It sure is good to own an NFL franchise these days.
According to NFL Network’s Ian Rapoport, the league-wide unadjusted team salary cap is due to increase again in 2018 — which signals another bump in overall league revenue. Although the official number won’t be released for a few months, the projected range is reportedly between $174.2M and $178.1M — an increase of 4.31-6.65% from this season’s $167M team cap figure.
It’s an extremely rough estimate, but the expected hike in next year’s cap means that the league is likely projecting revenues in the range of $14.5-$15 billion.
Daniel Kaplan of Sports Business Journal wrote in March that the NFL’s salary cap increase from $155.27 million to this season’s $167 million indicated that league-wide revenue would likely top $14 billion in 2017 — a $900 million increase from 2016 fueled in part by a revamped Thursday Night Football deal with CBS, NBC, and Amazon.
Such revenue growth obviously speaks volumes for the appetite consumers have for the league’s product. It’s even more remarkable when considering just how many potential threats to the owners’ bottom lines have surfaced this season — some which were brought upon by themselves.
There’s no debating that television viewership is down across the board. The ratings dip has lead to more theories as to its cause than penalty flags in an Oakland Raiders game; constant booth reviews, incessant commercial breaks, cord-cutters, etc. And there has been no shortage of the now-annual public outrage stemming from the League Office’s consistently-inconsistent disciplinary policies — not only in regards to on-field infractions, but to criminal and civil misconduct cases — particularly those involving domestic violence.
Of course, there has also been the fallout from the Colin Kaepernick protest saga — a bitterly politicized fiasco that has not only polarized fan bases, but managed to snowball into a public declaration of boycott from the highest office in the land.
As previously mentioned, the League owners themselves haven’t been without scandal in 2017; from Bob McNair’s racially-charged public comments, to the employer overreach of Jerry Jones and his stance on the National Anthem protests. Then there’s Jerry Richardson, who is currently alleged to have settled cases of workplace sexual harassment, and the use of a racial slur towards an African American employee according to L. Jon Wertheim and Viv Bernstein of Sports Illustrated.
It’s almost as if some members in the good ole boy network are out to prove that nothing can derail the financial locomotive that is the NFL’s financial viability. And with 2018 revenue projections potentially topping $15 billion — they might be right.
Knowing that nothing is stopping the money from flowing in — not ratings plunges, or scandals, or even the President of the United States — the owners, mirroring the untouchable attitudes and detachment from reality of late-2000’s Wall Street CEOs, are steamrolling into 2018 with their sights set on another record revenue forecast. This time it’s bolstered by a shiny new five-year, $2-2.5 billion agreement with Verizon to provide fans with mobile access to live NFL games.
However, there is one component to the league’s financial formula that is often overlooked. One that is potentially responsible for putting more dollars in the pockets of NFL ownership than anything else — the Collective Bargaining Agreement.
In July of 2011, following a bitter lockout, the CBA was signed. At the time, it was considered by many as victory for both sides — a sentiment that would quickly erode.
Many of the items that were considered “wins” for the players were safety-based initiatives such as the banning of padded two-a-day practices, and the retention of a 16-game regular season schedule. Acting as supreme moral arbiters, and falsely portraying a prioritization of player safety, the owners were able to leverage these commonsense practices as “concessions” from their side of the bargaining table — allowing them to score victories in many of the agreement’s critical financial areas. The resulting arrangement furthered the divide in equity between the NFL owners and the players.
According to Wertheim and Berstein, Jerry Richardson, the aforementioned Panthers owner accused of a variety of workplace violations, is widely known for his prominent role during these crucial 2011 lockout negotiations, and they provide fantastic context into the attitudes of ownership towards their labor force at the time.
...Richardson was either intensely miserly or intensely cost-conscious, depending on your view. He reportedly implored his peers, “We signed a [expletive] deal last time, and we're going to stick together and take back our league and [expletive] do something about it.” He also memorably insulted Peyton Manning during a negotiation, reportedly belittling the quarterback’s knowledge of player safety and asking, “Do I need to help you read a revenue chart, son?”
The NFL’s overall revenues are distributed into three “buckets”: league media, NFL ventures/postseason, and local revenue. Regardless of how the money from these buckets is distributed, the players’ share can not exceed 48.5% of overall revenue.
The fact that NFL players don’t have the opportunity to earn at least 50% of the total revenue from an entity that is entirely reliant on their abilities, is absurd — particularly when considering the lack of contract-guarantees in comparison to other leagues like the NBA and MLB. The situation is remarkably more inequitable when the actual amount of revenue that makes its way to the players is taken to account.
While the unadjusted league salary cap has risen by more than 16% over the past two seasons, rollover cap space has dramatically spiked, rising 62.2% since 2015 — meaning less is getting spent on player contracts, and more is staying with ownership. There has also been no concerted effort by the owners to increase the actual amount of cap they are using. In fact, the percentage of “active cap spending” against the average adjusted team salary cap (which includes adjustments for incentives, rollover cap space, etc) has remained stagnant between 83.7-84.8% over the past three seasons.
According to Joel Corry of CBS Sports, the issue is with the minimum cash spending provision in the CBA.
Illustrates a problem with a minimum spending requirement over 4 years instead of a shorter period & based on actual salary cap instead of each team's adjusted cap, which takes into account amounts carried over from one year to the next. https://t.co/qOl7mTJdjy— Joel Corry (@corryjoel) December 13, 2017
What Joel is referring to is the provision requiring teams to spend a minimum of 89% of the four-year league-wide salary cap total. The initial four-year period was between 2013-2016, and the league is currently in the second four-year term that ends in 2020 -- at the end of the current CBA. The provision was considered by many as a “win” for the players, because it established a firm salary “floor” — preventing owners from assembling rosters completely devoid of talent.
An 89% spending floor for between 46-48.5% of revenue (around 20% of which is allocated to benefits) generated by a league which is entirely dependent on player talent — with no guaranteed contracts for said players. Sounds like a fantastic deal if you happen to own a franchise.
From 2013-2016, only two teams spent less cash on players than the Patriots. At a total of $500,083,836, they spent 90.18% of the four-year league-cap total — or just over $6.5 million of the absolute bare minimum required. Over that time they continued their streak of AFC East division titles and AFC Championship game appearances, and took home two Lombardi Trophies.
Instead of fostering an even playing field, the salary cap only serves to create a strict framework for teams to operate within — which magnifies the gap between an elite football mind like Bill Belichick and his counterparts, while limiting the ability for teams to mask roster-building mistakes through avenues like free agency.
The NFL and its owners want so badly for you to believe that the entire reason the cap exists is to ensure parity and competitive equilibrium between franchises that reside in markets of varying sizes. But with more than 50% of revenues going to league owners who are entrusted with the trickle-down distribution of their labor costs, just so long as they adhere to a pathetic spending mandate, that notion is disingenuous.
The reality is that the NFL’s salary cap system is simply the most top-heavy, owner-friendly arrangement in professional sports. And it’s not changing until at least 2020.