Back from a little hiatus. I’ve been interviewing, hired and am training a new assistant here at the office. Jan-Feb and this month have been busier in the local real estate and mortgage market than I’ve seen in the last three years, so hopefully that’s the beginning of the recovery I’ve been seeing in different parts of town.
On the NFL front, I have to admit even I’ve been confused about this agreement, so I’m posting a 20 question and answer session to hopefully help us all understand. I found this on another website to help explain what is going on.
Q. Why is the salary cap going away?
Since the early 1990s, the Collective Bargaining Agreement between the NFL and the players’ union consistently has included a final year in which the salary cap disappears. The goal of the provision was to encourage the parties to get a new deal done more than a year before the current arrangement expires.
Previously, the strategy has worked. At no other time has the NFL even come within a year of an uncapped season. In 2006, the league and the union negotiated a new deal on the eve of the last season with a salary cap.
So this development and most if not all of its peculiar consequences have been contemplated for nearly two decades. Before now, however, no one wanted the cap to go away.
Q. How did we get to this point?
The 2006 CBA allowed the league and the union to terminate the contract two years early or one year early. At first, some believed the NFLPA ultimately would choose to pull the plug prematurely. In 2007, several influential owners began to speak out regarding the financial strains created by the most recent agreement.
In May 2008, the owners voted unanimously to end the contract two years early. The CBA expires in March 2011; the 2010 league year will therefore have no salary cap.
Efforts to negotiate a new CBA have failed for various reasons. The sudden illness and death of NFLPA Executive Director Gene Upshaw in August 2008 and the process for selecting a successor delayed the negotiations into 2009. But even once the bargaining sessions began, it became clear that progress would be elusive on the central question — the amount of money that the players will be paid.
The owners want to roll back the piece of total revenue (currently, 59.6 percent) paid to the players. The players are reluctant to reduce their share without proof that owners aren’t making money under the current deal. Currently, there is no reason to believe that either side will yield.
Q. Will there be a salary floor?
No, and many owners are believed to be preparing to cut labor costs by choosing to spend less than the mandatory minimum, $107 million per team in 2009.
But even without a salary floor, certain thresholds apply. Minimum salaries must be paid based on years of service.
Still, if a team is intent on enhancing profits, the team can dump high-dollar contracts and replace them with players making at or near the league minimum.
Q. Will some teams overspend?
It’s believed that most teams will exercise restraint. Several teams have said they’ll apply an artificial salary cap, better known in most businesses as a budget.
The reality, however, is that teams generating higher revenues will be in position to budget more money for players.
The Redskins are a team to watch in this regard. Some think that new G.M. Bruce Allen will counsel against excessive spending. Others think that owner Daniel Snyder won’t be able to resist the urge to splurge.
Another team that might be tempted to spend more than others is the Seahawks. Owner Paul Allen occupies a position among the richest owners in the league, and new coach Pete Carroll learned at the college level that recruiting better talent increases dramatically the chances of on-field success.
At the NFL level, the best recruiting tool is cash.
Q. Will a salary cap return at some point?
Upshaw vowed for years that, if the salary cap ever disappears, the players never would agree to another one. However, such a rigid position ignores the absence of a salary floor.
For both sides, the presence of a spending maximum and a spending minimum makes plenty of sense. Whether a cap or a floor or both ever returns will hinge on the terms of the agreement that is reached between the owners and the players.
The contours of a new system also will be the product of bargaining between the league and the union, with the parties ultimately having to come to a consensus as to the spending maximum, the spending minimum, and other rules that currently are set forth in a lengthy written contract.
Q. Can contracts be dumped in 2010 with no salary cap consequences?
Yes. In past years, teams had to weigh the decision to cut a player against the acceleration of bonus money applicable to future years. In some cases, it cost more under the cap to get rid of a player than it did to keep him.
In 2010, bad contracts can be wiped off the books with no ramifications, since there will be no salary cap and thus no acceleration of bonus money.
There’s one caveat. A new agreement could, in theory, reallocate to 2011 and beyond bonus money that was avoided by contracts terminated or traded in 2010. Whether and to what extent this occurs depends on the terms of the new CBA. Still, it seems unlikely that the new deal would reach back to 2010 and impose cap charges against teams that took advantage of the absence of a cap to clean the slate.
