NFL: Schefter speculates the '21 salary cap to shrivel due to COVID-19

[SlimShady'sSpaceForce]

NFL: '21 salary cap to shrivel due to COVID-19

 

Unknown financial implications from the coronavirus pandemic might force the NFL to reduce the 2021 salary cap by as much as 50 percent, ESPN's Adam Schefter reported.

 

With uncertainty around the 2020 season, including whether fans will be able to attend games at any point, and other revenue-tied variables up in the air, the NFL enters the summer months planning for the limbo that could follow next offseason.

 

Schefter estimated a loss in revenue of $3.2 billion in 2020 if games are played without fans.

 

sorry  I forgot the link

https://sports.yahoo.com/nfl-21-salary-cap-shrivel-161523251.html

Edited May 6, 2020 by SlimShady'sSpaceForce

[PromoTheRobot]

The simple answer is to reduce everyone's salary by the reduction in the cap. But nothing is ever simple, is it.

[SlimShady'sSpaceForce]

that scenario could be a major mess.  Thank god the Bills have a ton of cap space....  or would that actually be a bad thing? 

 

[MrEpsYtown]

4 minutes ago, SlimShady'sSpaceForce said:

that scenario could be a major mess.  Thank god the Bills have a ton of cap space....  or would that actually be a bad thing? 

 

 

Teams with QBs on rookie deals could manage. Teams that are paying one guy 30 plus million are probably screwed. 

[whatdrought]

Not really sure how you can do that. 50% of the cap is like 30 guys for some clubs. What, do they just not have a full roster? 
 

 

[BillsFan692]

Pretty sure the players will strike lol

[SlimShady'sSpaceForce]

I changed the title to reflect his "speculation" 

 

[ngbills]

I know this can get to be a complicated situation. But owners do not give money to players at the same rate of increases in value so why do so on the downside? Values of teams have gone from $100M to billions. Jerry Jones bought the Cowboys for $140M and they are now worth $5.5B. Think about that. Can other businesses that have shut down now pay our employees half as much? Lets drop minimum wage in half to account for lost business. I dont have the answers but seems like a money grab by billionaire owners. If you want to treat the players this way trade some salary for ownership of the team. 

[FireChans]

41 minutes ago, PromoTheRobot said:

The simple answer is to reduce everyone's salary by the reduction in the cap. But nothing is ever simple, is it.

Yeah I’m sure the NFLPA would LOVE this. Who is this a simple answer for? Someone without skin in the game?

[hjnick]

42 minutes ago, SlimShady'sSpaceForce said:

NFL: '21 salary cap to shrivel due to COVID-19

 

Unknown financial implications from the coronavirus pandemic might force the NFL to reduce the 2021 salary cap by as much as 50 percent, ESPN's Adam Schefter reported.

 

With uncertainty around the 2020 season, including whether fans will be able to attend games at any point, and other revenue-tied variables up in the air, the NFL enters the summer months planning for the limbo that could follow next offseason.

 

Schefter estimated a loss in revenue of $3.2 billion in 2020 if games are played without fans.

 

50% salary cap reduction!  The NFL cannot let that happen. 

 

I'm sure at least half the teams couldn't even get that low with all the dead money from cancelling all their high priced contracts.

 

The cap might go down by 5-10%, but I cannot see 50%.  It would devastated most of the teams.

[Call_Of_Ktulu]

7 minutes ago, ngbills said:

I know this can get to be a complicated situation. But owners do not give money to players at the same rate of increases in value so why do so on the downside? Values of teams have gone from $100M to billions. Jerry Jones bought the Cowboys for $140M and they are now worth $5.5B. Think about that. Can other businesses that have shut down now pay our employees half as much? Lets drop minimum wage in half to account for lost business. I dont have the answers but seems like a money grab by billionaire owners. If you want to treat the players this way trade some salary for ownership of the team. 

Employees are unfortunately the ones who are hurt when something like this happens. If for some reason my company lost billions we would not get a pay raise or lose money on our next contact. I work for the 3rd largest energy supplier in the world so I hope that doesn’t happen. 

[LABILLBACKER]

10 minutes ago, hjnick said:

 

50% salary cap reduction!  The NFL cannot let that happen. 

 

I'm sure at least half the teams couldn't even get that low with all the dead money from cancelling all their high priced contracts.

