The Real Issue With the CBA Impasse (1 Viewer)

[Bob Magaw]

some information lately has pointed to a meeting in the middle around 58%...

yet unless the owners can hammer out an agreement on how to divide revenues from local revenue streams (a complex issue with haves like jerry jones & dan snyder saying other owners are lazy, & the have nots complaining they are in smaller markets & it is not a level playing field), the much publicized NFLPA issues could all be a moot point... in fact, even if the players settled for 1%, there would still remain the owner entanglement.

one connection i haven't seen made a lot is that the same big market teams that seem the most resistant to sharing locally garnered revenues... are the ones that would seem to have the most to benefit from an uncapped state of affairs...

not to say they are related... jones & snyder may not want to budge on the former issue on principle... because they really think that is fair... but it is interesting that these same owners, if they continue to be an obstacle to a compromise & larger agreement... could be the cause of ushering in an era in which they would be favorably situated to maximally leverage their superior big market-driven revenue streams...

 

[Mr. Vegas]

some information lately has pointed to a meeting in the middle around 58%...

yet unless the owners can hammer out an agreement on how to divide revenues from local revenue streams (a complex issue with haves like jerry jones & dan snyder saying other owners are lazy, & the have nots complaining they are in smaller markets & it is not a level playing field), the much publicized NFLPA issues could all be a moot point... in fact, even if the players settled for 1%, there would still remain the owner entanglement.

one connection i haven't seen made a lot is that the same big market teams that seem the most resistant to sharing locally garnered revenues... are the ones that would seem to have the most to benefit from an uncapped state of affairs...

not to say they are related... jones & snyder may not want to budge on the former issue on principle... because they really think that is fair... but it is interesting that these same owners, if they continue to be an obstacle to a compromise & larger agreement... could be the cause of ushering in an era in which they would be favorably situated to maximally leverage their superior big market-driven revenue streams...

 

[HobbesAB]

Cash over Cap seems to be a huge issue for the low revenue teams:

http://sports.espn.go.com/nfl/columns/stor..._len&id=2352890

In the simplest terms, cash over cap is essentially the difference between a team's true payroll and the NFL salary cap in a given season. Many of the league's high-revenue teams, but certainly not all of them, have a considerable advantage over the clubs occupying the low-revenue rungs in terms of cash over cap.

To understand the concept of cash over cap, one must understand that the salary cap is just a bookkeeping number, one that can be massaged by amortizing signing bonuses and with other mechanisms. The cap has never been indicative of a team's payroll. The Washington Redskins, believed to be the highest revenue producing machine in the league, have had payrolls well over $100 million the last few seasons, even though the highest salary cap level ever was in 2005, at $85.5 million.

For the fans who can't get their heads around how this works, here's a simple example: Let's say the Redskins signed an unrestricted free agent to a five-year deal that includes a signing bonus of $10 million and a base salary of $1 million for the first season of the contract. In salary cap terms, the Redskins are charged only $3 million, arrived at by prorating the signing bonus over five years and then adding the base salary. But in real dollars expended, or payroll, that player cost the Redskins $11 million for the first year. That's a difference of $8 million between what the player was actually paid and what his cap charge was for the initial season of the contract.

Multiply that example by several player acquisitions, prominent free agents or high-round draft choices, and the total cash over cap is considerable.

So why is the issue of cash over cap suddenly such a potentially galvanizing element? Because for several years, some owners, such as Mike Brown of Cincinnati, have regarded cash over cap levels as dangerous. And because, over the past 18 months, NFLPA executive director Gene Upshaw has been identifying cash over cap as an element of the widening disparity between the NFL's have and have-not franchises.

Because it cuts at the heart of the revenue sharing debate over which owners have been internally battling for more than a year, cash over cap could be a critical issue in Friday's negotiations. There is a feeling that if the NFL and the NFL Players Association can divine a formula that addresses cash over cap -- maybe one that penalizes franchises for breaching various cash over cap thresholds -- it will somehow ameliorate the low-revenue teams' angst.

