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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I love the idea of no/low signing bonuses
The bonuses are what always seem to bite a team in the backside. We can never get rid of players because of their bonuses (Barber, Roy). I’m sure the player’s aren’t very happy about this.
One question I have OCC, do you think players (even middle tier players) will get more guaranteed money to replace the lost bonuses of years past?
"Be great today" - Jason Garrett
I think it’s pretty likely that a significant part of what previously were signing bonuses will either move into the first year salary or will be guaranteed, particularly for teams who are currently way under the cap. Teams close to the cap ceiling, like the Packers or Jets, may have little choice but to continue prorating money if they want to acquire free agents.
by One.Cool.Customer on Jun 23, 2011 4:38 PM CDT up reply actions
NFL Revenue
From what I have read about how much revenue the NFL is projected to make over the next 5 years I think there may be a lot of “backloaded” contracts. I read (I wish I can remember where) that the NFL’s revenue is projected to double by 2016 and the lowest % the players will get is 47% (if this CBA goes thru). It sounds to me that the salary cap in 2016 could be around 250 mil. I can see GM’s rolling the dice that the projection is true and giving players huge signing bonuses to spread over the life of a contract and bigger salaries in 2015 and 2016.
If someone else read this article and understands it better than me please reply and set me straight.
250 million?
Come on now. Let’s hope that the economy isn’t in complete shambles in 2016, because that has a massive effect on revenues as well.
"Be great today" - Jason Garrett
Yes 250 mil
I read the article by C Mortenensen on espn.com. They do project double the revenue by 2016 due to a thursday night TV package among other things and since the cap was 128 mil in 2009 then my guess is the cap would be around 250 mil by 2016.
Still man without getting political in here
The way the economy is right now and the way it’s headed, I just can’t see that being feasible. Massive changes have to happen.
"Be great today" - Jason Garrett
cap
in 1994 the salary cap was 36 mil …. did anyone think 15 years later it would of been 128 mil? Almost 4 times the original amount.
If you had $36 million in 1994, it would be like having $55 million today (per inflation calculator)
However, that is probably still pretty conservative considering the depressed value of today’s $.
My point is, the multiple of 4 is not accurate, it may be closer to 2.5 if not 2.
I do agree that the caps will only increase, but anyone gambling on best case scenario circumstances and hoping for it, will get hurt. Mismanaged teams will continue to be mismanaged. Teams that overspend for mediocre talent will continue to do so and will inflate the values of average players.
and
i dont think your being political just practical. However I think the NFL is one of the few business that is recession proof.
forgot to write
I dont think your being poliical just practical.
On the surface that seems to be the situation
I think that doubling revenue by 2016 is pretty optimistic, but in general the salary cap should increase in at least a fairly steady manner. That raises a couple of interesting points:
1 – Would players be willing to accept ‘back-loaded’ deals that aren’t guaranteed? Every year you’re a year older and a year more likely to have gotten injured – would you take a backloaded deal if you’re worried you wouldn’t see those big dollars? And if the team was willing to guarantee them (or at least some of them), wouldn’t they be harming their flexibility? Would another team thus be willing to do a more standard ‘cash up front’ signing bonus, and would you be more likely to take the certain cash now? How the market dictates the ‘preferred’ contract structures under this new setup will be really interesting.
2 – A good idea of what the cap will be over the next 3-5 years will be tremendously important to roster and contract management. As you say, if you took some of the projections at face value you could be looking at a cap northward of $200 million in 2016, where if it followed a progression more like the one we’ve seen to date it would likely be closer to $160 million in 2016. A GM who can accurately predict the cap structure several years out would have a big competitive advantage over one who guessed too high or too low.
Jerry Jones probably has a pretty good idea how things are going to play out
He’s got to be one of the most involved people in the NFL, and not just with the labor situation, hes pretty well versed in everything NFL I would imagine
Good thoughts OCC - this will have a lot of interesting impacts
Over the last few years, it’s come to be recognized that the guaranteed portions of NFL contracts (which typically meant the signing bonuses) were much more important than the ‘headline’ dollars and years figures. An announced “6 year, $80 million” contract might have $15 million salaries in each of the last two years that the player would never see.
I think you’re generally right in that we’ll see a decrease in the huge signing bonuses for the sake of long-term pro-ration. The Cowboys seem to have been near the forefront of the new contract trend of ‘partially’ guaranteed deals which either front-load a contract tremendously a la Miles Austin or guarantee part or all of the annual salary figure for early years of the deal.
