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Augie

How does COVID affect the salary cap?

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Posted (edited)

We will probably have no fans this year, and we may not even have a season. The salary cap is based upon shared revenue. What if there IS no revenue? Does the cap drop like a brick? Do they average it in some way? How do teams fit under the cap in that case? Do players get a year of service, and are they a year closer to the end of their contracts? Do they need to play games? If so, how many? Are players smart to sign now and get what they can? Does the CBA have a force majeure clause? That’s seems to be why NBA players need to try to go forward lest they lose leverage in a new deal. 

 

So many questions, and I have no answers. I’ve heard that they have discussed spreading the revenue loss over a single season, or stretching it out to 5-10 years. 

 

I really don’t know how this works.  What are people thinking? 

 

 

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Edited by Augie
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Posted (edited)

I remember reading somewhere that the majority of the salary comes from advertising. (85%+)? That's just a guess, i don't know the exact figures.

So, with that in mind, I think the NFL will be okay for at least a year. I could be wrong though.

 

Edit.

In regards to the other questions, I've thought about that stuff too. Your guess is as good as mine. And I have no idea.

Edited by costrovs

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2 minutes ago, costrovs said:

I remember reading somewhere that the majority of the salary comes from advertising. (85%+)? That's just a guess, i don't know the exact figures.

So, with that in mind, I think the NFL will be okay for at least a year. I could be wrong though.

 

Edit.

In regards to the other questions, I've thought about that stuff too. Your guess is as good as mine. And I have no idea.

 

What if there is no advertising/television revenue? Or do the networks have some minimal guarantee? Not putting you on the spot, I just don’t really have a good idea of how this works out. If we add our ideas together, apparently the total would be zero. 

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6 minutes ago, Augie said:

 

What if there is no advertising/television revenue? Or do the networks have some minimal guarantee? Not putting you on the spot, I just don’t really have a good idea of how this works out. If we add our ideas together, apparently the total would be zero. 

 

TV contracts go through 2022.  If there is no football then, unless there is a force majeure clause already in each network contract, the networks would have to sue to keep the money for a season not played.

 

If the season is canceled then there is no year for players to accrue.  If there is a season and a player opts out then they get no money but and accrued year.  Players under contract don't have much option to "sign now".

 

The revenue split in the CBA is what it is.  I'm not sure how a force majeure would apply.  They have already agreed to split whatever the revenues are.  How would or could it be changed?  Unlike the MLB, revenue sharing has made these questions much easier for the NFL (and NHL).

 

If games are played this season, the cap for next season will be decimated.  If the season is canceled and there is no revenue even from networks it gets interesting.  Maybe the 2021 cap stays the same as 2019.

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If the games are gonna be on T.V., then they'll be receiving ad revenue.

I just Googled 'nfl ad revenue' and it said that the NFL pulled in $5B in TV ad revenue. And the NFL salary cap for this year is 198.2 million. If I bump that up to 200 million and divide that by $5B, I get 25. That's 25 team salaries right there. Not to mention local team revenue, jerseys, and other NFL goodies. Not to mention the new Redskins** jerseys. I'm sure a lot of people will want those.

 

https://www.investopedia.com/articles/personal-finance/062515/how-nfl-makes-money.asp

 

In the 3rd paragraph it says 'Bloomberg estimates it earned around $15 billion during the 2018 season'

Based on that, I'm sure they'll be fine. Everyone will get paid, and the show goes on.

 

There's too much money to be made here. I'm guessing the NFL will tell the players to play or don't get paid.

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@Augie with a straight take.....well done and good question. 
 

I actually wonder in a crazy world, if no season this year, 2021 goes to a DOUBLE salary cap amount. Like $285M for only one season. 

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5 minutes ago, Mr. WEO said:

 

TV contracts go through 2022.  If there is no football then, unless there is a force majeure clause already in each network contract, the networks would have to sue to keep the money for a season not played.

 

If the season is canceled then there is no year for players to accrue.  If there is a season and a player opts out then they get no money but and accrued year.  Players under contract don't have much option to "sign now".

 

The revenue split in the CBA is what it is.  I'm not sure how a force majeure would apply.  They have already agreed to split whatever the revenues are.  How would or could it be changed?  Unlike the MLB, revenue sharing has made these questions much easier for the NFL (and NHL).

 

If games are played this season, the cap for next season will be decimated.  If the season is canceled and there is no revenue even from networks it gets interesting.  Maybe the 2021 cap stays the same as 2019.

 

If there is no football, I’m guessing they don’t have to pay. It gets muddier if they try to start a season, and then have to stop. If they play 3-4 games and have to stop, does a player earn an entire year towards the end of a rookie deal? I like our young core and their current contracts. I might rather not play than play 3 games and stop. 

 

If they split revenue according to the current CBA, then EVERY team might be over the cap. 

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3 minutes ago, Augie said:

 

If there is no football, I’m guessing they don’t have to pay. It gets muddier if they try to start a season, and then have to stop. If they play 3-4 games and have to stop, does a player earn an entire year towards the end of a rookie deal? I like our young core and their current contracts. I might rather not play than play 3 games and stop. 

 

If they split revenue according to the current CBA, then EVERY team might be over the cap. 

 

Regardless of a lower "cap" next year, teams would be obligated to honor their contracts.  

