As the optimistic drumbeat continues towards eventual resolution of the long-running labor dispute between the NFL Owners and Players, we are starting to hear reports of proposed deal points about what may be part of a settlement of Brady v. NFL and an eventual Collective Bargaining Agreement (CBA).
I am optimistic but cautiously so. Again, until everything is agreed to, nothing is agreed to. However, there appears to be some momentum.
As first reported by my colleague at ESPN and someone trusted by both Owners and Players -- Chris Mortensen -- there are proposed deal terms being discussed that reflect key issues analyzed in this space in recent months.
The negotiating team for the Owners presented the basic deal terms to the full membership yesterday in Chicago, with a goal of taking a positive response to a meeting with the Players outside of Boston today. The following details have started to emerge. Lets take a look.
Revenue split
While the Players have maintained their position for a 50/50 split of all NFL revenues simplifying the math and setting aside discussions of credits, set-offs, expenses, etc. the Owners offer has steadily climbed from a percentage in the low forties to a present offer of approximately 48%. These two percentage points may end up being the crux of this two-year negotiation, an amount worth $200 million this year and perhaps as much as $400 million by the end of the deal.
Using a present revenue total of $9.3 billion, 48% of that number would result in a Player allocation of $4.464 billion or a team Cap starting in 2011 of just under $140 million. The key would be how much of that number is allocated to salaries and how much to benefits. My sense is the player cost allocation may be around $121 million per team with the other $19-20 million toward benefits.
The Cap and its formulas and allocations are explained here.
As I have said for a year, the revenue split is the issue from which all others flow. It appears to be headed towards a 52/48 split between the Owners and Players.
Downside/Upside
Within the ultimate question of Who gets how much? to be fair in future years, there must be downside and upside protection.
In the CBA that expired in March, there was a mechanism called the Cash Adjustment Mechanism (CAM) which credited or debited future team Caps depending on whether Player spending exceeded or fell short of certain thresholds. In most years, the CAM adjustment was an addition to future Caps, meaning there was less spending on players than the established threshold.
I explained the CAM mechanism here when almost $5 million was added to each teams Cap in 2009 due to it being the last Capped year.
Owners and Players are talking about a similar mechanism now that protects both sides through a formula similar to CAM. With this formula, it is expected that the Player share of revenue will not dip below 46.5% during the life of the CBA.
Cash Minimum
I have always felt that for the Players this is the most important issue of all. Having managed an NFL Salary Cap for nine years, I am well aware that a Cap can be molded and massaged to show whatever a team wants to show. Cap minimums can be reached using various mechanisms that eat up a teams Cap while providing an excuse to agents and players not to spend.
Cash is king to Players. In March, the Owners offered a 90% cash minimum, which I thought was the most meaningful part of their offer. They have reportedly raised that offer to 95% or even higher. Were I advising Players, I would try to push that Cash minimum as close to 100% as possible.
I would think this potential concession may be receiving the most resistance among ownership.
This would reward teams with solid front offices and savvy pay as you go Cap management. With the Packers, I always tried to match our cash spending with our Cap, paying as we went rather than racking up potentially large future dead money. That style of management will be rewarded with the proposed new system.
