Wish to make a one time donation? Make it here.

Coronavirus Is Pushing the NFL Toward a Financial Cliff

Double Barrel

Moderator / Admin
Staff member
Contributor's Club
Coronavirus Is Pushing the NFL Toward a Financial Cliff

The league’s revenue could fall as much as $4 billion in 2020—and tensions with the players are surfacing over how to mitigate the shortfall that could gut teams’ rosters

Every NFL team has shaped its roster, planned its future and designed its strategy for winning a Super Bowl around the same basic premise: America’s richest sports league would continue to get richer.

The coronavirus pandemic has burst the league’s $16 billion revenue bubble.

NFL revenue could fall as much as $4 billion in 2020, depending on factors such as how many fans can attend games, executives familiar with the matter said. The resulting drop in the salary cap for 2021—a figure that’s calculated off the prior year’s revenue—could exceed $80 million, or more than 40% of the current cap at $198 million.

That would have a disastrous impact across the league. The only way for teams to meet the dramatically lower cap would be to gut their rosters.

Full Article
I was going to add this article to the COVID protocol thread, but thought the economic impact of the pandemic on the NFL was worthy of its own subject.

It's going to be very interesting to see how this all plays out. It's just the beginning.
 

Double Barrel

Moderator / Admin
Staff member
Contributor's Club
You don't happen to have a copy of the article past the paywall, DB?
Oddly, no. I'm usually prevented from WSJ articles because of the paywall. I'm not sure why this one let me get through. :um:

I'll just c&p my 'favorite parts'. . .

The projected trauma has the NFL and NFL Players Association locked in unexpected negotiations to try to flatten the league’s financial curve and prevent that scenario. Both sides agree that the outcome isn’t beneficial to anybody. But there are tensions on multiple fronts because of the certainty that revenue will go down—and the uncertainty over whether the coming season is happening in full or at all.

The NFL and NFLPA, which have a deep history of combative negotiations over money, disagree over the extent to which players should be paid if the 2020 season is abbreviated or canceled after it starts. The sides fear that situation could arise depending on the state of the pandemic, the status of government shutdowns or even a big enough outbreak in the league.

One NFL owner familiar with the negotiations said it would be deeply problematic if the players are paid in full this season, especially if the season isn’t played out in full, because it would worsen the future financial picture. The players, though, have balked at the NFL’s most recent ask to accept an $8 million decrease in the current salary cap, and an additional reduction in benefits, in order to soften the blow, according to another executive.
 

Double Barrel

Moderator / Admin
Staff member
Contributor's Club
At the same time, the mechanisms for smoothing the salary cap are contentious—not just between the league and the union, but also among the players internally, because of the varying ramifications any changes would have for different members of the player population.

The owner said a rift between stars and working class or younger players is slowing the current talks: “You have a more influential, more veteran group dragging their feet, coming up with everything and anything they can to delay the competition.”

NFLPA president J.C. Tretter disagreed, saying the past few months have shown “star players standing up for all players.”

“This has been a unifying moment for our union,” Tretter, an offensive lineman for the Cleveland Browns, said in an email. “Of course we understand what is happening in our country and we want what is fair for everyone. Players are the ones taking the biggest risk by playing in a global pandemic and we just want to protect our guys.”

The NFL’s balance sheet is intricately intertwined with the game fans see on the field every Sunday because the salary cap—the amount of money every team is allowed to spend on its players—is tied to league revenue.
 

Double Barrel

Moderator / Admin
Staff member
Contributor's Club
For years, there has been only one way to reasonably plan for the future: expect the salary cap to shoot up. The cap has gone up by at least $10 million for seven consecutive years. The reason is that NFL revenue boomed like never before. Teams had more to spend on players than ever before.

The common expectation was for it to soar even more rapidly following a new round of media rights deals promised additional riches. The latest collective bargaining agreement, signed in March, paved the way for a 17th regular season game and expanded playoffs.