 

If there is not football, there would have to already be agreed upon circumstances in the network contracts allowing them not to pay the NFL for this season.

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Cap is based on gross revenue and not net revenue. So if there is no season it doesn't matter that the players wont get paid. 

They will have to negotiate a new cap. There would be no other way.

Owners will still want to negotiate guaranteed money for roster bonuses as they would be obligated to pay regardless if there is any revenue or not. 

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No NFLPA will insist they should be paid including full amount for any potential bonuses they may have earned (but not fines they would likely have paid).

 

There will certainly be advertisers who are not advertising this year whether due to advertising budget down, what they are adverting is less in demand in this environment (cruises as example were big advertisers on NFL games) or local advertisers who will not be paying for stadium advertising not see by attendees.

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I think the salary cap is immune to it.

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Posted (edited)
7 minutes ago, Mr. WEO said:

 

Regardless of a lower "cap" next year, teams would be obligated to honor their contracts.  

 

If there is not football, there would have to already be agreed upon circumstances in the network contracts allowing them not to pay the NFL for this season.

 

Those contracts pay them to play football. What if there is no football? Where do we go from there? What is the wording in the contract? And the CBA? The devil is in the details. I doubt they pay them to sit home and play video games. 

 

 

.

Edited by Augie

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17 minutes ago, Seasons1992 said:

@Augie with a straight take.....well done and good question. 
 

I actually wonder in a crazy world, if no season this year, 2021 goes to a DOUBLE salary cap amount. Like $285M for only one season. 

 

I doubt that happens, as the owners don’t have double the income. 

 

This is crazy %$^#$, and I’m sure people far smarter than myself have spent significant time on it. I just don’t know how this turns out. 

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5 minutes ago, Augie said:

 

Those contracts pay them to play football. What if there is no football? Where do we go from there? What is the wording in the contract? And the CBA? The devil is in the details. I doubt they pay them to sit home and play video games. 

 

 

.

 

Again, there would have to be language in the TV contracts.  The CBA is shared revenue.  48% of nothing is nothing.

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6 minutes ago, Augie said:

 

Those contracts pay them to play football. What if there is no football? Where do we go from there? What is the wording in the contract? And the CBA? The devil is in the details. I doubt they pay them to sit home and play video games. 

 

If up to NFLPA yes.  They voted to have no preseason games and will probably go to court to try to get it.

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At the end of the day, the show will go on(I hope).

If a player or players get sick they'll probably take them out of the game for a week or two(assuming they actually feel sick and not just test positive).

This virus will hit 350lb Joe Blow with diabetes in the 300 section a lot harder than any of the NFL players.

 

Zeke had it, he said he had a little cough and a little shortness of breathe for a couple days.

Coincidentally, the virus doesn't seem to do very much to professional athletes or people in tip top physical shape.

 

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13 minutes ago, Limeaid said:

 

If up to NFLPA yes.  They voted to have no preseason games and will probably go to court to try to get it.

 

 

good luck with that.  They can't demand what hasn't been collectively bargained.

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6 minutes ago, costrovs said:

At the end of the day, the show will go on(I hope).

If a player or players get sick they'll probably take them out of the game for a week or two(assuming they actually feel sick and not just test positive).

This virus will hit 350lb Joe Blow with diabetes in the 300 section a lot harder than any of the NFL players.

 

Zeke had it, he said he had a little cough and a little shortness of breathe for a couple days.

Coincidentally, the virus doesn't seem to do very much to professional athletes or people in tip top physical shape.

 

 

Von Miller says you don't know what you're talking about.

 

Also, if symptomatic, player will be out for at least 10 days since symptoms began and at least 72 hours since last symptomatic.  

 

Try that google.com.....

 

 

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10 minutes ago, costrovs said:

At the end of the day, the show will go on(I hope).

If a player or players get sick they'll probably take them out of the game for a week or two(assuming they actually feel sick and not just test positive).

This virus will hit 350lb Joe Blow with diabetes in the 300 section a lot harder than any of the NFL players.

 

Zeke had it, he said he had a little cough and a little shortness of breathe for a couple days.

Coincidentally, the virus doesn't seem to do very much to professional athletes or people in tip top physical shape.

 

 

I have to disagree there. If you test positive, you are OUT! I’d bet a minimum of two weeks, then, like the NBA, you need a number of negative tests to get back in the game. 

 

I don’t see this season happening. I hope and pray I’m wrong. 

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Ok - guys slow down with the takes.

 

The NFL and NFLPA are having meetings to determine answers to all of these questions and more.

 

They have to determine and agree to thresholds for the games counting for this year and how to account for the loss of revenue.  To prevent a huge drop in the cap - they are discussing spreading the lost revenue out over 3-5 and even the next 10 years.  
 

Typically (as in other work stoppages) - the NFL just have to play games to get the TV revenue that was agreed to, but my guess is the NFL will be working with the stations to help cover if games go missing.

 

They also have to negotiate with the NFLPA the entire testing protocol and how teams are going to handle positive tests.  There was talk of maybe trying to negotiate AFC plays on even weeks and NFC on odd weeks to give teams 2 weeks between games to lessen the impact.

 

The NFL and NFLPA were hoping for some clear plan by the CDC or federal government to help guide their planning, but as that looks lost - they will have to hammer all of this out in a changing environment.

 

Until they come to agreements - everything else is just guessing and some may be right, but most will be wrong.

 

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