NFL CBA 2011 Analysis: Salary Cap questions

Every year it seems that the most frequently asked questions about football relate to matters of the salary cap. Yesterday we had an excellent post written up by AB83Rules, who runs ninercaphell detailing how much money the 49ers had available to them to address extensions this year and the signing of any possible free agents. 

Of course the big issue with the CBA was how the two sides were going to split the cash. One of the big criticisms of the past CBAs was that teams could theoretically hit the salary cap floor, while still spending way under it. This was frustrating to players who didn't get the contracts they wanted, and I'm sure it was frustrating to the other owners who actually spent money on contracts. With this new CBA the two sides have tried to fix that with new rules for salary cap spending. 

The first thing to understand when looking at salary cap rules with the new agreement is that there are actually three different sets of rules, depending on which year we're looking at. 

2011

Salary cap number is $142.4 million, with $120.375 million being salary and bonuses and the rest benefits  

  • Spending in the NFL needs to be at 99% of that number this season. 
  • This spending is league wide, not on an individual team basis
  • One-time bonuses paid this year count towards that league wide 99%, even though those bonuses can be spread out over the course of the player's contract for salary cap purposes. 
So what does this mean? League wide spending needs to be 99% of roughly $3.84 billion, which comes to $3.1 billion. Here are some examples of how this works, thanks to Andrew Brandt of the National Football Post.

Peyton Manning had been franchised by the Colts. Had he remained franchised his salary would have been $23 million, which would have also been his cap charge due to the franchise tag being a one year deal. With his new contract his salary this year is actually increased to $30 million, but the cap hit for the Colts is actually reduced to $16 million. This saves the Colts $7 million in cap space, but that $30 million counts towards the league-wide goal of 99%. 

Lamar Woodley has a similar situation. He was scheduled to make $10 million this year. He got a new 6 year, $60 million deal which pays him $18 million this season, nearly double his originally scheduled salary, yet the cap hit for the Steelers is reduced to $6.5 million. 

2012
  • Salary cap in 2012 will be at least the same amount as 2011. 
  • Instead of a 99% cash minimum the minimum is dropped to 95%
  • 2011 rules for counting cash spending are in place. 
  • Revenue sharing plan is changed from the straight dollar amount of 2011 to a percentage based. Players will get 55% of tv revenues, 45% of NFL Ventures revenue, and 40% local club revenue
  • The salary cap will be adjusted according to actual revenue
2013-2020
  • Salary cap will be based on the percentage of overall revenue
  • There will be a team minimum spending of 89% of salary. This must be cash spending, not salary cap spending. 
  • The salary cap will be adjusted according to actual revenue
What this means. Even though the salary cap in 2012 and 2013 is currently scheduled to be at $142 million, if the league experiences significant revenue growth (say new tv deals), the salary cap number will be adjusted to reflect that. This is a big win for the players, because it means that extra revenues earned above the projections will be split between the two sides, rather than the owners pocketing it. On the flip side, if there is a significant decline in revenue, then the salary cap figure will be adjusted downwards.

I think this is a fair deal for both sides. The vast majority of the revenue earned by the NFL comes from the tv deals. The players are the ones that drive those tv deals, thus they should get the majority of that revenue. NFL Ventures is the company in charge of everything else--apparel, licensing, videos, etc. Lots more costs involved there than in doing a tv deal, and the revenue relies more heavily on owner/management involvement. 45% of that is a fair compromise. The local club revenue is the least amount of money in the total revenue and is almost totally dependent on how well (or poorly) run the clubs are. By making this only a 40% share of revenue it limits the damage that a team like the Bengals can do. 

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