Key Feature of the NEW CBA

[flutie2phelan]

A league source tells us that a deal between the NFL and the NFL Players Association on an extension to the Collective Bargaining Agreement is "done," and that the only thing keeping the thing from being signed and sealed is the absence of a firm arrangement among owners regarding an expansion of revenue sharing.

The only remaining problem is that the new CBA replaces "Defined Gross Revenues" (i.e., the stuff that has been shared by the 32 teams for years) with "Total Football Revenues" (i.e., every penny earned). And if every penny earned, including stuff that isn't currently shared, goes into the formula for determining the salary cap, the problem is that the low-earning teams will see their individual cap numbers influenced by the much bigger money being raked in by other teams.

- sez profootballtalk.com

This is THE BEST POSSIBLE WAY to assure that either ... the lazy owners begin to drive their asset ... or, over time the lazy owners have to sell out to more enterprising chaps. That is, over the long term, maximize player compensation. Good deal!

 

[AzPatsFan]

Not so fast...

A league source tells us that a deal between the NFL and the NFL Players Association on an extension to the Collective Bargaining Agreement is "done," and that the only thing keeping the thing from being signed and sealed is the absence of a firm arrangement among owners regarding an expansion of revenue sharing.

The only remaining problem is that the new CBA replaces "Defined Gross Revenues" (i.e., the stuff that has been shared by the 32 teams for years) with "Total Football Revenues" (i.e., every penny earned). And if every penny earned, including stuff that isn't currently shared, goes into the formula for determining the salary cap, the problem is that the low-earning teams will see their individual cap numbers influenced by the much bigger money being raked in by other teams.

- sez profootballtalk.com
color=blue]This is THE BEST POSSIBLE WAY to assure that either ... the lazy owners begin to drive their asset ... or, over time the lazy owners have to sell out to more enterprising chaps. That is, over the long term, maximize player compensation. Good deal![/color]

I read "Total Football Revenues" a couple of ways. It does not neccessarily mean sharing every penny. I would think it does mean including box and club seat revenue as well as PSL revenue in the calculation of the "total Football Revenue". Current ticket revenue is shared 60-40 for the home versus visiting team, in football.

In the Patriots case, I ASSUME that the Krafts have kept the corporate structure similar to what used to exist at Schaeffer. The land is owned by one corporation; (remember that Football Huddles Adelman used to own it); the stadium is owned by another corporation, (the Krafts owned it and used it too prevent Orthwein moving and leveraged it to buy the Pats);. The first two corporations charge rent to the users for the land and stadium including people renting parking space fro cars, teams using the stadium, Patriots, Revolution, World cup playoffs, Home Shows, Boat Shows et cetera.

Under this definition the Patriots revenue subject to "Total Football Revenue", would only be box and club seat revenue.

Thsi may be a synthetic number that establishes what the union uses to calculate it portion of monies going to the players, by some percentage. The owners do NOT have to share amongst themselves the "Total Football Revenues" in any sense. They could share less, more, or what they currently do amongst themselves.

The NFLPA merely wants a method to compute the monies going to its class of employees it represents, based on some measureable amount of variable revenue that the league as a whole gets. This is actually good.

Suppose revenue goes down, e.g. the fans grow bored with football and spend money elsewhere. Then all the teams and all the players would be caught in the bind in an orderly way to shrink the player salaries as the teams monies declined. If that season the team cap declined by say $5 million there would be 5million cut from each teams rsoter. The choice of who goes an dwho stays is domne just as today , with "painful cuts" to get/stay under the cap. League wide, competitveness does not get hurt.

 

[DaBruinz]

Total Football revenues? Sounds to me like a way for the two groups to battle over what is considered Total Football Revenues.

If its set up as is suggested, that land is owned by a seperate corporation, then Parking revenues from the Patriots couldn't be included because its a seperate corporation and not the Patriots who are receiving that money.

The same could actually be said for the concessions.

 

[rookBoston]

Total Football revenues? Sounds to me like a way for the two groups to battle over what is considered Total Football Revenues.

If its set up as is suggested, that land is owned by a seperate corporation, then Parking revenues from the Patriots couldn't be included because its a seperate corporation and not the Patriots who are receiving that money.

