SBD/March 14, 2014/Leagues and Governing Bodies

NFL Teams Splurge In Free Agency To Avoid Salary-Cap Penalty Under New CBA

DeMarcus Ware's signing was part of $1B in contracts in the first days of free agency
Since the NFL free agency period began on Tuesday, "spending has never been higher, teams are gambling like never before and those within the game say only one thing is certain: This is the week that everything changed," according to Kevin Clark of the WALL STREET JOURNAL. Former Jets GM Mike Tannenbaum, who is now an agent, said, "This is the new collective bargaining agreement kicking in. There are unintended consequences." Clark writes those "unintended consequences stem from a confluence of factors." They include a "quickly rising salary cap ... and a little-discussed clause" in the '11 CBA, which said that teams "must spend 89% of the salary cap in cash over a four-year period." Through roughly the first day and a half of free agency, teams spent $324M "in guaranteed dollars to players," compared to $107M last year at this time, and by Thursday afternoon, over $1B in contracts had been given out over the three-day period. In the last few years, teams during free agency "have preferred to sit on the sidelines, either out of fear of making high-price mistakes or because they just don't want to spend." But now, "not spending creates problems." If teams "don't spend enough on players to meet the 89% rule, they have to write a check for the difference" (WALL STREET JOURNAL, 3/14). In Cincinnati, Paul Daugherty notes the spending spree "proves that the NFL has more money than it could ever possibly need" and that "many of its owners are clinically insane." Free agency is a "whole lot better deal for the players than the teams who sign them." It is "essentially a massive redistribution of wealth, backed by a keen sense of public relations" (CINCINNATI ENQUIRER, 3/14).

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