I think it will also be tougher for more successful teams to build quality ‘starting depth’ (e.g. having 22 starters who all belong on an NFL field, as opposed to straight ‘roster depth’ of having quality backups at a lot of positions). Think about the Cowboys trying to resign Sensi – an average, relatively capable NFL strong safety. Under the old system, there may have been some competition for his services but teams weren’t going to be too likely to offer a really above-market deal for a guy who’s not going to be a difference-maker. Under the new system, a ‘naturally’ under-spending team who might have been content to sit out that bidding and roll with a $95MM salary pool now needs to spend $112MM, and would be far more likely to throw crazier dollars his way.
The other really fascinating aspect will be the timing of signings in the free agency period – especially this first one when so many teams need to spend extra to get ‘up to code’. I imagine the huge-money deals for the premier guys will happen at the outset as usual. But if you’re somebody like a Jason Hatcher, do you sign a 4 year $10 million deal in the first week of free agency, or do you wait and hope somebody will throw an extra $3 or $4 million at you in the first year or two of your deal just because they need to per the new rules – taking the chance that teams may fill up their needs and leave you begging for scraps? When players and GMs are willing to execute different kinds of deals will be fascinating to watch.
This raises an interesting question for Nnamdi
I’ve already read that Tampa could be a darkhorse candidate for him. If they are as low as what everyone is saying, they could give him QB-type money just to get above the minimum salary cap.
"Be great today" - Jason Garrett
This means there will be less parody in the nfl
I don’t know about everyone else, but that is a little discouraging. This isn’t communist Russia. Not every team is supposed to field the same product. I understand giving every team a shot every year, which in theory should allow for those technically weaker team’s fans more opportunity for a pleasurable year, but it just doesn’t sit well with me. This is American Football, if you want to be the best, then you work to become it. And if you achieve it, you fight to keep it, and earn the resources to keep it going. And if you have positioned yourself well and are willing to spend more than the next guy, then you should be allowed to do so. I do not believe that this CBA will eradicate this ideal, but it is definitely a step in that direction. If every team in the league spent the exact same amount, by requirement, it means that talent levels among teams will level off… and I suppose that you could say that these are pros and that they should just have a drive to win, but I think that you lose a little of what makes the NFL the NFL. There is a reason why talented players want to play for the Pats, the Colts, the Cowboys etc with a collection of talent, instead of the Bills. I think this is a step in the direction to eliminate that… I for one find it discouraging.
This is akin to those little league soccer matches were after they play, they declare everyone winners because they don’t want to hurt the feelings of kids that lost, so they are all winners just by playing. Everyone is afraid of the spirit of competition, and it’s ridiculous. If you don’t want to lose, than work harder than the next guy. Period. And if you still loose, then instead of crying about it, get back to work and do what it takes to get better.
In principle I agree
but I really dont see in this CBA much of a difference than the past CBA. Instead of a floor of around 87% now it will be around 90-93%. Although I think that if a team drafts or signs a rookie FA and develops him that there should be some kind of cap exemption so a team that drafts and develoips well doesnt get punished by a form of socialism.
At the extreme, this will close the spending gap by almost half (46%). For next years numbers at 140mil, that means that instead of an annual spread of 18.2 mil (or what is effectively referred to as one Nnamdi unit) the spread would now be at most 9.8mil (or half a Nnamdi unit [54%]). A half Nnamdi unit easily equates to 2 upper tier FA’s or 4 or 5 mid tier FA’s…
On a side note, apologies for the veiled politically charged response, I have had MSNBC on all day and those talking heads really get me worked up sometimes with there idiocrasies… some of that frustration spilled over a bit.
by TheCowboyWay on Jun 23, 2011 5:23 PM CDT up reply actions
What a shame. I love a good parody. NFL Films used to do some good ones.
If at first you don't succeed - blame someone else.
There will still be parody in the NFL
Lifelong Cowboys Fan from the Swamps of Jersey
My Beer Blog: http://tiltingsuds.wordpress.com/
Gotta give the Mannings credit.
They do have a sense of humor.
If at first you don't succeed - blame someone else.
Ha!
