SBJ/June 18-24, 2012/Leagues and Governing Bodies

NFL projecting flat salary cap through 2015

The NFL is projecting that the salary cap will stay relatively flat through 2015, a period that represents the first half of the 10-year collective-bargaining agreement signed last August and runs beyond the start of the league’s new media deals in 2014, according to multiple team and league sources.

Player benefits, however, are projected to rise substantially during the period.

The projections were shared with teams in recent months and again last week at a meeting of team finance directors at league headquarters in New York.

The numbers run counter to any suggestion that the league’s new TV deals would drive up league revenue and lead, in turn, to immediate sharp increases in salaries for players under the cap.

“There is an overexcitement [among players] about the TV deals, which do not start at the higher levels and have to ramp up,” said Andrew Brandt, a former Green Bay Packers executive and co-founder of the National Football Post. “This is something that players will have to come to grips with, and agents and the union will need to be realistic on, with contract projections that this expected windfall in the rise in revenues is not happening any time soon.”

The NFL Players Association did not respond for comment. The NFL declined to comment.

The staggering of the media deals, which are rising on average 60 percent in the next round, is not the only reason the cap is projected at $122 million in 2014, up just 1 percent from the 2012 figure. The CBA contains complex formulas for determining the cap. It also provides for 2012 and 2013 a floor amount for the players of $142.4 million for the cap plus benefits, but only for those two seasons.

In 2012, the floor provision kicked in because the players’ share would have been less than $142.4 million after the calculations set out in the CBA. That is expected to be the case in 2013 as well.

Beginning in 2014, the sources said, that excess has to be adjusted back in favor of the owners, known as a “recapture” in the CBA.

While the cap may stay essentially flat until a projected 4 percent annual rise in 2016, the league does expect a substantial rise in benefits. The NFLPA also could negotiate, as it did for the 2012 cap, to shift the players’ monetary mix more toward the cap.

Benefits are rising for several reasons, including higher pension and medical insurance costs and injury protection fees. Performance-based pay is also included in benefits, though the NFLPA has the right to freeze or reduce this amount, thereby shifting resources back into the cap.

Benefits commonly consume about $21 million annually for clubs, but that amount will increase 25 percent in 2013, and on average 10 percent annually after that through 2016, one team source said. That would mean in 2013 the players’ full compensation would jump to more than $147 million and around $150 million in 2014.

Players commonly focus on the cap and not benefits, insiders in the sport agree. So if benefits are rising far faster than the cap, Brandt said, the union should try to shift its focus to the total amount.

To that end, when reports emerged earlier this year that New England Patriots owner Robert Kraft and Houston Texans owner Bob McNair said the cap would not spike in 2014 with the new media deals, NFLPA President Domonique Foxworth said in response that he would have to “crunch all the numbers.” Last month, NFLPA outside counsel Jeffrey Kessler sent a letter to players pointing out many of the benefits of the new CBA, like a higher share of cash going toward the cap. Kessler’s letter, however, did not address the issue of a flat cap. Kessler declined to comment for this story.
























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