Projected 2021 Salary Cap Decrease of $30-80 million

[XLIX]

What business man would give away 1 billion dollars today in order to get price reductions over the next 9 years that eventually add up to 1 billion?
Try this. You give me 100,000 today and I’ll give you back 1000 every month for 100 months. Who got the better of that deal?

What part of "including an adjustment for time value of money" did you not understand?

Furthermore, you keep trying to deliberately mislead in your argument. It isn't one businessman giving up a billion dollars. It is each team giving up about $40 million per team to recover that same amount (adjusting for cost of money) over the next few years.

I'll ask it again since you completely glossed over the part where I included an adjustment for cost of money: Why wouldn't they do that??

Of course it does because their players are resigning at a fraction of the cost.
If Edelman is due a $6 million salary and the market due to teams all being over the cap is $1 million how is it not better for the owner to cut him and resign him (or the equivalent replacement) for $1 million.

The cap is still going to go up in 2022, and by a huge amount. An in-demand free agent will get a very high contract and simply structure it with a low year-one cap hit.

 

[XLIX]

Not this time.

Greater free agency shifts control from owners to players.

Every. Single. Time.

 

[Ring 6]

Greater free agency shifts control from owners to players.

Every. Single. Time.

You are just wrong.
But by all means show me the example where free agency created a boon for players when payrolls decreased by 25% and a bunch of players were cut and forced to take pay cuts.

What you should be saying is the advent of free agency gives more control to players, and you would be correct. Massive cuts and resigning fit less money has the opposite effect.
Every. Single. Time.

 

[Ring 6]

Let me put this one more way. Then I’m done because it’s pointless to keep explaining reality in different ways.

Let’s use police as players and the towns/cities/states as the owners.

Because of coronavirus tax revenues will be down 25%.
One alternative being suggested is take money they don’t have and just keep paying them and make it back with no future raises. This may be a good solution for the police but is a terrible solution for the town because it doesn’t have the money.
So every police force fires half of their officers. Then with half of all officers out of work the replace (or rehire) them at a fraction of the pay because they need a job.
This is not a win for the police officers.

 

[Tottie]

It will be interesting to see how they proceed because you can obviously say that GMs didn't really mishandle their teams (as a whole) and that it's not reasonable to write contracts with future unknown pandemics in mind. I could see the 'richer' owners wanting to do some kind of correction for that one off season, and you could maybe see the owners who may not be able to do that balk at that suggestion.

 

[XLIX]

You are just wrong.
But by all means show me the example where free agency created a boon for players when payrolls decreased by 25% and a bunch of players were cut and forced to take pay cuts.

What you should be saying is the advent of free agency gives more control to players, and you would be correct. Massive cuts and resigning fit less money has the opposite effect.
Every. Single. Time.

It is clear you're missing the point. We all acknowledge that if they play this season without fans, then team revenue will take a hit and that loss of revenue will filter down to the players. So yes, a major loss of revenue will hurt both owners and players a great deal. Players are going to have to take a major pay cut due to the loss of revenue. That pay cut is completely unavoidable.

The question becomes: if that happens in 2020, what is the best way to proceed from that point going forward into 2021?

A) Play 2021 with an extremely low cap number, necessitating huge cuts from current rosters, create the largest free agent class in the history of the league, then the salary cap goes to a much higher level in 2022

B) Even things out and create league stability by letting 2021 "borrow" from future cap years, thus maintaining roster stability and enabling teams to keep guys currently under contract as desired

The owners maintain far, far more control under scenario (B) and it wouldn't even cost them a single penny since they would recover all the money back, including an adjustment for cost of money.

 

[XLIX]

Let me put this one more way. Then I’m done because it’s pointless to keep explaining reality in different ways.

Let’s use police as players and the towns/cities/states as the owners.

Because of coronavirus tax revenues will be down 25%.
One alternative being suggested is take money they don’t have and just keep paying them and make it back with no future raises. This may be a good solution for the police but is a terrible solution for the town because it doesn’t have the money.
So every police force fires half of their officers. Then with half of all officers out of work the replace (or rehire) them at a fraction of the pay because they need a job.
This is not a win for the police officers.

Horrible analogy since that's not how the NFL operates.

 

[Ring 6]

It is clear you're missing the point. We all acknowledge that if they play this season without fans, then team revenue will take a hit and that loss of revenue will filter down to the players. So yes, a major loss of revenue will hurt both owners and players a great deal. Players are going to have to take a major pay cut due to the loss of revenue. That pay cut is completely unavoidable.

