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SBJ/May 13-19, 2013/Labor and Agents
Filing confirms that NFLPA made deal to reduce future caps
Published May 13, 2013, Page 4
The fact that the NFLPA made the agreement to create an artificially higher cap in 2012 is not unknown, having been reported previously. But the court documents mark the first public confirmation of the deal by the union.
“In early March 2012, the NFL was negotiating with the NFLPA to obtain its consent to certain team salary cap reallocations as a quid pro quo for an NFLPA request to defer the salary cap charge of certain player benefit costs to future league years,” the union’s lawyers wrote in a brief filed with the 8th U.S. Circuit Court of Appeals earlier this month.
An NFLPA spokesman did not respond for comment.
The NFLPA has publicly confirmed it also boosted the 2013 cap by deferring performance-based pay to future years. Performance-based pay is counted as a benefit cost and detracts from salary, so by not paying it out in 2013, that would serve to boost the cap.
Player compensation, set by calculations in the collective-bargaining agreement, is divided between cap and benefits, the latter of which is usually $20 million to $22 million annually per club. However, with benefits rising quickly — in part because of increases in pension and medical insurance costs — the amount dedicated to salary has not risen nearly as fast.
By diverting some required funding of benefits to future years, the league agreed to raise the cap in 2012, sources said, from about $113 million to $120.6 million.
The cap in 2013 has been set at $123 million, and the league projects the cap to rise only slightly until 2016, when internal projections have it jumping to $130 million. That would then take the cap over the previous high of $127 million in 2009.
These calculations are subject to change depending on revenue. In addition to the deferral of performance-based pay, a late upward revision in 2012 league revenue caused the 2013 cap to jump $2 million more per club than had been expected.
With lucrative TV deals commencing in 2014, part of the explanation for the tepid projections would seem to be this agreement to allocate more cap dollars in 2012 and then take that away in future years.
Some experts see an advantage to the NFLPA move.
“[The] immediate hit would be reduced by deferring to future years when the NFL’s revenues would be higher and the salary cap would be going up,” said Mark Levinstein, a player lawyer. “The increase would be much more than the salary cap charges that are being deferred.”
The union disclosure is contained in a document arguing to the 8th Circuit that the players should be allowed to sue the league for collusion. A lower-court judge rejected that argument, saying players had waived their rights to sue in settling the 2011 lockout.
The players contend the league had a secret salary cap in 2010, when the CBA disallowed a cap.
In March 2011, the league announced it had docked salary cap space of the Dallas Cowboys and Washington Redskins because they front-loaded contracts in 2010 contrary to a previously undisclosed league policy. The league needed the union’s approval of the penalty, and to get it, the league agreed to the higher cap.
“Players received the benefits to which they were entitled in 2012,” a league source said. “The deferral involved the funding contributions that were otherwise supposed to be made in 2012. This is strictly a cash-flow issue.”