The Gulf Between The NFL And The NFLPA
Posted by Sam
There was an outstanding article in the National Football Post today by Robert Boland about the CBA situation. His general point is that we shouldn’t pay too much attention to the rhetoric about the NFL’s stance that the cap has to be cut 18% … that is just the initial offer.
It also obscures a bit of reality: there was a special adjustment that boosted the cap from $123 million up to $128 million this year. Backing out that one-time adjustment alone “slashes” the cap by 4%. Now, that adjustment reflects the shortfall of the cash payout that that owners had agreed to make to players during this CBA but haven’t, so it matters to the players on a theoretical level, but the truth is, that money isn’t going to ever be paid, so it is sort of crying over spilt milk to think of this as a concession.
More importantly, Boland points this out:
But any good negotiator knows where to look for helpful benchmarks or slack in an opponent’s proposal. An effective benchmark here is likely not rolling all the way back to 2006 numbers but limiting big jumps in salary growth in future years, and perhaps both sides looking heroic by taking a 10-percent cut. That would put player salaries at $115 million per team, just about the 2008 number. Owners would get more than $400 million back from their current spending, surely enough to ease margin pressure.
Let me look at his point a bit differently. The following graph [click for full size] shows how teams actually spent in 2008 (I don’t have 2009 numbers yet, or I would use those):
Let me explain the data first. Team salaries, from here, represents the actual cap (not cash) spent on players in that season excluding phony LTBE incentives and other roll over amounts. So it represents “true” cap spending in a year.
The average team salary in 2008 was $114.5 million. Setting the cap at that level in 2008 would only have constrained 15 of the 32 teams.
Now let’s compare that to what really was in place in 2008. The nominal salary cap was $116.7 million. However, because so many teams had rolled over LTBE money from 2007 to 2008, the average adjusted cap number for teams was $121.6 million. So teams didn’t have to be “cap efficient” in 2008 because they had plenty of space.
Remember way back in 2005, before the new CBA went into effect? Teams would minimize cap space paid in contracts today to be able to squeeze contracts under their cap. Teams in 2008 were doing the opposite. Many deals took bigger cap hits today than they needed to and left more cap space in the future. Deals are relatively more front-loaded from a cap perspective. That doesn’t change their cash values at all, it just changes how they are accounted for.
My point is that a $114.5 million cap probably would not have reduced team spending in cash terms by much at all, even for the 15 teams with some constraints. Those teams would have just been a little more creative with their accounting. So NFL teams could have reduced their cap from an effective $121.6 million to $114.5 million, or a 6% reduction*, and players would have been relatively indifferent.
Combined with the earlier 4% adjustment that I described, and that suggests that players could agree to a 10% drop in the cap from 2009 and their actual cash payouts wouldn’t be changed.
Now, obviously there is more involved than that, but keep those general guidelines in mind when listening to stories about the huge gap in the numbers between the two sides. The players could agree to what appears to be a huge concession … and not be giving up anything that would affect their bottom line.
* Implicit assumption: the $5 million extra cap space from roll overs would effectively remain in place. I know the Last Capped Year rules wiped out LTBE roll overs, but the Eagles effectively got around this in the McNabb and Vick contracts, for example, by moving 2010 cash payments into the 2009 cap. Other teams merely front loaded contracts to have relatively large 2009 cap hits. It is hard to know exactly what impact all this will have until we have more data on the 2009 and 2010 seasons, but I think the $5 milion assumption isn't too unreasonable.