Q. Can contracts be negotiated with the bulk of the money being paid in 2010?
Again, the rules determined by the league and the union in the future will control this issue. A large signing bonus paid in 2010 easily could be spread over the life of the deal, resulting in additional cap charges in 2011 and beyond.
One possible approach entails paying the bulk of the money as a roster bonus or base salary in 2010. The problem with this concept, however, is that once a player has pocketed the full amount of money earned in 2010, he might be inclined to want more money in the out years, forgetting about the money he already has been paid. Alternatively, he could be more apt to retire.
So while there are ways to engineer a contract in order to maximize the cap charge in 2010, the year with no cap, a team needs to have high level of trust that a player who would be getting most of his money in the first year of the deal will still show up and play — and not ask for more money — in 2011 and beyond.
Q. Why is Shawne Merriman upset?
The Chargers linebacker is one of 200-plus players who would have been unrestricted free agents if a salary cap existed in 2010. Because the CBA provides that, in an uncapped year, players must have six years, not four, in order to qualify for unrestricted free agency, Merriman and other players whose contracts are expiring but who have only four or five years of service will not hit the open market.
This means that teams easily can retain rights to all of these restricted free agents via the application of one of the various RFA tenders. The Chargers, for example, have tendered four restricted free agents at the highest possible level. In any other year, they would have been able to limit only one of the four via the franchise or transition tag, and the Chargers would have been forced to either re-sign the other three — or let them leave via free agency.
Merriman recently said that he is “speechless” regarding his predicament, but he shouldn’t be. Long before he made it to the NFL, the rule pushing minimum eligibility for unrestricted free agency from four years to six in an uncapped year was on the books. He should not be surprised, and if he’s upset the anger should be directed at the union for allowing these team-friendly provisions to apply even when the owners were the ones who decided to terminate the labor agreement two years early.
Q. Will restricted free agents hold out?
Multiple reports have emerged recently regarding the possibility that restricted free agents who would have been unrestricted free agents will refuse to sign their one-year tender offers and skip all offseason activities and, possibly, training camp and the preseason.
For each such player, the key date is June 15. At that time, teams can reduce the tender offer (if it hasn’t been accepted) to 110 percent of the player’s 2009 salary. For some restricted free agents, the difference will be significant. For others, the difference will be small, allowing them to boycott all of the activities before the start of the season without losing any salary and without being subject to a fine.
Though the teams may rescind the tender offers at any time, doing so would make them unrestricted free agents.
Q. Will players under contract hold out?
Though players who have signed a contract covering 2010 are subject to fines for skipping mandatory offseason minicamps and training camp practices, it’s possible that players will decide to voice their overall discontent regarding the current situation by opting not to show up for optional offseason workouts.
It will be an interesting test of union solidarity. If the NFLPA can’t persuade players to voluntarily stay away from the grind of April-to-June T-shirt-and-shorts practices for which they receive only a modest per diem, it will be difficult if not impossible for the union to get the players to stick together in the event of a lockout or a strike, when the price will be forfeited game checks.
Q. What is the “Final Eight Plan”?
In an effort to ensure that the best teams from the last capped year won’t be able to corner the market on unrestricted free agents, the CBA places specific restrictions on the ability of the final eight teams — the Ravens, Colts, Jets, Chargers, Cardinals, Cowboys, Vikings and Saints — to sign players.
There are two distinct levels. For the final four teams (Colts, Jets, Vikings, Saints), a UFA from another team can’t be signed until a UFA is lost to a new team, and so on. Even then, the contract given to the new player must be comparable to the contract received by the player who left.
For the next four teams (Ravens, Chargers, Cardinals, Cowboys), the same rule applies, but each team may sign one UFA for a contract with a first-year value of $5.8 million or more and no restriction on future growth, along with an unlimited number of unrestricted free agents to contracts with a first-year value of $3.8 million or less, with specific limits on future growth.