The virus will ruin those projections primarily due to the lost revenue from fans attending games. The New York Jets and New York Giants have already said the current order against mass gatherings in New Jersey means no fans at their games. Other teams have laid out plans for a limited number of attendees that would represent a fraction of normal crowds.

Meanwhile, the preseason has been scrapped and the virus has added additional costs, such as approximately $75 million for Covid-19 testing.
 

Double Barrel

Moderator / Admin
Staff member
Contributor's Club
The result of a big drop in the salary cap could be a leaguewide purge. Four teams already have more than $200 million committed to players in 2021, while 21 of the 32 teams have more than $150 million, according to overthecap.com. In order to get below the ceiling, they would have to release players and restructure contracts en masse.

“Nobody could have planned for this,” said Mike Tannenbaum, a former top executive with the Jets and Dolphins.

The mechanisms to avoid that cataclysm and address the projected revenue shortfall involve either agreeing on a pay reduction beginning this year, or delaying the brunt of it to future years. One resolution discussed by the sides involves spreading the loss over multiple years. For example, if the cap’s drop for 2021 were calculated to be $75 million, the two sides could agree to instead reduce the cap by $25 million in 2021, 2022 and 2023.

But the players prefer to spread that out over a longer period of time—over the length of the new, decade-long collective bargaining agreement, multiple executives said. The players believe that would lessen the blow, especially because a decrease in years down the road may be more negligible after the economy recovers and the league cashes in on its new media deals and the 17th game.
 

Double Barrel

Moderator / Admin
Staff member
Contributor's Club
Yet that is also potentially contentious within the union, with different players facing different financial hits depending on their contract status and expected longevity in the league.

The players also don’t believe it’s good policy to take any money out of the 2020 cap. “It’s good for NFL owners but bad for everyone else,” said NFLPA spokesman George Atallah.

Other disruptive problems are also on the horizon thanks to the virus. A critical part of the current talks is what individuals players would receive if they entirely opt out of the 2020 season because of health concerns. Those discussions have separated players into two tiers: one for medically supported situations involving higher risk, and others who aren’t but still reluctant to play.
 

OptimisticTexan

Hall of Fame
This was brought up by another member and I mentioned it about a week and half ago. One response mentioned how would the owners be able to circumvent current contracts. I mentioned that there could be a glutten of veteran players hitting the market next season since I could see veterans being released if they aren't behind re-structuring their contracts.

I believe owners could release players for various reasons, none of which would have the NFLPA blessings. Do players strike if this should come to pass or do they adjust their expectations in order to stayed employed. Players would have to know that signing a big number contract with another team may not be viable option since most teams would probably have their big money stars locked up with a lot of players filling roster voids. That will certainly suck for veterans but is there another option?

One thing I would expect, if players go with remaining employed it could be difficult to see owners bring that cap back up to 2022 expectations. I could see owners riding this bad financial season for at minimum 5 years. I could also see players eventually going on strike at some point between 2021 and 2025 which could result in another black eye for the NFL.

It would be crazy to see the greed from both sides drive this Brink truck into the ditch. It could certainly open the door for a new league and business philosophy.
 
Last edited:

Corrosion

Idealist
Staff member
So spreading next years cap loss over the next 4 years .... That assumes that we get back to normal between now and next year (edit - the year after). Kinda optimistic that a solution to Covid is found in that time period allowing fans back in seats.


Reportedly one of the biggest final hurdles for the NFL and NFLPA in talks for a revised CBA, the economics of the 2020 season boil down to this: This year's cap ($198.2M for each team) will remain untouched, but in order to make up for the projected loss of revenue throughout the season, the NFL would spread the financial shortfall over four years beginning in 2021

As part of the agreement, the 2021 salary cap floor will be set at a minimum of $175 million, up from the initial $165 million, marking a potentially stark drop from the projected 2021 cap of about $210 million. This means that while 2020 rosters figure to remain largely intact, teams could be forced to either cut or renegotiate with veterans carrying high cap numbers beginning in 2021.
Still this is better than the expected drop into the 120m range that was a disaster for every teams contractual obligations where they'd be cutting anyone without dead money to get below the required figure and fill out a roster. In that case , Tunsil better figure out how to play QB.
 