Sorry didn’t catch that, working on about an hour of sleep, had a little one that decided screaming and running around all night was much more fun than sleeping…
by TheCowboyWay on Jun 23, 2011 5:25 PM CDT up reply actions
I definitely feel you on that TWC
My avatar pic is my 2 kids (ages 4 and 2(as of aug) so I know how the “up all night with a screaming kid” thing goes
With the 9th Pick Dallas Selects Tyron Smith...Romo Weeps in Joy, and Bennet says"I might get to go out in the Pass Pattern now!"
by I am Ironman!!! on Jun 24, 2011 4:29 AM CDT up reply actions
Are the Beastie Boys going to sue for intellectual property rights?
http://www.youtube.com/watch?v=z5rRZdiu1UE
- Formerly fan since '65.
Only if Starsky & Hutch, The Rockford Files, etc. sue the Beastie Boys first
Lifelong Cowboys Fan from the Swamps of Jersey
My Beer Blog: http://tiltingsuds.wordpress.com/
On a serious note regarding parity, which I think you meant, this would seem to lead to more, not less.
And the idea I would think is for the athlete’s desire and drive to mean more than which owner has the deepest pockets. I think this makes good coaching and team chemistry more important. You won’t have team owners going out and buying a team of superstars, leaving the leftovers for the rest of the league, as happens in other leagues (see: New York Yankees, Miami Heat). I have no problem with keeping the payrolls roughly equivalent. I think it will lead to more entertaining play on the field.
If at first you don't succeed - blame someone else.
It sounds reasonable, but it is not true
If every team in the league spent the exact same amount, by requirement, it means that talent levels among teams will level off
Go look up the money that teams spent last year, and see what the top folks were vs the low spenders……since Wash and Dallas spent the most, and what were the records again??? (Nevermind dont really want to remember last year)…..
as it has always been, it is not about money spent, but money spent wisely
He who laughs last, thinks slowest
Well.....my days of not taking you seriously have certainly come to a middle
"Pleased to meet you, hope you guess my name"
Regarding the Cowboys
One season does not a trend make… Historically, Jerry has fielded a relatively successful franchise, one which I am sure the Browns and Bills etc would trade for in a heartbeat.
As for the Redskins…. well its the Redskins. ’Nuff said.
Seriously tho, I understand what you are saying, but even those teams that are wise with money, there is now less area for maneuvering to work their wizardry… and conversely true for those that are not wise with their money. Less room for magic and/or mistakes equates to less differences between teams.
If you are adept in these matters, that is an advantage that should not be negated.
by TheCowboyWay on Jun 24, 2011 9:52 AM CDT up reply actions
even those teams that are wise with money, there is now less area for maneuvering to work their wizardry
Less margin for error, agree 100%, but it is (better IMO) than a no cap alternative…..
This will invoke changes on the way teams to business, and the Miles Contract is a great example (if you have the right guy to spend the money on) If you have the cap space this year (like tampa) they should front load contracts to get to the cap number to help themselves down the road, but that only works on players you can trust to still preform after the big payday (Big Al comes to mind as one that did not)
Times they are a changing, and the teams will adjust to it, but I would rather be in a spot like TB, than the cap spot we are currenlty in
He who laughs last, thinks slowest
Well.....my days of not taking you seriously have certainly come to a middle
"Pleased to meet you, hope you guess my name"
Wow, how does this happen in a practical sense?
I mean like how do they roll this out? Cause this would mean throwing MONEY at guys just so you spend up to your low number, despite the presumed talent or lack there of in the guy your are “buying”.
And if you come under the cap (every year there are injury settlements and the rest of that salary is not paid) so do they put that money into a “penalty tax” on the team or do they give bump-up incentives to players who contributed more than expected?
It sure seems to me that there needs to be a plan in place for contract years for the new TV deals because if revenue jumps $50 million dollars how are you going to accomplish that… do you restructure a whole bunch of contracts with bonuses to eat up that “glut”? Or would it go into a floating pool type of thing that could be paid out in various ways like to supplement the veterans, the retired players, or baseline incremental raises?
Potential problem there it seems
Cause this would mean throwing MONEY at guys just so you spend up to your low number, despite the presumed talent or lack there of in the guy your are "buying".
I can see this affecting free agency in that some teams might drive up the bidding by being able to do exactly this. They mess with the market value of a player because they’re willing to grossly overpay.
"We'll see." --Bill Parcells
On another note
Did anyone notice that picture? It looks like Jerry and and Stephen are going gangsta and about to pull or some 9’s and bust some caps, Reservoir Dogs style. Nice…
Just a dumb question
What happens if: Say the players get 50% (47%) and every player is paid in full. Then NFL revenues show an extra $50 million profit. Would the extra money be split equally among players or would P Manning deserve more than, say, John Phillips or Alex Barron?
