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The Money Clip: Baltimore Ravens Salary Cap Analysis - How might the owners' opt out of the CBA affect the NFL?

For this and other CBA questions we turned to our 24x7 capologist...

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Posted On: 5/23/08

Written By:  

Brian McFarland

1. Fans are concerned that if the salary cap goes away, the NFL will then mirror MLB and the league will fracture into the haves and have nots.  Without the cap, would you expect teams like the Cowboys and Redskins to be the NFL's version of the Yankees and Red Sox and far outspend their competitors for talent?

 
Maybe, maybe not.  Snyder, in particular, has always pushed the Salary Cap limits, so it's not too hard to guess that he will be willing to spend more if there is no longer a Cap.  Regardless of the NFL's revenue sharing arrangements, the higher revenue producing teams will still have more to spend and will likely do so.  So, where there's a will, there's a way, and Snyder and others are likely to do as much as they can.

It will certainly also mean that middle and small market teams may not be able to spend as freely, and in at least a few locations that already have trouble with attendance, could mean the end of those franchises. 

 

It would also mean the end of the Salary Cap minimum, which means that some owners could also spend as little as they want.  Usually, the discussion is always about the maximum amount that a team can spend under the Salary Cap, but there is also a minimum amount that teams must spend.  With no Salary Cap, that would go away too, and it's not too hard to imagine some smaller market teams deciding to spend less in order to keep costs down.  With the price of tickets already so high, this could lead to a lot of empty seats, just like we see in MLB.

That said, the CBA actually has extensive provisions regarding how an "uncapped" year is to work and some of those provision deal with limiting teams from taking too much advantage of "uncapped" years (See further details below).  The NFL and NFLPA were obviously mindful of the good thing they have with the Salary Cap and did try to limit - to an extent - teams trying to take advantage of "uncapped" years.  Because of this, "uncapped" years may not mean the total free-for-all that some may expect. 

2. What changes to the existing CBA would you suggest to accommodate the owners and the players in order to prevent a lockout or strike after the 2010 season?

First off, there needs to be a Rookie Salary Cap.  Matt Ryan's contract is just another example of the insanity that rookie deals have become.  I would have to guess that there are a lot of NFL owners wondering why Blank just did what he did.  On the same day the owners say things are not working, Blank goes out and gives away that kind of deal to a guy who has never played in the NFL.  Some owners are likely questioning his sanity.  Then again, perhaps he's a genius, since this contract has seemed to even raise the ire of many veteran players.  Gene Upshaw of the NFLPA has said that there will be no negotiations on a rookie Cap, but some players - including Kevin Mawae, the top ranking player in the NFLPA, - seems to feel differently.  Over the last couple of days, several players have joined in the call for a rookie Cap.  So, when negotiations start up in earnest, it's likely going to be hard for Upshaw to argue against a Rookie Cap, when many of the players in his organization want one.

It would also seem that teams are too hamstrung when dealing with "troubled" players.  In the last CBA, the owners agreed to restrict what they could do as far as fining players, suspending players (TO in Philly) and releasing players for on- or off-field behavior.  They really gave up too much and with Goodell's new policy toward player conduct, the owners need to have more authority to be able to deal with these players.

Over the years, there have been calls for an exemption similar to the NBA's "Larry Bird" exemption that would allow teams to retain long term, franchise-type players, regardless of the Salary Cap implications.  This is obviously something that would be an attractive option to the Ravens right now, given the status of Ray Lewis.  With a "Larry Bird" exemption, the Ravens would be able to re-sign Lewis to whatever they wanted and not be forced to account for all of it against the Cap.   Obviously, the details would still have to be worked out - i.e. how many exemptions does a team get, what the exact qualifications are (how many years of service with the team) and what the exact impact the deal would have on the Cap - but it does have a certain ring to it (in moderation, in my opinion).

As far as other changes, it's hard to say.  The owners are saying the 2006 Extension simply isn't working, but they're obviously going to need to be able to document that.  They did give the players a bigger portion of the revenue with the new Extension, but the owners, by and large, are still making huge profits.  Both sides will likely have studies done which will support their position, so just like with MLB, it's going to be hard to tell whether the owners are sincere about their "plight" or just feel that they've given up too much and want it back.   Some adjustments in what revenue is considered in the Salary Cap calculation and what percentage the players get are likely in the offing.

One of the less talked about elements of this situation is that, to one extent or another, the owners, themselves, aren't even totally on the same page.  One of the hallmarks of the NFL's success in this area has been that late Commissioner Pete Rozelle got the owners to agree to a revenue share scheme that has allowed the Salary Cap to work.  But, owners like Jerry Jones and Daniel Snyder go to great lengths to maximize their teams' incomes, while other owners, like Mike Brown of the Bengals, do not.  This is a legitimate problem when Jones and Snyder are then asked to share a lot of that revenue. 