 

The cap might go down by 5-10%, but I cannot see 50%.  It would devastated most of the teams.

I agree, there's no way they can reduce it more than 10%. The union would immediately get involved. The owners are just going to have to "wear it" for one year.

[Back2Buff]

The NHL model always made way more sense to me.  The salary cap and players yearly salary is not what the actual real dollars are because of escrow.  They split the revenue and that is how much the players have to split up to get paid.  Usually they make around 85% to 90% of what their contract says in a year, this year there is talk of 50%.

 

It allows for an equal distribution of lost revenue from what was projected.

Edited May 6, 2020 by Back2Buff

[Punching Bag]

1 hour ago, PromoTheRobot said:

The simple answer is to reduce everyone's salary by the reduction in the cap. But nothing is ever simple, is it.

 

No not simple.

It does not work with prepaid signing bonuses which are spread over multiple years among other things.

[BillsNutHawaii]

I believe no other GM in the league is as good as managing the salary cap as GM Beane is.  It may get ugly, but I anticipate the Bills will be in as good a situation as any team in the league - with regard to salary cap. My favorite saying, “Where there is manure, there is a pony.” and I bet GM Beane will find that pony.

[NoSaint]

11 minutes ago, LABILLBACKER said:

I agree, there's no way they can reduce it more than 10%. The union would immediately get involved. The owners are just going to have to "wear it" for one year.

I’d imagine some renegotiation to keep as high as possible next year with the dips spread across the existing CBA years would be the way to approach it.

 

players get a higher percentage in 2021 due to it but a lower share in future years. 
 

[Rochesterfan]

17 minutes ago, NoSaint said:

I’d imagine some renegotiation to keep as high as possible next year with the dips spread across the existing CBA years would be the way to approach it.

 

players get a higher percentage in 2021 due to it but a lower share in future years. 
 

 

I agree - the NFL and the NFLPA have already agreed to the split - if the NFL can show that due to the lack of fans - they lost X amount - they can work with the NFLPA to spread that loss over 3-5 years keeping the salary cap at 0% increase - rather than cutting the cap in 1 year.

 

The NFLPA will go along because the alternative is for the NFL to decrease the salary cap by a significant margin - which would cause a huge impact in FA salaries and more importantly all kinds of players cut to work to get under the cap.  
 

The Bills are in pretty good position because of the number of short 1 year contracts and the available space for next year.  There are other teams that not getting a 10 million bump in the cap is going to cause major issues.

Edited May 6, 2020 by Rochesterfan

[H2o]

[Rochesterfan]

49 minutes ago, ngbills said:

I know this can get to be a complicated situation. But owners do not give money to players at the same rate of increases in value so why do so on the downside? Values of teams have gone from $100M to billions. Jerry Jones bought the Cowboys for $140M and they are now worth $5.5B. Think about that. Can other businesses that have shut down now pay our employees half as much? Lets drop minimum wage in half to account for lost business. I dont have the answers but seems like a money grab by billionaire owners. If you want to treat the players this way trade some salary for ownership of the team. 

 

This has nothing to do with anything at all.

 

The NFL and the NFLPA agreed to a % split of revenue produced each season to set the cap and the players are designated to make a percentage of the revenue year over year.  
 

If the revenue drops the salary cap drops - just as when the revenue goes up the cap goes up.  This is not a money grab - it is speculation that due to a potential lack of fans - approximately 3.2 billion in potential revenue would be lost meaning and that impacts the cap.

 

The most logical thing is that the NFL and NFLPA will come to and agreement to spread that loss out over several years to have the smallest impact on the cap.

[C.Biscuit97]

1 hour ago, PromoTheRobot said:

The simple answer is to reduce everyone's salary by the reduction in the cap. But nothing is ever simple, is it.

You can’t reduce agreed upon contracts.  Only you mean by the percentage of the reduced cap.  But you can’t change the contract.

[bigK14094]

1 hour ago, BillsFan692 said:

Pretty sure the players will strike lol

A contract is a contract.  the players get a percentage of revenue.  If revenue declines, the cap will go down.  I think any extensions going forrward  need to be stopped, until the smoke clears.  And, the chatter above here is right, if you are over extended on the cap, you might have trouble fielding  a team.  Will Brady give up his $30 mil.....I am thinking not.  But, the Bills don't have that guy (yet anyhow)   And, those that do extend are going to have to take a haircut, as they say.  Poyer got it just right imho,  did his deal before all this hit.