The same could actually be said for the concessions.

All the real money comes from the TV distribution rights, anyway. The rest of it is just nickles and dimes.

 

[JoeSixPat]

A league source tells us that a deal between the NFL and the NFL Players Association on an extension to the Collective Bargaining Agreement is "done," and that the only thing keeping the thing from being signed and sealed is the absence of a firm arrangement among owners regarding an expansion of revenue sharing.

The only remaining problem is that the new CBA replaces "Defined Gross Revenues" (i.e., the stuff that has been shared by the 32 teams for years) with "Total Football Revenues" (i.e., every penny earned). And if every penny earned, including stuff that isn't currently shared, goes into the formula for determining the salary cap, the problem is that the low-earning teams will see their individual cap numbers influenced by the much bigger money being raked in by other teams.

- sez profootballtalk.com

This is THE BEST POSSIBLE WAY to assure that either ... the lazy owners begin to drive their asset ... or, over time the lazy owners have to sell out to more enterprising chaps. That is, over the long term, maximize player compensation. Good deal!

"the only remaining problem..." That's been THE problem all along!

Talk about understatement and non-news!

and as much money as is generated by the football contracts, this is still very significant money

Some estimates are that last year's $85 million cap or so would have been @ $100 mil -

Its also very important to the owners - although the cap was @ $85 million last year some estimates are that owners received $87 million in revenue. So once you count operating costs and non-player salaries you can see how important non-tv revenue is to each team's bottom line.

 

[flutie2phelan]

"the only remaining problem..." That's been THE problem all along!

Talk about understatement and non-news!

....

Joe6, did u chance to notice?

The news was the invention of "Total Football Revenues" ... and that they are about to sign an extension WITHOUT waiting for the owners to solve their own equity quandary.

 

[DaBruinz]

All the real money comes from the TV distribution rights, anyway. The rest of it is just nickles and dimes.

Rook - if the rest was just nickels and dimes, then the NFLPA wouldn't be trying to get their hands on it.

Granted, its not the billions from TV, but there is a ton of money out there.

 

[JoeSixPat]

Joe6, did u chance to notice?

The news was the invention of "Total Football Revenues" ... and that they are about to sign an extension WITHOUT waiting for the owners to solve their own equity quandary.

It's always been understood that the NFLPA wanted a percentage of total revenues - that's nothing new.

This makes it sound like the disagreement among the owners is just some incidental detail. Its not.

Getting the NFLPA to agree to "allow" TFR to be the basis of the salary cap isn't an achievement - its what they've always wanted.

Figuring out how the "have's" and "have more's" are going to split that revenue among themselves has always been the big sticking point.

Let's assume the owners just decide to continue business as usual with their revenue sharing. The cap for every team rises from, let's say $90 mil for 2006 to $115 million (not nickels and dimes to me)

The "have more" teams are perfectly happy to spend up to the cap level, as their income is such that they can afford it.

The "haves" have no more income than they did before the NFLPA magnanimously agreed to allow TFR to be the basis of the cap.

They in turn spend what they had previously - $10, $20, $30 million under the "new" cap.

Maybe that's what's going on behind the scenes - indeed there's nothing I've read that actually requires teams to agree to a minimum cap - and lacking an agreement between teams or any insistance from the NFLPA that teams all have an equal amount to spend, I think that's exactly what you'll see...

i.e. - Rich teams spending up to the new higher salary cap and poorer teams spending much less.

If one believes that a degree of parity in the NFL was a good thing, those days may well be over. If one thinks its good for the sport to see football turn into a baseball like situation where the Yankees spend $200 million and the Devil Rays spend $20 million, its a bad thing.

That's why the real news is going to be whether the owners can agree on how to split the revenue.

 

[flutie2phelan]

JoeSixPat:
It's always been understood that the NFLPA wanted a percentage of total revenues - that's nothing new.
Correct. What is news is that the owners (apparently) have agreed.


This makes it sound like the disagreement among the owners is just some incidental detail. Its not.
It IS an incidental detail to extending the CBA. I see your point - which you buttress below - that it has a wider ramification for The Game Itself.