The question becomes: if that happens in 2020, what is the best way to proceed from that point going forward?

A) Play 2021 with an extremely low cap number, necessitating huge cuts from current rosters, create the largest free agent class in the history of the league, then the salary cap goes to a much higher level in 2022

B) Even things out and create league stability by letting 2021 "borrow" from future cap years, thus maintaining roster stability and enabling teams to keep guys currently under contract as desired

The owners maintain far, far more control under scenario (B) and it wouldn't even cost them a single penny since they would recover all the money back, including an adjustment for cost of money.

I am not even considering what is “better” I’m talking about what is reasonable and the owners taking a billion dollar hit is not reasonable.
Most franchises are going to lose money.

Roster stability has nothing to do with it. It’s financial as a group of owners that is the issue not whether their teams have to deal with turnover.

You are saying it’s better to pay an extra billion to keep players on the same teams then to save a billion and let them switch teams. There is no possible way owners would fall for that.

 

[Ring 6]

Horrible analogy since that's not how the NFL operates.

That’s why its an analogy. Apologies are not identical situations, they are comparisons used to emphasize the similarities.
The similarities being the impact of paying more than you can afford vs firing people and hiring back new ones that you can afford.
I’m not sure how you expect owners to lose money in order to allow players to not.
You are expecting owners to eat the loss. And they aren’t gaining anything.
Reducing the cap means the hit is equally shared just as revenues are. The pain should be equally shared as well. Asking either side to take the whole hit is unreasonable.

 

[XLIX]

I am not even considering what is “better” I’m talking about what is reasonable and the owners taking a billion dollar hit is not reasonable.

Fortunately they are not taking a billion dollar hit. They are going to spend roughly $40 million more per team and recover 100% of the money over the next few years.

You are saying it’s better to pay an extra billion to keep players on the same teams then to save a billion and let them switch teams. There is no possible way owners would fall for that.

You seem completely unable to realize the concept that the owners would recover every penny of that $1 billion, including an adjustment for cost of money, so it wouldn't cost them a single cent in the long term.

 

[XLIX]

That’s why its an analogy. Apologies are not identical situations, they are comparisons used to emphasize the similarities.

A good analogy creates a similar situation. Your analogy is weaksauce because your police situation is not even remotely similar to how the NFL operates.

 

[Ring 6]

A good analogy creates a similar situation. Your analogy is weaksauce because your police situation is not even remotely similar to how the NFL operates.

No a good analogy pulls out one vital similarity to emphasize it. That’s why it’s an analogy. If it were the same thing it wouldn’t be an analogy.
In this case you have employees who can it be afforded who must be cut free and rehired for less. You could use any profession. Police officers works because you have a finite workforce, a loss of funds required to pay them and a clearly defined group of candidates for rehire.

I’m any event, you believe the owners should just eat a billion dollars and I have never seen a single action by nfl ownership ever that would suggest they would willingly do that and would take the opportunity to cut players and rehire them at pennies on the dollar and think that is a terrible disadvantage to them so they would rather pay them a billion more than they can afford it they have collectively bargained because players switching teams for a billion less payroll is worse for the owners than keeping them on the same teams and paying them a billion more.
We have reached the point where a reasonable discussion clearly can’t happen so I will move on.

 

[Ring 6]

Fortunately they are not taking a billion dollar hit. They are going to spend roughly $40 million more per team and recover 100% of the money over the next few years.

You seem completely unable to realize the concept that the owners would recover every penny of that $1 billion, including an adjustment for cost of money, so it wouldn't cost them a single cent in the long term.

Didn’t see this so I will rapid before moving on.
Owners bargain collectively. 40 mill per team is about 1.3 billion.
His will they recover it?
To recover 1.3 bill over 5 years will probably require almost 2 bill of reductions to account for the time value of money. Do you really believe players will agree to give back 40-50% more than they get due to this. Do you seriously think the owners and nflpa could ever come to an agreement on that.
You also haven’t put any thought at all to his owners can pay that extra billion when their revenues are decreased by 2 billion. (Whatever the cap reduction is the revenue reduction is double).
So to summarize you want the nfl to do the following.
The “norm” is about 6.4 billion in revenue of which the owners pay 3.2 billion in player payroll. They feel that number is profitable enough for them. That leaves 3.2 bill for all of their expenses and whatever profit they make.

now when their revenues fall to 4.4 billion, under a cba that says that would result in payrolls falling to 2.2, so that their 3.2 bill left for expense and profit only falls by 35% to 2.2 bill, you expect them to keep payrolls the same so that they remaining revenue after payroll drops by 63% to 1.2 billion.