1 hour ago, ngbills said:

I know this can get to be a complicated situation. But owners do not give money to players at the same rate of increases in value so why do so on the downside? Values of teams have gone from $100M to billions. Jerry Jones bought the Cowboys for $140M and they are now worth $5.5B. Think about that. Can other businesses that have shut down now pay our employees half as much? Lets drop minimum wage in half to account for lost business. I dont have the answers but seems like a money grab by billionaire owners. If you want to treat the players this way trade some salary for ownership of the team. 

Valuation drops with revenue.  The boys are not worth that today, as their revenue prospects in the short term are substantial down.  (the Wall Street guys say the decrease is "material")

[BarleyNY]

The logical solution would be to hold the cap at its 2020 amount for 2021.  Then when the league is back to normal, use some of the revenue increases to effectively pay back what was borrowed.  

[ngbills]

15 minutes ago, bigK14094 said:

A contract is a contract.  the players get a percentage of revenue.  If revenue declines, the cap will go down.  I think any extensions going forrward  need to be stopped, until the smoke clears.  And, the chatter above here is right, if you are over extended on the cap, you might have trouble fielding  a team.  Will Brady give up his $30 mil.....I am thinking not.  But, the Bills don't have that guy (yet anyhow)   And, those that do extend are going to have to take a haircut, as they say.  Poyer got it just right imho,  did his deal before all this hit.

Valuation drops with revenue.  The boys are not worth that today, as their revenue prospects in the short term are substantial down.  (the Wall Street guys say the decrease is "material")

If they went up for sale today I would bet they still get the $5.5B or more. Its about future revenue not revenue today or even just next year. 

31 minutes ago, Rochesterfan said:

 

This has nothing to do with anything at all.

 

The NFL and the NFLPA agreed to a % split of revenue produced each season to set the cap and the players are designated to make a percentage of the revenue year over year.  
 

If the revenue drops the salary cap drops - just as when the revenue goes up the cap goes up.  This is not a money grab - it is speculation that due to a potential lack of fans - approximately 3.2 billion in potential revenue would be lost meaning and that impacts the cap.

 

The most logical thing is that the NFL and NFLPA will come to and agreement to spread that loss out over several years to have the smallest impact on the cap.

Which is my point. "IF" the teams say are cutting salaries by $120M next year then that is a money grab. Yes something needs to happen like a sharing of the losses over a number of years. 

Edited May 6, 2020 by ngbills

[LittleSammy]

1 hour ago, BillsFan692 said:

Pretty sure the players will strike lol

Let them strike. Lots of folks laid off, furloughed or taking pay cuts. The players can get the same dose of economic reality as the rest of us.

[HOUSE]

This is what happens when you try to remove beer from the stadiums

 

 

 

 

 

 

 

.

Edited May 6, 2020 by HOUSE

[ProcessAccepted]

No way that happens. Worst case for the players is that they'd freeze the cap. I know it's based on a % or league revenues but there is no way teams like the Cowboys are going to shed players to meet a new cap. The owners will eat the loss and recoup when revenues rebound. To decrease the cap would only hurt the league.

[HardyBoy]

5 minutes ago, ngbills said:

If they went up for sale today I would bet they still get the $5.5B or more. Its about future revenue not revenue today or even just next year. 

 

Yeah, it's actually kind of crazy that the cap is tied to a single year revenue. I mean I guess it is stop gap for something like this, but you'd think they'd smooth it over over the last few years with future anticipated revenue built in too.

 

The problem you are going to run into is cashflow though...the fans are a consistent revenue stream, especially season ticket holders. They'll get loans, but remember that whole cash to cap thing? Maybe not the worst idea after all, but assuming that included future ticket revenue anticipated in the coming season.

 

Might be a good number of teams up for sale, because I don't care who you are, not many people have 150m in cash burning a hole in their pocket and a lot of investments are down and it might make a lot more sense to sell an nfl team at a profit than a bunch of investments at an astronomical loss...they should sell guaranteed team bonds.