For example, there apparently was an exchange during the last negotiations where Jones took Brown to task for not attempting to maximize his revenue, while expecting Jones to share his.  Jones pointed out that the Bengals' stadium is named after Brown's father and Bengals founder, Paul Brown.  While this certainly is a noble, and understandable, gesture, it doesn't work well within the NFL revenue sharing model, where Jones is asked to contribute a ton of the revenue that he has cultivated to help other owners like Brown, when Brown could be doing more to create more revenue for himself - such as selling the lucrative naming rights to his stadium.

So, while the owners want some concessions from the players, they will likely need to find a better working arrangement amongst themselves as well. 

3. If the cap goes away, do you think that designations like "franchise player" and "transition player" will go away as well?

 
Actually, teams will be getting an additional Transitional Tag designation to go along with their present Franchise and Transition Tags.  Presently, teams can only use either the Franchise Tag or the Transition Tag, but not both.  If an "uncapped" year comes to pass, team will be able to use all three together.  This would mean the players would get very high one-year offers, but would restrict their ability to seek offers on the “open” market.

Another change during an uncapped season is that players will not be able to become Unrestricted Free Agents until after 6 years of service as opposed to the present rule of only needing 4 years of service.  So, even though rookie contracts may expire, players would only become some sort of Restricted Free Agent or have to play for the yearly minimum salary if they haven't yet reached 6 years of service. 

There are also some kooky provisions that actually limit player acquisitions by teams that reach the "Final 8" in the prior year.  Those teams would essentially be limited in the number of free agents they can sign and the money that they can spend.  This would seemingly limit the best teams from continuing their run by attempting to “buy” another championship.

4. Jerry Jones recently re-signed Marion Barber and Terrence Newman to lucrative extensions and some have suggested that these extensions were structured with an eye on un-capped future in the NFL.  If more owners follow suit, might they then be forced to vote against keeping the cap just to save the financial structure of their own rosters?

Actually, Jones re-signed those players prior to 3:00 p.m. on Tuesday in order to take advantage of what were the present rule governing contracts at that time.  After 3:00 on Tuesday, a new set of rules applies, and obviously, Jones preferred the old rules.  

The new rules - in effect after the Tuesday deadline - again relate to the CBAs attempt to limit the potential devastating impact of an "uncapped" year.  Basically, any new deals signed after the Tuesday deadline have new ways of pro-rating bonus money and have different rules that apply regarding how much salaries may increase in the "uncapped" year.  These rules are in place to keep teams from doing contracts that put a ton of money into an "uncapped" year.

 

Basically, if a contract does put too much money into an "uncapped" year, that money is pro-rated over the prior years of the deal, so that it does have an impact on the teams Cap, thereby lessening the impact of paying it in the "uncapped" year.  

But, because the Cowboys did these deals prior to the deadline, they get the old rules.  Basically, when these deals were signed, 2010 was not the "uncapped" year, 2012 was, so they put large amount of guaranteed money in for 2010, which at the time wasn't considered to be an "uncapped" year.

I'm sure teams will start to look at the "uncapped" years rules a little closely and there will be some creative contracts written around those, since the "uncapped" rules are, in some cases, more limiting, we may not see more extensions because of the "uncapped" years.

In summary, due to the restrictions in place, it’s not likely that teams will be forced to vote against a Cap because of the contracts they have at the time.

5. The first round rookie wage scale is out of hand.  JeMarcus Russell and now Matt Ryan are guaranteed over $30 million each and they've done nothing as professionals. Is there any chance that the owners can convince the player's union to accept a rookie wage scale modeled after that of the NBA's?

 
As I said above, it appears to be something that has to happen.  The owners are absolutely going to want it to happen and it now appears that, at least some, players do as well.  Gene Upshaw has said it won't happen, but I've got to think that he is just stating that objection as a first salvo in the negotiations.  My guess is the players will eventually agree, but in return for some concession by the owners on another issue. 

6. Yes or no...will there be a strike or lock out prior to the 2011 season?  Why or why not?

I've got to think that they will find a way to get this straightened out.  I just can't believe that they would be so stupid as to kill such a good thing.  But, unfortunately, common sense does not always prevail.

That said, it's going to be very painful.  It's going to be hard for the owners to get the NFLPA to give anything back that they just got only 2 years ago.  The Union's job is to get the best deal possible, and you've got to think that they believe they've got it.  It's going to be tough to get them to give anything back, especially if the owners are also asking for a rookie Cap and fewer restrictions when having to deal with troubled players.  Right now, it seems that the owners are going to be the one asking for everything, while the players would just prefer to continue on with the present arrangement.  That’s going to be a hard place for the owners to have to start a negotiation.

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Enlarge Text Decrease Text Print this Article send this article to a friend Add This bookmark facebook twitter rss

Posted On: 5/23/08

Written By:  

Brian McFarland