Capocolypse Now: 2021 salary cap could decrease by 40-85M

[NYJ1]

1 hour ago, Doggin94it said:

I'm not going to quote the whole article because the underlying math doesn't really matter and they actually quoted the wrong section of the CBA that makes this a reality, but it is a reality. The 2021 salary cap will be adjusted to account for the loss of revenue in 2020, and that loss could be very significant:

https://overthecap.com/what-could-happen-to-the-salary-cap-in-2021/

A couple of takeaways from this. First, it helps explain why so many players had to take 1 year deals this offseason. There is just way too much uncertainty about what the 2021 cap will be for teams to allocate meaningful guaranteed dollars to that year for anyone but core players. There was nothing that teams could do about their players who already had contracts running through 2021, but there was no way anyone was signing a slot corner or a guy like Jordan Jenkins to real money for 2021 with that looming on the horizon. 

Second, it's worth taking a look at which teams are conceivably in a position to survive that type of cap adjustment. Take a look at the effect of cap space table  in the opening post of this thread

 

I'm not sure whether or not that includes rollover money from unused 2020 cap space or not, but if it does, the teams at the bottom of the table are going to be seriously screwed even with a low end adjustment, and completely incapable of surviving if it's an 80+M hit. If that happens, I'd expect the NFL and union to agree to break the 2020 true-up over a period of years rather than taking it all in just a single year. Either way, the teams that have the most cap space, up at the top of the table, are going to have a serious competitive advantage next offseason, way more than usual. 

Third, there is effectively no way that any NFL team is handing out a big dollar contract to any remaining free agent at this point. Logan Ryan, Clowney, Griffin, all of those guys? They are well and truly effed. Other than perhaps the Colts and the Patriots, there isn't a team in the NFL that is in the position to hand out an even high seven figures contract right now, been on a one-year deal. As long as it is uncertain whether there will be a a massive Revenue loss in 2020, teams need to save all of the rollover space that they can for 2021 so that they can survive the worst case scenario if it happens

This stuff is truly unprecedented and how it plays out is going to have a big impact on the future of the Jets and the rest of the NFL

Well, I don't think there's any loss in revenue as of this moment other than the draft? We'll have to see how this progresses but as of right now there's only discussions of cancelling the season or playing games without fans watching.

[Philc1]

1 hour ago, LAD_Brooklyn said:

How exactly would TV revenue take a loss?

The rest of the economy is going to crap so ad revenue may still decrease even if ratings skyrocket 

[Philc1]

1 hour ago, Irish Jet said:

Mahomes will be getting 75% of the Chiefs cap at this rate.

And Jamal Adams and CJ Mosely will be getting 75% of the Jets 

[playtowinthegame]

36 minutes ago, GreenFish said:

Right. If anything TV revenue should go up. The draft has a huge spike in viewers.

What if the games aren't played, or the season is shortened? I'm praying it's not, but it's a strong possibility. 

[flgreen]

9 minutes ago, bla bla bla said:

Was just coming here to say this, we are going to see a ton of star players hit the open market if the cap drops like this.

More then likely there will be some sort of season, so the cap hit won't be near $80M.  Just as likely there will be a drop in the cap of some proportion.  Teams that have mortgaged their future are going to lose some very good, but over priced players.

Suspect the FA market will be wild next off-season.  Board will be insane.  lol  

[NYJ1]

I'd also be willing to bet that the salary cap would most likely take no hit at all as a result of this? The players union and owners could easily get together and negotiate different rules custom fit for the duration of the pandemic.

[Doggin94it]

21 minutes ago, bla bla bla said:

Yea but if we reset the cap back to 2014 levels the highest paid safety was only getting $10m per year. It could feasibly take 5+ years to have the cap get that high again. 

Not really, since this is a black swan event that won't significantly impact revenue projections (which is what the cap is based on) in future years. 

It took 6+ years to go from 2014 projections to 2020 projections via incremental growth. The drop here would be artificial so the growth back once conditions normalize is likely to be more of a jump than incremental 

[playtowinthegame]

So is this where the ad revenue comes from during the Pandemic?

Netflix

Amazon Prime

Hulu/Disney+/ESPN+

Communication Platforms: Skype and Zoom

Mobile Phones: T-Mobile, AT&T, Verizon, and Sprint

Pizza Hut

Clorox and Lysol Wipes

Hand Sanatizer companies

Toilet Paper

[Doggin94it]

25 minutes ago, Aaron Hernandez said:

Is it really racist to say a large chunk of NFL players would have sh*t jobs without the NFL? I mean it's cause and effect but you never have to learn to be responsible if you can run a 4.3 and catch a ball. Some people are born rich some people are ultra athletic and get paid cause us normal people want them to win us a silly trophy one time in our lives 

Yes. 