Getting the NFLPA to agree to "allow" TFR to be the basis of the salary cap isn't an achievement - its what they've always wanted.
Figuring out how the "have's" and "have more's" are going to split that revenue among themselves has always been the big sticking point.
That has only been the big sticking point among the owners. I, however, am delighted that the owners (again, apparently) have agreed to a CBA extension without first having to solve the spat between the rich boys ... and the richer boys.


Let's assume the owners just decide to continue business as usual with their revenue sharing. The cap for every team rises from, let's say $90 mil for 2006 to $115 million (not nickels and dimes to me)
Not nickels and dimes to me either. But discuss that with rookBoston.



The "have more" teams are perfectly happy to spend up to the cap level, as their income is such that they can afford it.
The "haves" have no more income than they did before the NFLPA magnanimously agreed to allow TFR to be the basis of the cap.
They in turn spend what they had previously - $10, $20, $30 million under the "new" cap.
Maybe that's what's going on behind the scenes - indeed there's nothing I've read that actually requires teams to agree to a minimum cap - and lacking an agreement between teams or any insistence from the NFLPA that teams all have an equal amount to spend, I think that's exactly what you'll see...
i.e. - Rich teams spending up to the new higher salary cap and poorer teams spending much less.
I concur completely ... that a new CBA should have a salary minimum ... as well as a max. If Gene Upshaw has any business cajones at all ... we'll find that the new cap does contain a reasonable floor.



If one believes that a degree of parity in the NFL was a good thing, those days may well be over. If one thinks its good for the sport to see football turn into a baseball like situation where the Yankees spend $200 million and the Devil Rays spend $20 million, its a bad thing.
That's why the real news is going to be whether the owners can agree on how to split the revenue.
Very well put! But, in the lead post, i took heart from the inexorable workings of the "creative destruction of capitalism". Meaning that owners who refuse to make money ... by and by receive offers they can't refuse from people who wish to become Big Men In Town ... by owning their local NFL heroes. THOSE guys, in turn - having "overpaid" for the privilege - cf., Bob Kraft - now work like the ****ens to maximize their revenues - cf. Bob Kraft.

 

[Miguel]

I concur completely ... that a new CBA should have a salary minimum ... as well as a max. If Gene Upshaw has any business cajones at all ... we'll find that the new cap does contain a reasonable floor.

FYI - There has been a floor in the CBA for awhile now.

 

[arrellbee]

FYI - There has been a floor in the CBA for awhile now.

If you don't mind the question, what has it been ??

 

[flutie2phelan]

Originally Posted by Miguel
FYI - There has been a floor in the CBA for awhile now.

Arrellbee: If you don't mind the question, what has it been ??


Thanks ... i didn't know that.

But, yes ... what is it (was it?)

 

[JoeSixPat]

Actually, profootballtalk.com reported a few weeks ago that there was agreement on a new definition on which revenues would be part of the equation so I'm still unclear what makes this "new" news.

The issue from that point on was the NFLPA demanding that the owners come to some agreement amongst themselves, setting a 3/2 date for that to happen - and owners expressing indignation for the NFLPA sticking their nose into what they deemed an owner only issue

So the news I guess is that the NFLPA is dropping any demand that the teams all have equal amounts to spend on the players

Without a minimum salary cap then, elite players are going to have an incentive to be drawn toward the "have mores" among the teams even more than than they are currently, as such teams will be able to offer their veteran players more to remain with the team.

Players that have become elite playing for the "have less" teams will find that such organizations will not be able to afford them as they become more successful

JoeSixPat:
It's always been understood that the NFLPA wanted a percentage of total revenues - that's nothing new.
Correct. What is news is that the owners (apparently) have agreed.


This makes it sound like the disagreement among the owners is just some incidental detail. Its not.
It IS an incidental detail to extending the CBA. I see your point - which you buttress below - that it has a wider ramification for The Game Itself.



Getting the NFLPA to agree to "allow" TFR to be the basis of the salary cap isn't an achievement - its what they've always wanted.
Figuring out how the "have's" and "have more's" are going to split that revenue among themselves has always been the big sticking point.
That has only been the big sticking point among the owners. I, however, am delighted that the owners (again, apparently) have agreed to a CBA extension without first having to solve the spat between the rich boys ... and the richer boys.


