New Salary Cap Rules Likely To Change How NFL Operates

Nothing has been formally agreed between the players and the owners yet, but it looks pretty likely that the players will get 48% of all revenues. In an earlier series of posts on revenue sharing, we looked at how that percentage of all revenues has developed over the last ten years, summarizes in the table below.

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Players’ Percentage of All Revenues 56.5 52.6 51.8 50.5 52.3 51.1 52.7 51.8 51.0 50.6

Obviously, the 48% that are being talked about means the players will be getting less than in previous years. But in exchange, the players get a mandatory minimum spending level, or a hard salary floor for every team. ESPN reports that the numbers currently being negotiated are somewhere between 90-93% of the salary cap. In 2009, the final capped year under the previous CBA, the floor was 87.6% of the cap.

The difference between the percentages may not sound like much, but it further closes the spending gap between teams, and may lead to changes in how the NFL operates.

So what could these changes mean?

For one thing, teams are likely to be more reluctant than before to borrow against their future with signing bonuses that are prorated over the length of a players' contract. Large signing bonuses will further cut into teams' ability to maneuver in later years, so we'll likely see fewer and lower signing bonuses in favor or larger annual salaries.

Miles Austin's contract is such an example (although specifically designed for the uncapped 2010 year, not for the new rules): His 2010 salary was an incredible $17.1 million, which drops to $8.54 million in 2011 and further drops to an incredibly low $1.15 million in 2012 before going up again. While the first year salary can be considered a signing bonus, for salary cap purposes it was not, and Austin's contract will be very salary cap friendly in the coming years for the Cowboys.

Watch for teams with low salary levels (Helloooo Tampa Bay) to go for similarly structured contracts in free agency this year, that will help them meet the salary floor in 2011 (with high first year salaries) while leaving a lot of room in the later years.

Another change I think we'll see is that teams will sign free agents to shorter contract lengths. Instead of the 7-year deals that are horribly back-loaded, I think we'll see much more two or three-year contracts. Since teams will hand out fewer and lower signing bonuses, they will not have to keep players on the roster for long periods to amortize the prorated parts of the signing bonuses. The negative example here is Roy Williams, whose contract was structured in such a way that releasing him even after his third year with the Cowboys would still have a negative cap effect due to the proration of his excessively large signing bonus.

Some teams might even take it to the extreme and sign players to one-year contracts just to get over the cap floor threshold in one year without jeopardizing their options the next year. Shorter contracts will invariably result in more roster churn and significantly more free agency activity for all teams, so the free agency period will get even more exciting than it has been in previous years.

These are just the changes that I see off the top of my head. What else do you see happening?

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