[Bugg]

Prediction; neither the owners nor players want to make less money. There is really only one more big ass mostly untapped revenue stream; gambling, on damn near every aspect of NFL football. No way around it, potential consequences and downside be damned. 

[Doggin94it]

20 minutes ago, bla bla bla said:

Kurt Warner was literally bagging groceries, I see no issue with your argument. Most these players were pushed through college and never earned a degree and some that did may not have actually received the education part of it because they were pushed through their classes so the schools could make money on their talent.

All of which would absolutely have happened the exact same way if the NFL didn't exist, right? 

[Doggin94it]

18 minutes ago, nycdan said:

It would be prudent for the NFL and NFLPA to agree to push some 2020 cap into 2021.  Perhaps hold the cap flat or just let it rise by $5MM per team this year and push the rest to offset the inevitable decrease in 2021.  But I can't see the NFLPA agreeing to that because players who retire after this season would get screwed (very slightly but the optics would be bad).  

Too late. At this point, that happens on a team by team basis via rollover

[Doggin94it]

11 minutes ago, Philc1 said:

The rest of the economy is going to crap so ad revenue may still decrease even if ratings skyrocket 

Ad revenue belongs to the networks

[bla bla bla]

Just now, Doggin94it said:

All of which would absolutely have happened the exact same way if the NFL didn't exist, right? 

I guess when you put it like that it wouldn't, if the NFL didn't exist haha these players may have actually stayed all 4 years and earned their degrees

[bla bla bla]

Just now, Doggin94it said:

Ad revenue belongs to the networks

yes, but the networks pay the NFL. If the networks are not getting the ad revenue than the NFL is not as valuable to the networks.

[Doggin94it]

9 minutes ago, NYJ1 said:

I'd also be willing to bet that the salary cap would most likely take no hit at all as a result of this? The players union and owners could easily get together and negotiate different rules custom fit for the duration of the pandemic.

0% chance that happens unless there's no meaningful revenue loss. Remember that the owners absolutely want the salary cap to be lower and have no interest in paying a higher share of revenue to the players in order to keep it artificially higher, especially given what that would mean, precedent wise, when it came time to negotiate the next CBA. If it's on the high end, high enough that it would negatively impact the product on the field league-wide, I can see the owners agreeing to break up the true up over the course of multiple years. But there is no way that they have any interest in simply eating the loss

[BigRy56]

Joe Douglas will be ready

[Doggin94it]

2 minutes ago, bla bla bla said:

yes, but the networks pay the NFL. If the networks are not getting the ad revenue than the NFL is not as valuable to the networks.

Yes, but that has no impact for contracts that already are in place covering multiple seasons, through 2022. And by the time the contracts are up, and the networks are negotiating for contracts covering 2023 forward, the one-year blip due to an unlikely to be repeated event is not going to be much of a factor in the negotiation of the next set of 10 year contracts

[CTM]

1 hour ago, LAD_Brooklyn said:

How exactly would TV revenue take a loss?

My first thought, if anything tv revenue will go up significantly 

[Doggin94it]

2 minutes ago, CTM said:

My first thought, if anything tv revenue will go up significantly 

Other than NFL Network revenue, tv revenue can only go down (the price per season is fixed, but the networks will likely be entitled to prorated refunds if the league doesn't play a full slate of games, or even compresses the season by eliminating bye weeks) 

[playtowinthegame]

When you have a horrible economy during a Pandemic there is no way the NFL won't feel it. No way. Ratings don't pay the bills when there is much less discretionary income during record unemployment.

[TuscanyTile2]

2 hours ago, Augustiniak said:

sux to be jamal.

I bet PrezMAL asks for even more money!

[flgreen]

9 minutes ago, TuscanyTile2 said:

I bet PrezMAL asks for even more money!

IF this all happens, can't wait for the "Prez's" tweets when highest offer is $8M

[Aaron Hernandez]

25 minutes ago, Doggin94it said:

Yes. 