Q. Can final eight teams sign restricted free agents?
Yes. The “Final Eight Plan” applies only to unrestricted free agents — that is, players with six or more years of service whose contracts expired when the uncapped year began.
This means that the final eight teams can pursue as many restricted free agents as they wish, regardless of whether the restricted free agents received a tender offer. For example, Chargers running back Darren Sproles, a restricted free agent with no restrictions because he received no tender, can be signed by any of the final eight teams.
Q. Can final eight teams sign players who were cut?
Yes. Though the CBA is vague on this point, the NFL interprets it to permit players with six or more years of service whose contracts are terminated to be signed by any of the final eight teams.
As a result, veteran running backs like LaDainian Tomlinson, Thomas Jones, and Brian Westbrook may be signed by one of the final eight teams. For running backs like Chester Taylor and Willie Parker, however, the limitations apply.
Q. Can final eight teams make trades?
Yes, with one exception. They cannot trade for players that they could not have signed as unrestricted free agents.
In other words, if the Saints wish to acquire Panthers defensive end Julius Peppers, they cannot arrange for another team to sign him as an unrestricted free agent and then make a trade with that team for Peppers’ contract.
Q. Will there be a lockout?
A lockout would come, at the earliest, in 2011. The union firmly believes that the NFL is preparing for a lockout. Some think the league is merely trying to make the players believe a lockout is coming. And some think that the union actually wants to force a lockout, in order to eventually get the best deal by creating havoc for the NFL via political and public pressure.
At this point, no one knows what the NFL will do. For specific reasons relating to labor law principles, the NFL will say only that it intends to bargain in good faith toward a new agreement.
David Cornwell, a finalist for the NFLPA Executive Director position last March, believes that the owners will not lock the players out, and that the owners will ultimately impose new work rules after the contract expires and after an impasse is reached via collective bargaining. Then, the players would have to decide whether to work under the new terms or strike.
Q. Will there be a strike?
Though at times there have been scattered rumors of a player walkout, the CBA contains a clear provision preventing a lockout or a strike before expiration of the deal. Thus, there will be no strike or lockout in 2010, and the full football season will be played.
After that, no one knows for sure what will happen.
Q. Will there be more or less movement in free agency?
At this point, no one knows. The reduced number of unrestricted free agents and the “Final Eight Plan” will necessarily shrinks the pool of available players and suitors. But there could be a more robust market for restricted free agents after the pursuit of unrestricted free agents dies down.
Regardless of the amount of movement, the union has vowed to monitor team spending. Eventually, the union could launch a P.R. attack against the league for not spending enough — or specific players may speak out regarding their own teams’ decision not to attempt to improve by acquiring free agents.
For now, the prevailing view is that teams will spend less, if for no reason other than to further pad the league’s 2011 lockout fund — regardless of whether the league plans to lock the players out or whether it’s all an elaborate bluff.
Q. Can players under contract get more money?
Yes, but with limitations. The so-called “30 percent rule” applies to any renegotiation, which will complicate the ability of teams to give significant raises to players already under contract.
Those nuances might be lost on veteran players who believe that the money should flow freely in an uncapped year, especially if they signed their contracts with the expectation that their 2010 compensation would take into account the existence of a salary cap.
Q. Will more trades occur?
Probably. In a capped year, trading a contract triggers cap consequences. In an uncapped year, the cap no longer will be an issue.
Thus, player trades could happen with greater frequency than in past years. Player-for-player trades specifically could increase.
Q. Once the uncapped year begins, is there any chance a deal will be struck during the 2010 season?
It’s highly unlikely that any agreement will be reached before the end of the 2010 season. Once salary commitments are made based on the absence of a salary cap and a salary floor, teams will have no desire to adopt new cap rules during a league year that already has begun.
Of course, an agreement can be reached in 2010 that would make new rules applicable as of 2011. But with teams and players focused on the football season once the football season starts, it makes more sense to defer any final deal until the period of time after Super Bowl XLV has been played and before the CBA expires in March.
So while an agreement won’t come until 2011, the lack of one looms large over the 2010 season. While the question of whether that’s a good thing or a bad thing will depend largely on perspective (and on the outcome of the coming season), things will be different this year.