Let's assume the owners just decide to continue business as usual with their revenue sharing. The cap for every team rises from, let's say $90 mil for 2006 to $115 million (not nickels and dimes to me)
Not nickels and dimes to me either. But discuss that with rookBoston.



The "have more" teams are perfectly happy to spend up to the cap level, as their income is such that they can afford it.
The "haves" have no more income than they did before the NFLPA magnanimously agreed to allow TFR to be the basis of the cap.
They in turn spend what they had previously - $10, $20, $30 million under the "new" cap.
Maybe that's what's going on behind the scenes - indeed there's nothing I've read that actually requires teams to agree to a minimum cap - and lacking an agreement between teams or any insistence from the NFLPA that teams all have an equal amount to spend, I think that's exactly what you'll see...
i.e. - Rich teams spending up to the new higher salary cap and poorer teams spending much less.
I concur completely ... that a new CBA should have a salary minimum ... as well as a max. If Gene Upshaw has any business cajones at all ... we'll find that the new cap does contain a reasonable floor.



If one believes that a degree of parity in the NFL was a good thing, those days may well be over. If one thinks its good for the sport to see football turn into a baseball like situation where the Yankees spend $200 million and the Devil Rays spend $20 million, its a bad thing.
That's why the real news is going to be whether the owners can agree on how to split the revenue.
Very well put! But, in the lead post, i took heart from the inexorable workings of the "creative destruction of capitalism". Meaning that owners who refuse to make money ... by and by receive offers they can't refuse from people who wish to become Big Men In Town ... by owning their local NFL heroes. THOSE guys, in turn - having "overpaid" for the privilege - cf., Bob Kraft - now work like the ****ens to maximize their revenues - cf. Bob Kraft.

 

[AzPatsFan]

Total Football revenues? Sounds to me like a way for the two groups to battle over what is considered Total Football Revenues.

If its set up as is suggested, that land is owned by a seperate corporation, then Parking revenues from the Patriots couldn't be included because its a seperate corporation and not the Patriots who are receiving that money.

The same could actually be said for the concessions.

Bingo ! You' ve got Bingo!!

Now you've got it. Yes certainly concession revenue would be excluded and if some were forced to be included it would only be from concession money obtained at football events. Monies earned selling hot dogs and beer at Revolution games or Boat Shows would certainly not count. The same would apply to parking fees earned. How could a parking fee obtained from the Boat Show be counted as part of "Total Football Revenue"?

As for the Stadium, expenses such as mortgage and taxes would be excluded as expenses, and if forced to include some revenue it could only come from the rent of the Stadium to the Patriots for NFL football games. Rent from the Revolution or the Boat show,or for a colege game, couldn't be construed as "Total Football Revenue".

 

[AzPatsFan]

FYI - There has been a floor in the CBA for awhile now.

Thank You Miquel. it really helps to know a thing or two before speaking. The issue is... How close the minimum floor will be to the maximum cap?. In the last agreement it was substantial but not close to the current cap.

I would expect the minimum floor to be a higher percentage than it was or better yet allowed to be substantial for only a year or two to cover situations like a forced roster cap teardown like the Titans are undergoing, or a physical disaster as befell the Saints this past year.

 

[JoeSixPat]

FYI - There has been a floor in the CBA for awhile now.

I think that's largely been looked at as a joke. Unless I'm mistaken the current CBA calls for a team minimum salary of 54% of the DGR. Since DGR effectively IS the current cap, then 54% of this previous season's cap of $85.5 million would have a cap minimum of $46 million.

If that were extended to a new CBA with a salary cap at, say $100 million, the "have not" teams would only be required to spend $54 million to field a team and the NFLPA couldn't stop them.

Having a league where some teams spend $100 million and others spend $50 isn't really in the league's (or the players') best interest.

