Is SRS funding no small thing?

Since my article last week on the decision by the NFL to scrap the Supplemental Revenue Sharing (SRS) program that distributes funds from higher-revenue teams to the lower-revenue teams, I’ve heard from both sides of the labor dispute about the significance – or lack thereof – of this mechanism’s potential termination.

The league’s position on scrubbing the plan for 2010 is that while the SRS has contributed roughly $100 million per year to lower-revenue teams since it was approved in 2006, that figure is such a small slice of the overall amount of shared revenues in the NFL that it’s hardly significant. In other words, with $6.5 billion in shared revenues, the decision to drop a program – which the league maintains is tied to the salary cap, much in doubt for 2010 – that’s less than two percent of that number will not affect the product on the field for next season.

The union’s position is that $100M per season is indeed significant and can buy a lot of players for teams looking to improve the level of talent on their clubs. The lack of that funding mechanism will have an adverse effect on the competitive balance of the league. The union has challenged the elimination of the SRS with the Special Master; a ruling is expected soon.

As someone who is neutral and has been on both sides of the bargaining table, my sense is that, well, both sides are correct. The amount of money in the SRS is a nominal amount compared to the overall amount of shared revenue in the NFL (the league with the most shared revenue of all the major professional sports). On the other hand, $100M is $100M. The real concern for the union is that the $100M – or any amount of money due to a revenue-sharing program – should be money earmarked for use on football players rather than anything else.

With that in mind, there were a reported nine teams that received funding last season for approximately $100M. Since the identity of those teams has not been released, and no NFL team – save the Packers – releases its financial information, let’s look at the Forbes magazine revenue rankings and take the bottom nine teams of that group. In most of these cases, the teams are looking to attain the most important new revenue stream available: a new or renovated stadium.

With this reported list of the lowest nine revenue teams in the league – the Forbes rankings show revenue in this group from Cincinnati at $222M to Detroit at $208M -- let’s look at what those teams may have purchased with some of those SRS funds this season.

Again, as mentioned above, the key to any SRS program from a union point of view is that the money is actually used to pay players, which is not required. Having said that, here are some examples of 2009 player costs for teams that likely received SRS funding this season. The chart lists one player per team and the cash commitment for the 2009 season.

Team (revenue rank) Player 2009 compensation
Cincinnati (24) Laveranues Coles 9.75M
Buffalo (25) Terrell Owens 6.5M
St. Louis (26) Jason Brown 15M
Jacksonville (27) Derrick Harvey 7.55M
Oakland (28) Nnamdi Asomugha 12M
San Fran (29) Joe Staley 13M
Atlanta (30) Matt Ryan 14.2M
Minnesota (31) Brett Favre 12M
Detroit (32) Calvin Johnson 7.2M

The above represents approximately $100M in player costs ($97.2M) featuring one player per team of teams that may have received SRS money this season. Again, $100M is a trivial amount compared to $6.5B in shared revenues, but it’s an example of what that money can buy.

A few other comments from the weekend:

• Why didn’t Cowboys coach Wade Phillips walk on the field to be by the side of DeMarcus Ware, as all the players were and most head coaches usually do? Did he really need to be on the sideline tethered to his headset at that moment?

• This year, the teams with the top two picks in the draft were the Lions and Rams. Both lost to teams struggling to make the playoffs by a combined score of 95-10 Sunday. It appears that these teams – who committed $75 million in guarantees to Matthew Stafford and Jason Smith last summer -- will once again have the financial albatross of a high pick hanging from their necks.

• Hard to believe that the most dynamic player in the NFL right now is someone who’s generously listed at 5-10 and 175 pounds. The Eagles’ DeSean Jackson – who is probably closer to 5-9, 165 pounds – scores more touchdowns with no one near him than any player I’ve seen. Some players are fast but not quick, or quick but not fast. He’s off the charts in both traits.

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To read more about the state of the Cowboys after another December loss, check out this article from Bleacher Report.

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