[C.Biscuit97]

6 minutes ago, LittleSammy said:

Let them strike. Lots of folks laid off, furloughed or taking pay cuts. The players can get the same dose of economic reality as the rest of us.

I get your point but have you heard how desperate people are for sports?  Athletes will always be in demand.  They are talking about making a bubble for them to play in.  

but I believe this was part of the reason the players accepted the new contract even though a lot were against it.  The owners would have total power right now if they didn’t.

 

[Buddo]

There is every likelihood there will have to be cap adjustments of some sort, due to a reduced revenue stream. The revenue stream is what defines the cap number.

 

Now, the NFL might be able to do something as regards allowing teams to be over the cap, due to extenuating circumstances, but the NFLPA, doesn't really have a leg to stand on.

 

Where things can, and probably will, get ugly, is in the area of individual contracts that have to be honoured.

[Nester]

I love it, 

 

easy come easy go, just like the rest of us. 

Would be interesting to see big names with big salaries get Cut as the salary is to much to bare in this new Era. 

No more guarantees etc...

 

Great GMs like ours will shine in this environment. 

[SoTier]

I thought that the NFL salary cap and the percentage allocations in the previous and current CBA were/are based on TV money and other league revenue that all goes into a single NFL "pot", such as the money from the NFL's share of official NFL gear licensing.  I thought that all or most of attendance revenue went to the individual teams' pots rather than into the general NFL "pot", so that teams with stadiums with lots of very expensive luxury suites and those that sold PSLs generated much larger revenue streams -- and more profits -- than teams with fewer/cheaper luxury boxes and didn't have PSLs.  The entire purpose of the salary cap is to give teams that don't generate as much revenue equal access to player personnel as teams that generate significantly more.

 

If my understanding is correct, then I don't think the salary cap will drop significantly for 2021 although NFL teams would likely have to "eat" their 2020 losses.

 

 

[Rochesterfan]

41 minutes ago, ngbills said:

If they went up for sale today I would bet they still get the $5.5B or more. Its about future revenue not revenue today or even just next year. 

Which is my point. "IF" the teams say are cutting salaries by $120M next year then that is a money grab. Yes something needs to happen like a sharing of the losses over a number of years. 

 

No it would not be a money grab- it would be the result of the negotiated revenue split.

 

it would drop and then when the revenue went up in 2021 - the cap would increase by a huge amount.  
 

This is why the NFL and NFLPA will negotiate an balance to prevent the cap from dropping significantly, but it will have to be negotiated because the agreement already states how the cap is calculated year over year.

 

The ever increasing revenue has been a boon for the players and when the revenue drops like this it can also be a nightmare.

[njbuff]

This whole thing is WAY OUT OF HAND now.

 

 

 

 

 

 

 

[Rochesterfan]

6 minutes ago, SoTier said:

I thought that the NFL salary cap and the percentage allocations in the previous and current CBA were/are based on TV money and other league revenue that all goes into a single NFL "pot", such as the money from the NFL's share of official NFL gear licensing.  I thought that all or most of attendance revenue went to the individual teams' pots rather than into the general NFL "pot", so that teams with stadiums with lots of very expensive luxury suites and those that sold PSLs generated much larger revenue streams -- and more profits -- than teams with fewer/cheaper luxury boxes and didn't have PSLs.  The entire purpose of the salary cap is to give teams that don't generate as much revenue equal access to player personnel as teams that generate significantly more.

 

If my understanding is correct, then I don't think the salary cap will drop significantly for 2021 although NFL teams would likely have to "eat" their 2020 losses.

 

 

 

I think you are partially correct.  The shared revenue that the league gives to every team is based on the bolded above.  
 

The shared attendance, PSLs, luxury boxes are all considered revenue for the cap, but that money is not shared equally amongst the teams.

 

In this case for the cap, both the TV revenue and all money generated by attendance makes up the pool of money the cap is set from.  
 

So without fans the revenue generated for 2020 stands to decrease by ~ 3.2 billion once everything is accounted for based upon the numbers thrown out - so that will be potentially cut from the cap. 
 

Individual teams like the LA teams, Las Vegas, Dallas - with tons of PSLs, luxury suites, and huge amounts of fans in newer stadiums - stand to lose significantly more money from this than Buffalo with smaller costs, smaller luxury boxes, and no PSLs.