As noted earlier this week by ESPN.com, it's actually a well-bonded alliance of nine to 10 low-revenue clubs that has demonstrated far more solidarity in recent days. Sources have suggested to ESPN.com that, in an effort to strike a deal that will preclude them from having to make deep roster cuts, some high-revenue teams have begun to reach out to their low-revenue fraternity brothers. But the lower-revenue teams have not budged from their insistence that they will not ratify an extension to the NFL collective bargaining agreement that does not adequately address their revenue-sharing issues.

"It's human nature," said one owner. "People that have money eventually decide they'll solve an issue by throwing money at it. And people who have less money, and feel the pinch, are by nature going to hang in a little longer, because they feel they have to, that their [financial] security is being threatened."

 

[DoctorDetroit]

some information lately has pointed to a meeting in the middle around 58%...

yet unless the owners can hammer out an agreement on how to divide revenues from local revenue streams (a complex issue with haves like jerry jones & dan snyder saying other owners are lazy, & the have nots complaining they are in smaller markets & it is not a level playing field), the much publicized NFLPA issues could all be a moot point... in fact, even if the players settled for 1%, there would still remain the owner entanglement.

one connection i haven't seen made a lot is that the same big market teams that seem the most resistant to sharing locally garnered revenues... are the ones that would seem to have the most to benefit from an uncapped state of affairs...

not to say they are related... jones & snyder may not want to budge on the former issue on principle... because they really think that is fair... but it is interesting that these same owners, if they continue to be an obstacle to a compromise & larger agreement... could be the cause of ushering in an era in which they would be favorably situated to maximally leverage their superior big market-driven revenue streams...

I'd agree. I think the owners have to hammer a few things out before even taking anything to the players. I think at this point the owners are just trying to feel things out so they can haggle over details when they all meet next week. This isn't like baseball or the NHL where the two sides were so far apart. Right now as you point out, the biggest fracture is likely within the group of owners.

 

[faulkfan]

leave it to rich morons to kill their cash cow. They have a great product and a great fan base and their willing to jeopardize that because they want to make $25 mil a year instead of $23 mil. Thank goodness we can count on one thing...whatever the outcome of the CBA debacle, ticket prices will continue to rise.

 

[fatness]

There's some information that Snyder budged a bit already on his position. Nothing nationally posted that I've seen, but a writer on a Redskin board mentioned it several days ago:

Link (you may have to register to read it in its entirety)

The Redskins are facing some very painful decisions in order to get under the league-mandated salary cap if there is no new CBA with the players association by midnight on Thursday. It appears that Redskins owner Dan Snyder is willing to forgo a considerable amount of money, perhaps as much as a billion dollars, in order to avert such a scenario........................

...................... Dan Snyder is willing to change his position on NFL revenue sharing in order to get a CBA extension done................... that would mean that Snyder has pushed some more of his own chips into the pot in this high-stakes poker game.

........................ Just to use a round number, let’s say that we’re talking about Snyder giving up 10% of the team’s revenue to go into a pot. According to Forbes, that would be about $28 million per year. Even if revenues are static, which they won’t, and Snyder owns the team for another 25 years, which is probably on the low end, he will be giving up $700 million. It’s easy to see revenue increases pushing that figure over the $1 billion mark.

 

[Rovers]

Cash over cap is a big deal now. It's one way that players make more money.... sort of a "cap mortage". So, not only would getting rid of it mean less $ for the players, short term, it would really put some teams behind the 8 ball, like Washington. They keep handing out big signing bomuses as a way of circumventing the cap. If they were forced to get their cash flow under the cap, .... well, it isn't even mathematically possible at this point.

The lower income teams are understandably against the whole idea of cash over cap, but they can't reasonably insist that it disappear overnight, either.

 

[GRIDIRON ASSASSIN]

It's all Gene Upshaw's fault... ask Matt Birk.

 

[Grid71]

As a fan of the game, I don't think I could stomach watching it turn into the Yankees vs. the scraps.

Let's hope the large market owners realize what makes the NFL so much better than any other pro sport.

 

[Marvelous]

If there is not CBA, in 2008, the owners can implement any system they want, but if the players disagree, they can sue in court. See the article below in today's Washington Post. I have bolded the applicable text.

