Making points: Union must think cash, not cap
On Wednesday, I started to outline some ways that the NFL Players Association (NFLPA) and its leader DeMaurice Smith could start to make some progress in the stagnated negotiations with the NFL toward a new agreement. Here are a couple of key points that would certainly make a difference for the players, ways to get past the rhetoric toward meaningful bargaining.
Cash, not cap
The negotiation should be framed in terms of cash to players, not cap. There are two types of accounting in the NFL: cash accounting and cap accounting. They are very different, with the former being much more accurate regarding committed costs for teams.
The cap is a regulatory mechanism that, in theory, puts teams on an equal playing field to acquire and maintain player talent. However, with ways of allocating cap charges to future years through prorated signing bonuses and other tricks of the trade, the cap is a fluid number. The NFL salary cap has not been a “hard” cap but a “soft” one, a yarmulke, if you will (some of you just laughed, some of you said, “A what?”).
The cash accounting number allocated to a player is a real number. For instance, if a player gets a $10-million signing bonus on a five-year deal, the cash number in the first year is $10M although the cap number is $2M. Throw together a few of these deals and one can see the vast difference between cash and cap.
From the owners’ side, their goal is to harden the cap to remove some of the accounting loopholes and make the cap expense of each team more in direct correlation to the cash expense. Many teams have already taken that approach (we did in Green Bay), adopting a pay-as-you-go approach rather than a “we’ll worry about that later” approach that sank many teams years ago.
From the union side, their goal should be to make sure that whatever percentage is allocated to players, the percentage reflects cash amounts rather than cap amounts. This may be the biggest misunderstanding among fans and media about how much NFL players make and how much teams are spending on payroll. Cap accounting can be fudged; cash accounting is cold, hard cash -- and the real money the union should be fighting for.
Revenue sharing for real
Per an arbitration earlier this winter, the NFL’s supplemental revenue sharing (SRS) program that takes money from the high-revenue teams and distributes it to the low-revenue teams will continue. The amounts in questions have been reported to be more than $200M.
Revenue sharing between teams is meaningless to the NFLPA, however, unless that revenue has earmarks for player spending. The union needs to ensure that any money sent to teams with low revenue – although they may have high profit, which is a true problem with the SRS – be designated and mandated for use on football players, not pocketed or used for other means.
The NFLPA can ask the Major League Baseball Players Association and their recent episode with the Florida Marlins about this issue.
Instead of resisting the NFL’s plea to make collective sacrifice and share the risk, the union is starting to do what it should have been doing all along since the shared risk language became fashionable. As Smith discussed with Jim Trotter of si.com, the union is starting to use the tact of turning around the words to benefit the players.
When the NFLPA has put forth the fact that it agrees with the league about shared risk and wants to also share in the reward, that’s when ownership recoils.
At a recent bargaining meeting, the NFLPA used this tactic, suggesting that the two sides become true partners with an equity interest given to the players. That suggestion caused quite a reaction from NFL outside counsel Bob Batterman.
The idea of sharing risk and reward with an equity interest certainly gets the league’s attention. Will it happen? Very doubtful, but it has certainly given the union a bargaining point in the debate about shared risk. The offer of a true partnership with the NFLPA rather than simply keeping players as high-paid employees may force a different tone in these stalled talks.
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