 

So based on my understanding the underlined section may or may not be correct.  If they lose 3.2 billion in game day revenue- the cap will potentially be impacted big time - although I do not see 50% decrease - more like 15%.  The second part is mostly true - some teams will eat more of the loses in 2020 than others - although the shared TV money typically covers 100% of the team costs - so that should not change.  
 

At least that is my understanding.

[Tortured Soul]

1 hour ago, Rochesterfan said:

The NFL and the NFLPA agreed to a % split of revenue produced each season to set the cap and the players are designated to make a percentage of the revenue year over year.  

If the revenue drops the salary cap drops - just as when the revenue goes up the cap goes up.  This is not a money grab - it is speculation that due to a potential lack of fans - approximately 3.2 billion in potential revenue would be lost meaning and that impacts the cap.

 

So, back to what Schefter said, a $3.2 billion revenue decline is $100 million per team.  The salary cap is ~$200 million (slightly more). A 50% cut in the cap would be $100 million. 

 

Meaning that, if you take what Schefter is reporting at face value, the players would bear the entire loss.

[Don Otreply]

3 hours ago, PromoTheRobot said:

The simple answer is to reduce everyone's salary by the reduction in the cap. But nothing is ever simple, is it.

that’s crazy talk... ? although it is the right thing to do.

[Taro T]

56 minutes ago, Rochesterfan said:

 

I think you are partially correct.  The shared revenue that the league gives to every team is based on the bolded above.  
 

The shared attendance, PSLs, luxury boxes are all considered revenue for the cap, but that money is not shared equally amongst the teams.

 

In this case for the cap, both the TV revenue and all money generated by attendance makes up the pool of money the cap is set from.  
 

So without fans the revenue generated for 2020 stands to decrease by ~ 3.2 billion once everything is accounted for based upon the numbers thrown out - so that will be potentially cut from the cap. 
 

Individual teams like the LA teams, Las Vegas, Dallas - with tons of PSLs, luxury suites, and huge amounts of fans in newer stadiums - stand to lose significantly more money from this than Buffalo with smaller costs, smaller luxury boxes, and no PSLs.

 

So based on my understanding the underlined section may or may not be correct.  If they lose 3.2 billion in game day revenue- the cap will potentially be impacted big time - although I do not see 50% decrease - more like 15%.  The second part is mostly true - some teams will eat more of the loses in 2020 than others - although the shared TV money typically covers 100% of the team costs - so that should not change.  
 

At least that is my understanding.

 

Does the NFL collectively bring in ~$20B?  Thought they were closer to $10-12B.  If it's the former, that projected revenue drop is ~15%.  If it's the latter, it's more like 25-30%.

 

[simpleman]

What percentage of the income from stadium related revenue goes toward the cap? I thought there were two revenue streams, Local Revenue(stadium income) ticket sales, concessions, and corporate sponsor income which went directly to the individual teams.And National Revenue, TV contracts, licensing, merchandising etc. to the league to be allocated to all teams though revenue sharing and determine things like cap.  Even if the season is played without fans present, I thought TV contract revenue was a big contributor to the cap. That would not change even if the games are all not played in front of the fans, and just televised. The contract revenue from the networks would not change if the full number of games are played and televised according to the existing contracts. As long as the televised games have the ratings expected, TV income should be stable. Isn't most stadium revenue shared with the home team and the visiting team under some formula? How much of stadium related revenue (local revenue) is actually shared with the league? Wouldn't lack of stadium revenue impact the individual team's bottom line more so than the league's itself?

 

Edited May 7, 2020 by simpleman

[dollars 2 donuts]

Wow...I guess no one is going to be home watching tv in September.

 

Edit:  you have never seen tv ratings for football like you are going to see this fall.  I’m also thinking the networks are going to take advantage of that, too, with the ad buys.  Let’s also throw in the fact that tv original series production will be much delayed and that leaves you with the only new thing on tv since the end of this tv season will be the NFL.

 

...this is owners pondering and bracing to put the kibosh on the players.

Edited May 7, 2020 by dollars 2 donuts

[nedboy7]

So you are saying professional athletes and franchise owners might have to make less money?  Oh no.  Maybe Trump can cut them a giant check from my taxes to fix this injustice!!!