Why does everyone assume the NFL will be uncapped after the CBA expires? Do you really think 24 of the 32 owners will agree to a system where only the rich teams can compete?

NFL Talks Collapse; Market Set to Open

By Mark Maske

Washington Post Staff Writer

Sunday, March 5, 2006; Page E01

The NFL's labor negotiations collapsed again yesterday, keeping the league's future uncertain with its free agent market scheduled to open at midnight tonight.

Hopes for a settlement between the league's team owners and the players' union were rekindled when Commissioner Paul Tagliabue and Gene Upshaw, the executive director of the union, agreed Thursday to a three-day postponement of the opening of free agency. The sides had bargaining sessions Friday and yesterday in New York, but the talks broke down and Upshaw said late yesterday afternoon he was returning to Washington.

NFL Commissioner Paul Tagliabue speaks the media during a news conference following a meeting with NFL owners at the Grand Hyatt Hotel, Thursday, March 2, 2006, in New York. NFL owners voted unanimously Thursday to break off talks with the players' union on a contract extension, leaving the current salary cap in place with the start of free agency looming _ and possibly forcing the mass dumping of veterans. (AP Photo/Louis Lanzano) (Louis Lanzano - AP)

"Talks broke off because the owners are not capable of compromise," Upshaw said. "I'm on my way back."

League officials said they expected negotiations to resume before the scheduled opening of free agency.

"No progress has been made, but we expect more discussions to take place before Sunday night," said Greg Aiello, the NFL's vice president of public relations.

Said Buffalo Bills cornerback Troy Vincent, the president of the Players Association: "Just because negotiations break off doesn't mean there won't be communications. Everyone is exhausting themselves trying to get it to work. There are just some core issues here that need to be resolved, and it hasn't happened."

Upshaw did not rule out another attempt by the parties to reach a settlement today but said he had no reason to be optimistic that a deal is within reach. He said he had relented on his demand that the players receive at least 60 percent of the league's greatly expanded revenue pool, but the talks were deadlocked with the owners offering 56.6 percent. Upshaw declined to specify the terms of the players' most recent offer.

"I don't know where else to go," he said by telephone. "I came down from 60, and then I came down again. They're at 56.6. That's too low. They went from 56.2 to 56.5 to 56.6. You tell me if they've made any real movement. At this rate, they'll get there some day, but I'll be long gone by then."

Union officials said the owners' portrayal of their offer as 58 percent of revenues was misleading because that figure included an already existing performance-based pay pool. Upshaw said he was willing to negotiate a system to limit the amount of money that teams could spend above the flexible salary cap, but the parties could not agree to the details.

Teams must be under next season's salary cap of $94.5 million per club by midnight tonight, barring another postponement of the deadlines. If teams must release players to get under the cap, those moves must be made by 6 p.m. At midnight, free agent players are eligible to begin signing contracts with new teams. Many clubs are facing tight salary cap squeezes and were hoping for a labor settlement to push next season's cap as high as $108 million per team.

If there is no labor extension, the short-term effect would be that many players would be released today and relatively few teams would have much room under the lower cap.

The long-term effect would be that the owners and players could be headed toward a courtroom confrontation. The players' executive board is scheduled to meet next week in Hawaii. Upshaw has said if there is no labor deal by then, he will recommend to the players that they put in motion the process to decertify the union. That would enable the owners to implement whatever system they wish after the current labor deal expires in the spring of 2008. But the players would have the option of filing an antitrust lawsuit if they don't like the rules imposed by the owners.

The players currently receive about 65 percent of a smaller pool of revenues. The labor deal keeps the current salary cap system in place through next season, then there would be a season without a salary cap in 2007 before the labor contract expires. Upshaw has said that if the sport has a season without a salary cap, he doesn't see a cap ever returning.

After an owners' meeting Thursday in New York, Tagliabue and several owners called the union's demands excessive.