Last edited:

badboy

Hall of Fame
I understand 175 is expected minimum now and Texans are $20 m below the 198 cap as of now. Cutting $3 more is easy peasy. I realize not all 32 in same place but Houstin is looking good my opinion.
 

CloakNNNdagger

Hall of Fame
I understand 175 is expected minimum now and Texans are $20 m below the 198 cap as of now. Cutting $3 more is easy peasy. I realize not all 32 in same place but Houstin is looking good my opinion.
NFL Team Salary Cap Tracker
NFL Team Salary Cap Tracker

A real-time look at the 2021 salary cap totals for each NFL team, including estimated cap space. Assumes a $175,000,000 team salary cap


*************************************************************************************

If I'm reading this correctly, even if the 2021 salary cap is $198,000,000, the Texans don't seem to be sitting too pretty.
 

Corrosion

Idealist
Staff member
NFL Team Salary Cap Tracker
NFL Team Salary Cap Tracker
A real-time look at the 2021 salary cap totals for each NFL team, including estimated cap space. Assumes a $175,000,000 team salary cap


*************************************************************************************

If I'm reading this correctly, even if the 2021 salary cap is $198,000,000, the Texans don't seem to be sitting too pretty.

I don't think people understand that those numbers for next year only include active contracts and that won't be 55 ... it excludes all expired contracts / free agents and rookies.

Teams might be just under the cap with 15-20 roster spots to fill.

Just about every team in the league is going to be cutting mid tier players with little to no dead money and scrambling to sign guys for pretty much the minimum.
 

steelbtexan

King of the W. B. Club
Contributor's Club
So despite the billions of dollars of TV contracts, I guess fans in the stands matter after all. Although this isn't what most season ticketholders have been lead to believe by guys like Colin Cowheard.
 

OptimisticTexan

Hall of Fame
NFL owners will ride this season's loss in profits for as long as they can. I can see 5 years as a minimum. Like I mentioned in the past....I wouldn't put it past them to try and eliminate the "Dead Money" cap hit in an effort to reshape their individual rosters while lowering the contract money being paid out.
 

JB

Old Curmudgeon
Contributor's Club
NFL owners will ride this season's loss in profits for as long as they can. I can see 5 years as a minimum. Like I mentioned in the past....I wouldn't put it past them to try and eliminate the "Dead Money" cap hit in an effort to reshape their individual rosters while lowering the contract money being paid out.
The owners are wanting to take the entire hit this year. The players are the ones wanting to spread it out
 

OptimisticTexan

Hall of Fame
The owners are wanting to take the entire hit this year. The players are the ones wanting to spread it out
Correct....but taking the hit this season won't cover the losses. The players may want it spread out but the owners would take the hit this season and still spread their losses out for as long as they can. Regardless as to how this plays out.....I'd be hard pressed to say that the expected 200M+ salary cap that probably would've came in 2021 wont show up until 2025. No fans projects at a 5.5 Billion dollar loss alone for the owners....that's not a one season and done financial issue. If the entire season is lost....I think that that could be as much as 16B+ lost. NFL had 14.8B in total revenues in 2018 so 16B+ may not be too far fetched for 2020 if the season was lost.
 

Double Barrel

Moderator / Admin
Staff member
Contributor's Club
I know,

That's not what some in the media would want you to think.

How quickly do you think the NFL recovers even if a vaccine is available within a yr? I'm guessing 5 yrs from this yr.
I think pro sports, as well as live entertainment in general, is about to cash a reality check that won't bounce. We've never created a vaccine for any coronavirus, much less COVID-19.

I think the truth is going to be a bitter pill for a lot of folks to swallow, and I'm not convinced that live entertainment events will ever be the same as pre-2020.

