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

[Gordio]

16 hours ago, Call_Of_Ktulu said:

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. 

 

 

If your company loss billions, my guess is you would be out of a job.  

 

With that being said, I didn't think the number would be that high (3.2 billion) with no fans in the stands, at the end of the day it may not be possible but my guess is the NFL is going to do everything they can to make sure fans are in the stands this fall.  The NFL is a cash cow but $3.2 billion is a hard number to swallow even for them.

[DCOrange]

FWIW, my company’s COO has been told the government expects a decrease in our GDP of roughly 50% over the next 4 months.

 

Feels like the government would theoretically be trying anything they can to avoid that happening but we’ll see. 

[Hardhatharry]

17 hours 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.

 

sorry  I forgot the link

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

That's a cold water situation there.... We set up best for it TBH if true.

[SoTier]

12 hours ago, simpleman said:

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?

 

 

This is how I thought it worked, too.   If it does work this way, then the salary cap wouldn't be impacted much but individual teams' bottom lines would be severely impacted.  That would likely result in a significant drop in what top players can expect in extensions in 2020 or in FA in 2021 because some teams are likely too cash strapped to offer big dollar contracts.  OTOH, it might improve the market -- and money -- for more modest FAs. 

 

11 hours ago, atlbillsfan1975 said:

I’m not an attorney but I bet there is something in each contract for these very circumstances. 
 

 

 

There likely is language that addresses what happens when something prevents all or some games from being played at all but it's unlikely that there's any mention of games played without fans. 

[K-9]

Can’t believe the NFL CBA doesn’t have a force majeure clause like the NBA. 

[Bleeding Bills Blue]

43 minutes ago, SoTier said:

 

This is how I thought it worked, too.   If it does work this way, then the salary cap wouldn't be impacted much but individual teams' bottom lines would be severely impacted.  That would likely result in a significant drop in what top players can expect in extensions in 2020 or in FA in 2021 because some teams are likely too cash strapped to offer big dollar contracts.  OTOH, it might improve the market -- and money -- for more modest FAs. 

 

 

There likely is language that addresses what happens when something prevents all or some games from being played at all but it's unlikely that there's any mention of games played without fans. 

 

Right - how many teams rely on fans to ya know... pay the players.  Or for loans for stadiums in LA that are 3 BILLION dollars over budget.  I feel like 90% of the licenses and season tickets in that stadium were purchased by brokers for 30 cents on the dollar.  And now brokers are all cash poor, so eventually you have to give them their money back if the seats can't be sold.  That's a big problem when you may have already spent it paying contractors to get your giant empty stadium ready.

 

Ticket business is a mess right now.  Ticketmaster has no money coming in, so they can't cancel anything.  Brokers likely had an insane number of chargebacks so they have no money to give ticketmaster, so they probably have to do chargebacks too (a big no-no in ticket biz).  

[ProcessAccepted]

16 hours ago, Nester said:

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. 

Why??? The Purge movies were interesting but I don't want to see that in real life. I like having key players locked in on their teams because it make the game more fun and it's much more interesting supporting your team. 

[Mr. WEO]

36 minutes ago, K-9 said:

Can’t believe the NFL CBA doesn’t have a force majeure clause like the NBA. 

 

It would be hard for the NFL to invoke force majeur while still playing all the games.  Players only get game checks, so if the NFL was worried about 3.2 billion in lost revenue, they could cut the season short to  make up the difference, as long as they are getting paid a full contract by the networks for a shortened year.

[Back2Buff]

13 hours ago, BuffaloRebound said:

The 50% number is absurd.  Ratings will be huge.  Look at the draft.  Schefter is revealing himself to be a gigantic tool.  

 

Ratings mean nothing when no companies have money to advertise.

 

Dave Portnoy on barstool radio when COVID first hit, was talking that advertisers were already pulling all their funding at that time.  It has to be way worse now.

 

The companies that are thriving, don't need advertising because they are essential.  The companies that are struggling don't have the money to throw at advertising.

 

[Punching Bag]

5 hours ago, DCOrange said:

FWIW, my company’s COO has been told the government expects a decrease in our GDP of roughly 50% over the next 4 months.

 

Feels like the government would theoretically be trying anything they can to avoid that happening but we’ll see. 

 

They can try giving away money like they are currently doing and raising taxes post election..

[SlimShady'sSpaceForce]

18 hours ago, Mr. WEO said:

Reports last year were that the NFL made 15 billion.  If it drops 3.2 billion from last year, that still leaves 370 million per team.  The cap in 2020 will be just over half that at 198 million.

 

How would this lead to a "50%" reduction in the cap?

 

Shefter needs clicks?  

 

[Mr. WEO]

33 minutes ago, SlimShady'sSpaceForce said:

 

Shefter needs clicks?  

 

 

Never enough for some people!

[Orlando Tim]

On 5/6/2020 at 7:34 PM, simpleman said:

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?

 

I can not find a specific break down of the new CBA but you are correct about the one from last year. I assume numbers are similar but I am assuming

On 5/7/2020 at 9:46 AM, dneveu said:

 

Right - how many teams rely on fans to ya know... pay the players.  Or for loans for stadiums in LA that are 3 BILLION dollars over budget.  I feel like 90% of the licenses and season tickets in that stadium were purchased by brokers for 30 cents on the dollar.  And now brokers are all cash poor, so eventually you have to give them their money back if the seats can't be sold.  That's a big problem when you may have already spent it paying contractors to get your giant empty stadium ready.