I believe the numbers are based on projected value, and do not “true up” at the end of the fiscal year. So the 47% (guaranteed not to be below 46%) is based upon the NFL’s projections. Now if in the unlikely event it does happen to come in below the guarantee, it is likely that any additional revenue owed would go into the benefit side of the pot, not the total salary side, as the contracts are inflexible (at least as it pertains to this). Alternatively there may also be a clause that allows for any owed revenue to be applied to the floor of the following year, thereby allowing it to flow to player salaries more directly. I could be incorrect but I do not believe it is paid out retroactively.
by TheCowboyWay on Jun 23, 2011 5:49 PM CDT up reply actions
OCC
Can you define all revenues. Does it only apply to league generated revenues or does it also apply to individual team generated revenues as luxury suites, individual team licensing fees, etc. From the owners perspective high revevue teams such as our Cowboys have a clear advantage over low revenue teams like Buffalo. Is there any proposal to even out this disparity?
No, there is not
Luxury boxes, naming rights, concessions and many other revenue sources (for now ) remain outside of the owner’s revenuevsharing, but they do count against the salary cap.
by One.Cool.Customer on Jun 23, 2011 6:26 PM CDT up reply actions
As your insightful article a few months back demonstrated
That’s been the essence of the revenue sharing rift between the owners. It counts against the cap and thus the floor. This has been the sticking point all along it seems. The disagreements with the players were always pretty negotiable.
"We'll see." --Bill Parcells
Fairly simple for owners
Run your organization better, win more…you get more fans. You get more fans, you put up luxury boxes…get $50 mil for someone to put a name on your stadium, ect.
The Cowboys haven’t been like this forever. They started out just like everyone else did.
Teams like the Bills, Bengals, Browns, ect. can cry all they want…but you’ve had mediocre teams for decades. Fix that and the $ will follow. Just ask the Patriots.
"Be great today" - Jason Garrett
And if you don't like where your team is located
It hasn’t stopped owners before. The 2nd biggest market in America has been begging for a team for years now.
"Be great today" - Jason Garrett
in response to this
The 2nd biggest market in America has been begging for a team for years now.
You mean that Mexico City will be getting a Football team? awesome!!!!
With the 9th Pick Dallas Selects Tyron Smith...Romo Weeps in Joy, and Bennet says"I might get to go out in the Pass Pattern now!"
by I am Ironman!!! on Jun 24, 2011 4:33 AM CDT up reply actions
I would guess he's referring to media market
And in that case, it’s LA, not Mexico City
http://www.proadvance.com/topmediamarkets.html
"I still feel like I have something to offer, and the cynical fan can really kiss my ass. I really don’t care. There’s a bunch of true fans and the people who actually want to take the time to get to know me know who I am. The guy who sits in his mom’s basement and types on his mom’s computer, I couldn’t really care less about." - Chipper Jones
LOL
Mexico is in America (North America) , it is just not in the United States :-)
He who laughs last, thinks slowest
Well.....my days of not taking you seriously have certainly come to a middle
"Pleased to meet you, hope you guess my name"
When people say just America
they are referring to the United States of America. No one is implying North America, right?!
Tony Romo 2011's League's Most Valuable Player
In most cases,
yes, but Mexico is in America is it not ? So is Brazil for that matter…..
Just letting mhuff how Mexico City is in America, not attempting to ruffle any feathers here
He who laughs last, thinks slowest
Well.....my days of not taking you seriously have certainly come to a middle
"Pleased to meet you, hope you guess my name"
*sigh* Which is in NORTH America.
Round and round we go…:P
God Bless Texas
by dwarfknight64 on Jun 24, 2011 7:16 PM CDT up reply actions
OK I wasn't talking about North America
I’m from the UNITED STATES of America so when I refer to America that’s what I mean. My bad.
"Be great today" - Jason Garrett
Believe it or not...
Many hispanics refer to themselves as “americanos,” referring to anyone from the Americas…From the highest reaches of Canada to the bottom of Chile. If you told a Mexican he isn’t American he would likely be offended. In Spanish, someone from the US is Estado Unidense, or a United States-ian. The things you learn in Spanish class…
by CotySaxman on Jun 25, 2011 3:04 AM CDT via mobile up reply actions
I did it wrong...Sorry
You mean that Mexico City will be getting a Football team? awesome!!!!
