
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