You truly expect a business to be fine with their after payroll revenue dropping by 63%? Just so the players suffer no loss? The owners eat 2 bill and the players don’t lose a nickel?
Please tell me which nfl owner had ever done or said anything that would indicate they are on board with that.
It could and probably would, bankrupt the league.
The owners after negotiating 50% of their revenues going to players would suddenly happily agreed to give 73% of it. (In other words the players get their half plus almost half of the 50% the owners bargained to keep).

 

[ctpatsfan77]

Players can ask for guaranteed contracts all they want. They would have absolutely no leverage in this case.
If there is a clause in the CBA that says players can negotiate a higher % of revenue if revenue falls that is news to me, can you direct me to it?

As long as they don't rip up the entire deal, they're free to make whatever side deals they want.

And, BTW, one reason the owners would have for agreeing to distribute the pain would be what would happen if the cap did drop $50M.

Royally f—ked ($50M+ over): PHI. NO, ATL
F—ked (over the cap): TEN, DET, LAR, CAR, BUF, GB, CLE, KC, DAL, MIN, LV, CHI, PIT, HOU
Teams with $0 to $40M in cap room: CIN, WAS, BAL, SEA, MIA, AZ, TB, DEN, NYJ, NYG, SF
Teams with $40M+ in cap room: IND, JAX, LAC, NE

You think teams in the first two categories really want to see that scenario play out? Again, those teams would have to release multiple players just to get under the cap, let alone have money to sign free agents.

 

[Ring 6]

As long as they don't rip up the entire deal, they're free to make whatever side deals they want.

That’s not what you said, you said the players have a right within the cba to renegotiate the split if revenue decreases. They can always strike.

And, BTW, one reason the owners would have for agreeing to distribute the pain would be what would happen if the cap did drop $50M.

Royally f—ked ($50M+ over): PHI. NO, ATL
F—ked (over the cap): TEN, DET, LAR, CAR, BUF, GB, CLE, KC, DAL, MIN, LV, CHI, PIT, HOU
Teams with $0 to $40M in cap room: CIN, WAS, BAL, SEA, MIA, AZ, TB, DEN, NYJ, NYG, SF
Teams with $40M+ in cap room: IND, JAX, LAC, NE

You think teams in the first two categories really want to see that scenario play out? Again, those teams would have to release multiple players just to get under the cap, let alone have money to sign free agents.

It’s economics. You cannot convince me that owners would prefer to pay an extra billion dollars that they can’t afford over and above what they agreed to, because it’s just too hard to cut players you can’t afford and then resign them for pennies on the dollar so they can afford them.
And where is this billion supposed to come from? The owners will almost surely lose money this year.

 

[Ring 6]

To put some actual numbers on this, the Packers are publicly owned so we can see their financials.
The last 2 fiscal years (ending March 19 and March 18) that are reported show 8 mill (2019) and 34 million (2018) of profit.
If the cap went down by 40 million that would mean revenues go down by about 80 million.

At the lower cap they would lose between 6 and 32 million based upon those years.
If they agree to keep payroll the same despite the drop in revenues they would lose between 46 and 72 million.

 

[mgteich]

So I don’t know if this is new news on here, but Schefter’s been saying the owners expect the cap to drop next year between 30 million and 80 million

Adam Schefter Dropped an Important Nugget About Projected 2021 NFL Salary Cap That No One is Talking About

Obviously this will have massive impacts. Especially for us when we were expecting to have a windfall of cap next year.

Thoughts? How will the league adjust?

I’m concerned

The hit will be over many years. The teams and the union will negotiate something that is better for both of them. There will NOT be a very low cap in 2021 and then a $100M increase in 2022. This benefits no one.

 

[Jlaff]

If they’re smart, they will work out a way to reduce salaries this year proportional to revenue loss and keep future cap calculations in line with what they were projected to be.

Makes perfect sense. Just go with the simplest solution.

 

[Miguel]

Recommend listening to the first 30 minutes of this podcast
OTC Podcast: Are the 49ers the Best at Contracts? | Over the Cap
since Jason Fitzgerald talks about the 2021 cap.

 

[Ring 6]

The hit will be over many years. The teams and the union will negotiate something that is better for both of them. There will NOT be a very low cap in 2021 and then a $100M increase in 2022. This benefits no one.

It benefits the owners who will have lost billions in revenue.