The owners, while negotiating with the players, have been waging an internal battle over a proposal to increase the degree to which the teams share locally generated revenues. There have been growing disparities among the clubs in those revenues, and lower-revenue teams have been seeking to narrow that divide. Tagliabue and some owners said Thursday there could be a labor deal with the players without a revenue-sharing accord among the owners. Upshaw has maintained the two would have to come simultaneously or the low-revenue teams could not afford the financial commitment they would be making to the players.

The discussions during the most recent bargaining about limiting the amount of money that teams can spend above the salary cap was an attempt by the two sides to address the lower-revenue clubs' concerns without a new revenue-sharing plan in place.

Link

 

[Bri]

Cash over cap is a big deal now. It's one way that players make more money.... sort of a "cap mortage". So, not only would getting rid of it mean less $ for the players, short term, it would really put some teams behind the 8 ball, like Washington. They keep handing out big signing bomuses as a way of circumventing the cap. If they were forced to get their cash flow under the cap, .... well, it isn't even mathematically possible at this point.

The lower income teams are understandably against the whole idea of cash over cap, but they can't reasonably insist that it disappear overnight, either.

signing bonuses go against the cap and are the largest part of NFL contracts, roster bonuses are second and base salary is a far behind 3rd.

 

[Autumn Wind]

Cash over cap is a big deal now. It's one way that players make more money.... sort of a "cap mortage". So, not only would getting rid of it mean less $ for the players, short term, it would really put some teams behind the 8 ball, like Washington. They keep handing out big signing bomuses as a way of circumventing the cap. If they were forced to get their cash flow under the cap, .... well, it isn't even mathematically possible at this point.

The lower income teams are understandably against the whole idea of cash over cap, but they can't reasonably insist that it disappear overnight, either.

signing bonuses go against the cap and are the largest part of NFL contracts, roster bonuses are second and base salary is a far behind 3rd.

Yes, but the signing bonuses can be spread out over multiple years (on the cap, not in real dollars paid up front). The end result of this shell game is that richer teams can afford to hand out bigger signing bonuses.

 

[GroveDiesel]

I'm not sure why small market teams are that upset about the cash over cap issue. First of all, they can still only go so far over. Sure there's no actual limit in the rules, but just mathmatically it has to be impossible to breach a certain number since you can only extend out a certain number of years.

Secondly, since those bonuses accelerate when a player is cut, it makes large signing bonuses over long periods more risky contracts. If you sign too many guys to contracts like that and they are busts, you have to either keep them around and suffer through bad play, or cut them and have a ton of dead cap space. Even playing the shell game it will catch up eventually. And I think to a large extent it has caught up to the Redskins. Even if the new CBA deal goes through and there is the $108M cap, Washington still won't have the cap room to make any big FA moves because of all of their big money busts within the last 5 years or so.

So yeah, having more money allows you to dole out more large signing bonuses, but onl to a certain extent and at the cost of huge risk.

For an example of this, look at the New York Knicks. They don't even have a hard cap and yet Thomas has killed that team. They've brought in a ton of huge contracts and even traded away picks to get more talent for the present. But those moves have been busts and now they will be essentially stuck with that team for the foreseeable future.

 

[Bri]

Cash over cap is a big deal now. It's one way that players make more money....  sort of a "cap mortage". So, not only would getting rid of it mean less $ for the players, short term, it would really put some teams behind the 8 ball, like Washington. They keep handing out big signing bomuses as a way of circumventing the cap. If they were forced to get their cash flow under the cap, .... well, it isn't even mathematically possible at this point.

The lower income teams are understandably against the whole idea of cash over cap, but they can't reasonably insist that it disappear overnight, either.

signing bonuses go against the cap and are the largest part of NFL contracts, roster bonuses are second and base salary is a far behind 3rd.

Yes, but the signing bonuses can be spread out over multiple years (on the cap, not in real dollars paid up front). The end result of this shell game is that richer teams can afford to hand out bigger signing bonuses.

no it's not, they still have to "pay the piper" eventually and it catches up to them.

 

[Bri]

Years ago Jerry Jones was OK with the rule that there was a 50% revenue minimum for total salary. This was so cheap owners had to pay at least 50%. It never came up but it was there.