This pandemic just exposed the truth that we will always be vulnerable, and with technology making it easy to manipulate viruses, this could be just the beginning.

Ultimately, the exorbitant salaries of the past couple of decades will not be sustainable when society realizes that live entertainment is not as vital as once believed. Billions of taxpayer dollars for sports stadiums - especially one-sport use so prevalent today - will seem incredibly dumb against a backdrop of crumbling infrastructure and massive public debt.

I think sports will survive, but I'm just not sure their current salaries will in the long run.
 

steelbtexan

King of the W. B. Club
Contributor's Club
I think pro sports, as well as live entertainment in general, is about to cash a reality check that won't bounce. We've never created a vaccine for any coronavirus, much less COVID-19.

I think the truth is going to be a bitter pill for a lot of folks to swallow, and I'm not convinced that live entertainment events will ever be the same as pre-2020.

This pandemic just exposed the truth that we will always be vulnerable, and with technology making it easy to manipulate viruses, this could be just the beginning.

Ultimately, the exorbitant salaries of the past couple of decades will not be sustainable when society realizes that live entertainment is not as vital as once believed. Billions of taxpayer dollars for sports stadiums - especially one-sport use so prevalent today - will seem incredibly dumb against a backdrop of crumbling infrastructure and massive public debt.

I think sports will survive, but I'm just not sure their current salaries will in the long run.
Lot's of good memories at concerts

Truth is, I will miss the people I've sat around for years at the football games alot. The games themselves not so much
 

Double Barrel

Moderator / Admin
Staff member
Contributor's Club
Lot's of good memories at concerts

Truth is, I will miss the people I've sat around for years at the football games alot. The games themselves not so much
Yeah, 2020 was going to be a great concert year for me. I had at least 7-8 shows that would have been mandatory.

I'm sure live entertainment will return. But how lucrative it will be is going to be interesting. I had no idea that fans at games were a third of league revenue.
 

steelbtexan

King of the W. B. Club
Contributor's Club
Yeah, 2020 was going to be a great concert year for me. I had at least 7-8 shows that would have been mandatory.

I'm sure live entertainment will return. But how lucrative it will be is going to be interesting. I had no idea that fans at games were a third of league revenue.
I'm a big live entertainment guy.

Before the latest shutdown I went to Green Oak tavern in Humble and saw John El Toro Richardson. He's really talented. He's from Baytown. Had a trumpet playing friend (I can't remember his name) that sat in with him and that guy was awesome.

As far as the big venue guys, John Mayer at Cynthia Woods was great. I actually enjoyed him more than Santana. Although both were great.
 

Texansballer74

Hall of Fame
Yeah, 2020 was going to be a great concert year for me. I had at least 7-8 shows that would have been mandatory.

I'm sure live entertainment will return. But how lucrative it will be is going to be interesting. I had no idea that fans at games were a third of league revenue.
My wifey and I was going to go to at least 4 old school concerts this year too. I never liked going to the NFL games because of the traffic afterwards. But I’m going to miss going to the Rockets games. I try to attend at least 10 a year.
 

Carr Bombed

Hall of Fame
Yeah, 2020 was going to be a great concert year for me. I had at least 7-8 shows that would have been mandatory.

I'm sure live entertainment will return. But how lucrative it will be is going to be interesting. I had no idea that fans at games were a third of league revenue.
I have floor tickets to the 5FDP concert that's already been rescheduled.. and will never happen on Oct. 9th.
 
Last edited:

badboy

Hall of Fame
NFL Team Salary Cap Tracker
NFL Team Salary Cap Tracker

A real-time look at the 2021 salary cap totals for each NFL team, including estimated cap space. Assumes a $175,000,000 team salary cap


*************************************************************************************

If I'm reading this correctly, even if the 2021 salary cap is $198,000,000, the Texans don't seem to be sitting too pretty.
2021 top 51 $195- 175= $20 - 20 roll over from 2020 Texan are in very good shape IMO with several moves that can be made.
 


Top