SBJ/April 2-8, 2012/Labor and Agents

Despite media deals, player pay to stay flat

NFL player pay will be flat through 2014 even though the league’s massive new broadcast contracts begin that season, according to Bob McNair, owner of the Houston Texans and chairman of the league’s finance committee.

McNair becomes the first owner to say publicly what has been talked about in industry circles in recent weeks: that the salary cap would not rise in the first four years of the NFL’s new collective-bargaining agreement (2011-14).

Houston Texans owner Bob McNair said the salary cap would not rise in the first four years of the league’s new labor deal.
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“It is staying pretty flat for several years,” said McNair, speaking as he left last week’s owners meeting. “What happened is the first year [2011] was set, and the negotiation [with the NFL Players Association] was it wouldn’t drop the second year. And actually, those first years were above what it would have been had they just applied the [CBA] percentages. So as they apply the percentages properly, it produced the results you are seeing.”

According to McNair, without the compensation-floor provisions that are part of the CBA for 2012 and 2013, the players’ total pay would have dropped significantly. One team source said it would have been $113 million this year and next for the cap, down from $120.4 million in 2011 and the $120.6 million that resulted for this year.

But that is not found money for the players; their compensation has to be averaged out over time. The CBA calls for a 10-year player compensation average of 47 percent of revenue, before deductions and credits. The players’ take in 2012 after deductions and credits will be around 47.5 percent. The same development is expected in 2013, the last year with a compensation floor. As a result, when the TV deals are kicking in the following season, some of the accounting for essentially the overpayments in 2012 and 2013 begins, said one source.

Those floor provisions are designed to only kick in if the players’ share would have been less than $142.4 million after the calculations set out in the CBA. That is what occurred in 2012 and is widely expected next year.

Also, McNair said, the TV deals do not jump 60 percent right away in 2014 but ramp up methodically.

“It will go up gradually after 2014,” McNair said of TV revenue.

The NFL in December renewed with NBC, Fox and CBS for another nine years, with the total payments averaging slightly more than $3 billion annually, up from $1.9 billion. The headlines that followed those deals were that NFL players had hit the jackpot because under the CBA, they get 55 percent of media revenue. While true, the players’ total take is also capped at no more than 48 percent of all revenue before credits and deductions in any one year.

The NFLPA did not respond for comment.

McNair said there was no quid pro quo between the league and union to raise the cap in 2012 in exchange for the NFLPA agreeing to the salary cap sanctions on the Washington Redskins and Dallas Cowboys that were issued last month. Instead, the union had the designated sum of $142.4 million per club from the floor provisions and chose to adjust teams’ prescribed spending on benefits in order to give teams more cap space. “They determined how much would be for benefits and how much would be for cap,” McNair said. “They can determine it.”

These numbers are certainly less than many players likely were hoping for at this time last year, when the lockout had just begun and CBA negotiations were being held under a cloud of rhetoric and court filings. The NFL proposal the players walked away from 13 months ago that led to the lockout would have guaranteed them $146 million per club in cap and benefits in 2012, $150 million in 2013, and $161 million in 2014. Instead, it appears they will get $142.4 million in each of the first three years of this CBA, and likely a modest increase in 2014.

In 2009, the last year with a cap under the old CBA, the cap was $123 million per club, with about $20 million in per club benefits spending.

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