His cowboys won and his $ skyrocketted. He wanted 50% to be the salary cap since now his 50% is higher than most, yet he can offer his point to the other owners as an even number "across the board". All the previous happenned years ago. I do NOT know what Jerry wants NOW but I have never heard of him giving up on this idea. Regardless, if gives you a line into how he's thought in the past.

His Dallas Cowboys back in 94? 95? had a 35 mil cap and 3 or 4 players "ate" 25 mil of that cap. So 40+ shared 10 mil. That team is used as the basis for NFL players in complaining that there is no middle class in the NFL. The cap's risen considerably and it's change some but if you look at a team like the Colts, it's still not that different.

I would imagine the two things above are being brought into the talks to some degree

 

[Marvelous]

I'm not sure why small market teams are that upset about the cash over cap issue. First of all, they can still only go so far over. Sure there's no actual limit in the rules, but just mathmatically it has to be impossible to breach a certain number since you can only extend out a certain number of years.

I can see it. A lower revenue team will not spend much cash over the cap. But they are competing against other teams that do. So this year, it could be the Redskins going way over. Next year, the Broncos. The following year the Giants. etc. The lower revenue team will always be at a disadvantage to someone.

 

[cstu]

Cash over cap is a big deal now. It's one way that players make more money.... sort of a "cap mortage". So, not only would getting rid of it mean less $ for the players, short term, it would really put some teams behind the 8 ball, like Washington. They keep handing out big signing bomuses as a way of circumventing the cap. If they were forced to get their cash flow under the cap, .... well, it isn't even mathematically possible at this point.

The lower income teams are understandably against the whole idea of cash over cap, but they can't reasonably insist that it disappear overnight, either.

Cash over cap may help teams like the Redskins who go on spending sprees in the short turn, but it will eventually catch up to them. The Redskins have been pushing the limits of salary restructuring and now their situation is extremely tight, with big problems they have to deal with about guys who they need to trade/cut but whose cap hit would be too large. You can't outrun the cap forever and the Redskins are very limited in roster moves they can make - almost all of which revolve around who can provide cap savings, not the needs of the team on the field.

 

[cstu]

I'm not sure why small market teams are that upset about the cash over cap issue. First of all, they can still only go so far over. Sure there's no actual limit in the rules, but just mathmatically it has to be impossible to breach a certain number since you can only extend out a certain number of years.

I can see it. A lower revenue team will not spend much cash over the cap. But they are competing against other teams that do. So this year, it could be the Redskins going way over. Next year, the Broncos. The following year the Giants. etc. The lower revenue team will always be at a disadvantage to someone.

Excellent point.

 

[Boston]

some information lately has pointed to a meeting in the middle around 58%...

yet unless the owners can hammer out an agreement on how to divide revenues from local revenue streams (a complex issue with haves like jerry jones & dan snyder saying other owners are lazy, & the have nots complaining they are in smaller markets & it is not a level playing field), the much publicized NFLPA issues could all be a moot point... in fact, even if the players settled for 1%, there would still remain the owner entanglement.

one connection i haven't seen made a lot is that the same big market teams that seem the most resistant to sharing locally garnered revenues... are the ones that would seem to have the most to benefit from an uncapped state of affairs...

not to say they are related... jones & snyder may not want to budge on the former issue on principle... because they really think that is fair... but it is interesting that these same owners, if they continue to be an obstacle to a compromise & larger agreement... could be the cause of ushering in an era in which they would be favorably situated to maximally leverage their superior big market-driven revenue streams...

I think you need to look at this premise from another angle. You're really talking about two different issues...winning and making money. If the "rich" owner purely cares about winning than an uncapped NFL would be in his favor. He could spend money with reckless disregard and have zero ramifications (not that this guarantees winning because there are boatloads of examples to the contrary). Yet, if the "rich" owner is concerned about keeping his hard earned revenue than a salary cap allows him to keep more of his money. If infact these "rich" owners are currently maximizing their revenue streams (which appears to be the crux of the battle) than an uncapped situation does not help them pocket more revenue. It actually increases pressure from their fanbase to spend more of it.