If you say so. Half the programs in the NCAA don't care if they can read at a HS level and it seems like even less teach the how to manage their money if they do make it. I don't think it's racist to point it out. Your issue should be with the NCAA

[neckdemon]

how the hell does that work??? teams will have to let so many players go

[Philc1]

17 minutes ago, neckdemon said:

how the hell does that work??? teams will have to let so many players go

A bunch of player contracts will be restructured

[ZachEY]

1 hour ago, viffer said:

I hate Jerry Jones but he is a billionaire because of his business dealings outside of the NFL. Most NFL players would be working at Walmart if it weren't for the NFL. Big difference.

So what?

Because Jones made money elsewhere, the labor that generates this revenue stream should not be compensated in accord with what they generate?

[Philc1]

4 minutes ago, TeddEY said:

So what?

Because Jones made money elsewhere, the labor that generates this revenue stream should not be compensated in accord with what they generate?

And who is watching Cowboys games if the players don’t play?

 

Plus how much has the Cowboys valuation gone up since Jones bought the team in the late 80’s for $140 mil?  At least $2.5 Billion

 

[Prestige Worldwide]

2 hours ago, LAD_Brooklyn said:

How exactly would TV revenue take a loss?

I figure tv revenue will go up if no one can go to games?

[ZachEY]

57 minutes ago, Doggin94it said:

0% chance that happens unless there's no meaningful revenue loss. Remember that the owners absolutely want the salary cap to be lower and have no interest in paying a higher share of revenue to the players in order to keep it artificially higher, especially given what that would mean, precedent wise, when it came time to negotiate the next CBA. If it's on the high end, high enough that it would negatively impact the product on the field league-wide, I can see the owners agreeing to break up the true up over the course of multiple years. But there is no way that they have any interest in simply eating the loss

Which is why I'd think it'd make sense, to avoid a major shift, if the players agreed to take an across the board pay cut, for the season, with no meaningful change to the structure of things (as many businesses are doing).  They're not getting away unscathed, so angling for a one year loss is probably the smartest move, no?

[Embrace the Suck]

I'm surprised they don't use the last three years average or something like that to adjust the cap for reasons such as outliers like this.

[Chrebetfan80]

4 hours ago, Doggin94it said:

There's no way the owners don't insist on the true up. I think what it looks like in practice depends on how much the loss is. If it's only 40M, then it'll be brutal for some teams at the bottom of the cap space table, but survivable, and they'll just reduce the cap accordingly. 

85M would be a wipeout few teams could survive, from a cap perspective, and I think the league and the players would come to an agreement to break the true up across multiple years. Basically, reducing the cap a total of 85 million, plus interest, over 2 to 5 years, instead of doing it all in a single year

No. Never. 

If the NFL chooses to cancel games, I would imagine that their contracts with the TV providers would say that the providers don't pay for games that aren't aired

This is all very interesting to me.. It appears they are really pushing to have games played on schedule, which while the stadium attendance dollars will be way down TV viewership should be up.  I also know that the TV contracts are coming up again in a few years.  That was the reported reason for a lot of short term deals in FA, not necessarily the pandemic scare, but more so that players wanted to be able to cash in multiple times when there would be even more money in the pots after the new TV deals are signed. 

I just wonder how all of this balances out.. There is bound to be some ramifications on the cap due to loss of revenue as the season goes on, but with TV contracts going to be signed does this help mitigate some of that even though its a few years away?  A lot to consider, and makes JD's approach to FA even smarter. 

[sec101row23]

My guess is that if the local revenues take a beating that they spread out the losses over the next few seasons.  There’s no way you can simply drop the salary cap by $80M and expect teams to function.   That won’t happen.  

[Doggin94it]

3 hours ago, TeddEY said:

Which is why I'd think it'd make sense, to avoid a major shift, if the players agreed to take an across the board pay cut, for the season, with no meaningful change to the structure of things (as many businesses are doing).  They're not getting away unscathed, so angling for a one year loss is probably the smartest move, no?

Yes and no. Players have WILDLY differing interests based on career status, contract structure, etc. Would absolutely suck to take a 20% cut in a year that your deal loaded a chunk of your total contract value into. Would be much easier if you have a small P5 salary for that year and a balloon coming. Would be super tough if you're planning to retire, or a player in the last virtually guaranteed year of a big FA contract your play since signing hasn't justified. Would be much easier if you're on the last year of a rookie deal you've wildly outplayed. 

Owners generally don't have those types of competing imperatives; money's money, and as long as they get interest to cover for the time value of it, it won't make much practical difference to them when the true up happens. Players? Not so much, and I can't see the union being able to agree to play with the timeline by taking a paycut across the board in a given year

[Maxman]

I can't wait for the new 7 on 7 league. Football as at its best with 9 man rosters.