Section 5. Minimum Team Salary:

(a) For the 1993-97 League Years, with respect to each League Year for which a Salary Cap is in effect, there shall be a guaranteed Minimum Team Salary for each Team of 50% of Projected Defined Gross Revenues, less League-wide Projected Benefits, divided by the then current number of Teams in the NFL. Beginning in the 1998 League Year, with respect to each League Year for which a Salary Cap is in effect, there shall be a guaranteed Minimum Team Salary for each Team of 54% of Projected Defined Gross Revenues, less League-wide Projected Benefits, divided by the then current number of Teams in

Page 97

the NFL. Each Team shall be required to have a Team Salary of at least the Minimum Team Salary at the end of each League Year.

*Extension Agreement 2/25/98

(b) Nothing contained herein shall preclude a Team from having a Team Salary in excess of the Minimum Team Salary, provided it does not exceed the Salary Cap.

(c) Any shortfall in the Minimum Team Salary at the end of a League Year shall be paid, on or before April 15 of the next League Year, by the Teams having such shortfall, directly to the players who were on such Teams’ roster at any time during the season, pursuant to reasonable allocation instructions of the NFLPA.

(d) If the NFL agrees, or a judgment or award is entered by the Special Master, that a Team has failed by the end of the then current League Year to make the payments required to satisfy a Team’s obligations to pay the Minimum Team Salary required by this Agreement, then, in the event the Team fails promptly to comply with such agreement, judgment or award, the NFL shall make such payment on behalf of that Team (such funds to be paid as salary directly to the players on such Team at the direction of and pursuant to the reasonable allocation instructions of the NFLPA).

 

[mgteich]

This is great news. "Total Football Revenue" has likely already been decided, my guess is that it doesn't include soccer revenue or concert revenue or food revenue or parking revenue. I would be interest to see what are excluded expenses. I would expect mortgage costs are excluded, as well as stadium rent and land rent. If all this turns out to be true, Kraft has reason to smile. The players will smile because they will be lots more money from TV and from the added revenue.

 

[Miguel]

If you don't mind the question, what has it been ??

http://www.nflpa.org/Members/main.asp?subPage=CBA+Extension+Features

last paragraph
In the 2002 League Year and thereafter, the Minimum Team Salary will be 56%, meaning that each team must spend at least 56% of league-wide DGR divided by the 32 teams.

 

[AzPatsFan]

I think that's largely been looked at as a joke. Unless I'm mistaken the current CBA calls for a team minimum salary of 54% of the DGR. Since DGR effectively IS the current cap, then 54% of this previous season's cap of $85.5 million would have a cap minimum of $46 million.

If that were extended to a new CBA with a salary cap at, say $100 million, the "have not" teams would only be required to spend $54 million to field a team and the NFLPA couldn't stop them.

Having a league where some teams spend $100 million and others spend $50 isn't really in the league's (or the players') best interest.

Thanks for the info,

SixPat,

You have it wrong. Yes its 54% of DGR, for th cap floor but the cap maximum is 65% of DGR. So if the cap is $85.5 million per team, the cap minimum is $71 million per team. A difference of about $14.5 million on 85.5 million or 83.4% of the cap. If the poorer billionaires only spend 84% of what the rich guys do it still relatively balanced league. Its not a $300 million Yankee versus $20 million Devil Ray situation, or anything at all close to it.

 

[JoeSixPat]

Thanks for the info,

SixPat,

You have it wrong. Yes its 54% of DGR, for th cap floor but the cap maximum is 65% of DGR. So if the cap is $85.5 million per team, the cap minimum is $71 million per team. A difference of about $14.5 million on 85.5 million or 83.4% of the cap. If the poorer billionaires only spend 84% of what the rich guys do it still relatively balanced league. Its not a $300 million Yankee versus $20 million Devil Ray situation, or anything at all close to it.

Good point about the maximum under the current system - of course, in regard to the future system now that we're moving from DGR to a TFR I'm assuming there's much more revenue involved and the $15 million discrepancy will jump to $20 million + between the minimum and maximum - in the first year alone

As the cap grows so too will the disparity.

And while DGR reflects true shared revenue, that allows the haves and have nots to compete equally - the haves couldn't use their additional revenues if they wanted to

under a TFR system, the cap is based on monies that the have nots don't actually have, barring a revenue sharing agreement

The Yankees/Devil Rays comparison was a metaphor to make a point... but I'm sure most people would agree that a system where there are $20, $30, $40 million differences between team player payrolls over time gives some teams a distinct advantage