 

Ticket business is a mess right now.  Ticketmaster has no money coming in, so they can't cancel anything.  Brokers likely had an insane number of chargebacks so they have no money to give ticketmaster, so they probably have to do chargebacks too (a big no-no in ticket biz).  

Assuming the TV contracts pay for the player salaries, I can not believe the bad Luck of Rams and Chargers. They probably need 20 years in the new stadium just to break even and to receive no revenue now compounds the problem, even a man who had 10 billion 6 months ago might have issues with cash flow at this point.

[Bleeding Bills Blue]

44 minutes ago, Buffalo Timmy said:

I can not find a specific break down of the new CBA but you are correct about the one from last year. I assume numbers are similar but I am assuming

Assuming the TV contracts pay for the player salaries, I can not believe the bad Luck of Rams and Chargers. They probably need 20 years in the new stadium just to break even and to receive no revenue now compounds the problem, even a man who had 10 billion 6 months ago might have issues with cash flow at this point.

 

I mean - its mostly the rams problem financially.  I'm sure there was some handshake agreement around ticket sales/seat licenses for chargers games that the money goes to the rams, but i remember reading that the chargers were selling like - nothing. 

 

The chargers problem will be negotiating whether they stay or not when their current stay is up, and where they go when legit no city wants them around.    

[Mikie2times]

On 5/6/2020 at 3:41 PM, Call_Of_Ktulu said:

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. 

Well said. Now the players do have a powerful union. So this could lead to a very ugly situation. As another poster mentioned, I see no practical way to accomplish this by cutting players to get below the number. It would have to be a reduction as a % of the the total cap spent. So if a guy make 16 million, now he makes 8 million. That is unless you want the open market to just take over at which point roster turnover would be inconceivable. Hell, I wonder if teams would even opt to carry a full roster if that's the case.    

Edited May 12, 2020 by KzooMike

[billsfan89]

On 5/6/2020 at 1:31 PM, C.Biscuit97 said:

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

 

The CBA gives the players a percentage of total Football related revenue. So there has to be some sort of claw back in case revenue shrinks. Just for the Sake of round numbers let's say the total revenues are 10 billion and it goes down to 9 billion. The CBA is set to give the players 50% of revenue, so they would receive 5 billion dollars out of 10. But if revenue goes down the players would only get 4.5 billion. I would imagine there is a claw back clause in the CBA to ensure that and prevent wild scenarios from occurring. 

 

There have been examples (most recently in the NHL) where there were clawbacks on contracts where all contracts were reduced by a percentage. 

[JetsFan20]

The NFLs #2 and #3 sponsors PepsiCo and ABI recently announced that they were completely revamping their marketing strategy to reduce sponsorship budgets and focus more on social,

digital, and direct to consumer platform. 
 

Without venue sales the NFL is going to lose a ton of money. 

[BuffaloRebound]

Good thing for the NFL it’s a presidential election year.  I’m sure Trump and Biden campaigns will be spending hundreds of millions on TV ads and offset any losses in sponsors.  

[Tuco]

First of all the Yahoo article is crap. Schefter never says anything about 50%. Schefter says $3.2 Billion - or $30-$80 million. Then further down Yahoo writes about the salary cap being at least $120 mil since 2012.  That's where the $50% figure comes from.

 

In reality, let's say it is $3.2 billion. That's a nice round $100 million per team. And the salary cap is roughly 49% of that. Except it isn't. The 49% figure the players share includes all  player costs, including insurance payments, pension contributions etc.  Once all that is figured, then the salary cap for the year is figured.  Regardless, if the figure is $3.2 billion, the cap would go down a large percentage of roughly 49% of that. So let's say it goes down $40 million. Yes that's a lot, but it's really only around 20%. That's not great for all parties involved, but it's certainly manageable. 

 

And no the league doesn't have a force mejeure clause. They do have a clause that states both parties will bargain in good faith to adjust the cap if games are missed. And they also have the ability to go back and redo the agreement any time if needed. So it's entirely possible they could look at the final numbers and then agree to prorate a $30-$40 million reduction over 5 years or whatever.

 

It's not going to be $50 percent and the Yahoo writer is a tool for saying so.

 

My $.02

Edited May 13, 2020 by Tuco

[SlimShady'sSpaceForce]

1 hour ago, Tuco said:

First of all the Yahoo article is crap. Schefter never says anything about 50%. Schefter says $3.2 Billion - or $30-$80 million. Then further down Yahoo writes about the salary cap being at least $120 mil since 2012.  That's where the $50% figure comes from.

 

In reality, let's say it is $3.2 billion. That's a nice round $100 million per team. And the salary cap is roughly 49% of that. Except it isn't. The 49% figure the players share includes all  player costs, including insurance payments, pension contributions etc.  Once all that is figured, then the salary cap for the year is figured.  Regardless, if the figure is $3.2 billion, the cap would go down a large percentage of roughly 49% of that. So let's say it goes down $40 million. Yes that's a lot, but it's really only around 20%. That's not great for all parties involved, but it's certainly manageable. 

 

And no the league doesn't have a force mejeure clause. They do have a clause that states both parties will bargain in good faith to adjust the cap if games are missed. And they also have the ability to go back and redo the agreement any time if needed. So it's entirely possible they could look at the final numbers and then agree to prorate a $30-$40 million reduction over 5 years or whatever.

 

It's not going to be $50 percent and the Yahoo writer is a tool for saying so.

 

My $.02

 

At this stage ANY conversation on this subject is pure speculation.  

 

yahoo article or not.  FWIW  nearly every Yahoo article is from a different "source" occasionally with a Yahoo employee offering their opinion on the subject.