With the 9th Pick Dallas Selects Tyron Smith...Romo Weeps in Joy, and Bennet says"I might get to go out in the Pass Pattern now!"
by I am Ironman!!! on Jun 25, 2011 3:31 PM CDT up reply actions
I thought you were joking
Because you are Iron(y) man! Haha anyway, I’m sure mexico city has a football team…just not an American football team. (football meaning soccer, and American referring to the sport, not the team) Don’t you just love the age of political correctness?
by CotySaxman on Jun 26, 2011 8:14 AM CDT via mobile up reply actions
Thanks OCC
Maybe the new 48% figure for the players share of the pie will help smoothe things out. Still though this really favors the high revenue teams, but you do get what you pay for.
OCC r u sure
Naming rights and concessions are part of the “total football revenues” from the 2006 agreement? I don’t think they are. How do PSLs fit in? I don’t think they are revenue or salary shared. Also, it is apples and oranges at this point to compare the current 48% being talked about with the rest of the figures on your table in the article since we don’t know what credits or anything else will be counted as total revenue.
by b roo on Jun 25, 2011 10:08 PM CDT via mobile up reply actions
I'll re-state my opinion here
I would like to see a widening of the ceiling/floor. As the ceiling/floor comes closer together, it gets harder to keep together a team. I fear that any strong super-bowl winning team will have their free agents signed away as the team is unable to afford them and worse teams have money burning a hole in their salary floors.
Look at the 2011 Cowboys. This is a team that is looking at cutting at least half-a-dozen players this off season and still is concerned with how it will be able to fit re-signing 1 or 2 players under the salary cap.
The Ohio State Buckeyes are your Sugar Bowl champions... and for the 7th year in a row Michigan still sucks.
by Blue Eyed Devil on Jun 23, 2011 7:44 PM CDT reply actions
And what sucks is
I fear that any strong super-bowl winning team will have their free agents signed away as the team is unable to afford them and worse teams have money burning a hole in their salary floors.
Look at the 2011 Cowboys. This is a team that is looking at cutting at least half-a-dozen players this off season and still is concerned with how it will be able to fit re-signing 1 or 2 players under the salary cap.
We were FAARRR from a Super Bowl team…
"Be great today" - Jason Garrett
Higher Car Floor is GOOD for parity
It will force teams that routinely underspend (see Buffalo, Cincinnati, Cleveland, Tampa Bay) to have to spend more on their players. This will create more parity, not less and will give those fanbases a better product.
I don’t think it will affect the bulk of the teams that routinely hover around the salary cap anyway (see Dallas, Washington, New England, etc.) because they spend more than the floor anyway. What it will do, however, is limit the prevalence of incentive-laden contracts because the new floor will not allow teams to count incentives toward that figure, thereby circumventing it.
Finally, Andrew Brandt from National Football Post has an interesting take I did not think of:
As a result of higher cap minimums you will also see longevity positions such as QB and OL salaries continue to sky rocket north because it’s always the best place to park money with existing players.
Since you have to spend X, teams will likely spend more money on positions whose talent level doesn’t tend to drop off a cliff with age.
Tampa and Philly have done superb jobs keeping their player costs low.
They can afford to go out and buy whatever players they want and that could mean a run on Superbowls if they play their cards right.
I know Philly has prefered to do it through the draft but at this point where they have to spend more money to get up to the floor it would be ideal (if I were them …and I didn’t dislike them so) to go “purchase” your missing parts.
Like this nightmare— they outbid Us for Doug Free and the Gmen for Ahmad Bradshaw, then add Plax. and a Cornerback. What more do they need besides Barrett Rudd?
It amazes me how so many fans
Think that raising the salary floor will suddenly ruin the NFL. Honestly, if this happened in a negotiation mid-season rather than mid-lockout, it would generate only passing interest from any but the most obsessed fans. I doubt fans will notice a difference. Supply and demand will still govern a player’s salary. At worst, it will force horrible teams to pay for depth and experience rather than slop together a bunch of rookie free agents on minimum deals for special teams.
On the plus side, maybe it will generate some interest in our moderate-salary role players. Sam Hurd at 2 million a year could improve anyone’s depth. Who knows, maybe someone would even pick up barber, davis, or newman if it helped them to meet the minimum :)
by CotySaxman on Jun 25, 2011 3:16 AM CDT via mobile reply actions

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