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What if there’s no new Collective Bargaining Agreement in February?

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The NFL is required to engage in collective bargaining with its players. That happens via the NFL Players Association (NFLPA), and the controlling document that results from those negotiations is the Collective Bargaining Agreement (CBA).

The current agreement was signed in 2011, following a 2010 season which was played without an agreement in place, and, thus...technically... no salary cap, though Redskins fans know how that turned out.

The 2011 agreement was good for ten years, which sounds like a good long time, but we are about to reach the end of the ninth year. At 4:00 pm New York time on March 18th, 2020, the final 12-months of the 2011 CBA will begin. If there is no new CBA in place by that time, then there are a number of impacts on salary cap rules, and, by extension, contracts and roster decisions.

In that regard, this might be the worst time to have upheaval among the Redskins’ contract and personnel staff in the front office. This is a time when the best and brightest need to be on hand to guide the organization through the rocky shoals of the year ahead. That’s one key reason why it was disappointing to see the team parting ways with Eric Schaffer at this time.

Of course, there have been positive reports off and on for the past year that have indicated that a new CBA may be finalized soon after the Super Bowl. If that happens, then there will still be a significant challenge in getting up to speed with the provisions of the new document and understanding the implications for contracts and roster-building. When the 2011 document took effect, one of the significant changes implemented was the rookie wage scale and ‘slotting’ of contracts for drafted players. It took fans a few years to come to grips with the implications, and some NFL front offices were quicker to figure it out than others.

The Redskins need to be ahead of the curve, not behind it. Eric Schaffer always seemed to be competent; that is, average or better in understanding and adapting to the opportunities and challenges presented by the Collective Bargaining Agreement. Hopefully, the new crew, apparently led by Rob Rogers, will be as good as Schaffer was, or better.


Related

Redskins and Senior VP of Football Ops Eric Schaffer agree to part ways, Rob Rogers hired to replace him


If there is a new CBA in place next month, then I will spend the off-season trying to learn about it and identify how it is different from the current agreement. It will, whenever it is implemented, certainly offer new opportunities for creative people to gain a competitive advantage through skilled contract management.

Until that time, teams have to prepare to move forward into the 2020 season with no new agreement in place, and, because the CBA will be in its final year, there are a number of changes that are triggered.


Related from Hogs Haven:

CBA & Contracts - a collection of articles

Salary Cap & Comp Picks - a collection of articles

What should the NFLPA be fighting for in the next CBA?


While I was aware of some of these changes from my general interest in the CBA and NFL contracts, an article on OverTheCap this week highlighted many of the special provisions and contract restrictions that teams will face, some of which I hadn’t previously been aware of.

I thought it would be worthwhile to highlight those issues here.

What special situations do we need to be aware of if no new CBA is signed before the new league year begins?

No. 1 - There can be no post-June 1 designations for roster cuts

From Over The Cap:

For those unfamiliar with the June 1, it was a date in the NFL calendar that was used to defer acceleration (dead money from future years) due to signing bonus prorations to the following league year. So when you cut a player all the cap dollars have to be taken in 2020.

While this sounds bad to most fans its not that big of a deal. Only a handful of teams in recent years have had such a bad cap/contract situation where they have needed to use the June 1 so most times deferring money to the following year is just due to circumstance not need.

No. 2 - Teams have both the Franchise Tag and Transition Tag at their disposal

In a normal year a team can designate just one player either a Franchise or a Transition player. In 2020 they can designate both. So for a team like the Cowboys with a set of major free agents this is a very useful tool as it gives them the ability to, at the very, least match any offer received for two players. In a normal year a team like Dallas would franchise Dak Prescott which would leave Amari Cooper and Byron Jones free to find employment. Now only one of those two will be 100% free. It’s important to note, though, that you can’t use two Franchise tags or two Transition tags, it’s a one and one situation.

I’m not sure that this is likely to matter much to the Redskins. The only logical candidate for the franchise/transition tag seems to be Brandon Scherff. Looking over the list of pending free agents, I don’t see anyone who would merit the use of a second tag.

No. 3 - teams may write some unusual contracts to work around the 30% rule

To prevent teams from dumping huge amounts of cap into what may one day be uncapped seasons the league has a rule in place that does not allow raises of more than 30% of a player’s cap charge minus the signing bonus proration in 2020. So if a player has a cap charge of $6M in 2020 and $3M of that comes from a signing bonus it means he is only allowed a $900,000 raise in any season beyond 2020. Basically the rule is in place to prevent teams from using a signing bonus and from backloading contracts.

There are creative ways around this by using escalators, incentives, option bonuses, and other mechanisms so it just requires more time for team and agents (or self represented players) to finalize a deal. But we have already seen this going on in 2018 and 2019 and it led to a whole bunch of confusion in particular when Carson Wentz, who signed a deal in excess of $30M a year, had a contract that averaged millions less on paper to comply with the 30% rule but had a million and one ways to unlock the full contract value through escalators and incentives that had a 99.99999999999% chance of being earned.

Because so many don’t know about some of these rules and there is such a rush to report on a contract I can already envision all kinds of mis-information about option years, completion bonuses, guaranteed salary, and annual contract values.

I’m not sure how to project the impact of this rule on the Redskins and their contracts. With Eric Schaffer, there didn’t seem to be much concern for this restriction, and, given the structure of his contracts, not much need for concern. Teams like the Eagles do a lot more cap manipulation, as they have relied much more on veteran free agency and less on the draft for roster-building in recent years.

I guess the most important takeaway from this is a caveat to be wary of early Twitter reports on free-agent contract values this off-season; the headline numbers may be very deceiving (probably to the low side) as teams who try to work around this restriction make use of options, incentives and other devices to escalate contracts beyond the nominal 30% limit.

No. 4 - Teams have to account for all incentives (debits and credits) in the 2020 season

The normal practice is for each team’s salary cap to be charged for the salary, bonus pro-ration, and any incentives deemed “likely to be earned”.

At the end of the year, actual incentives paid to players are calculated, and the difference between the actual bonuses earned and the projected “likely to be earned” becomes an adjustment to the following season’s salary cap for that team.

  • If the actual bonuses earned are greater than the projected “likely to be earned” then the following season’s salary cap allotment is reduced.
  • If the actual bonuses are less than the projection, then the following year’s salary cap allotment is increased.

Without a CBA agreement in place for 2021, there is no salary cap to be adjusted, so adjustments to salary cap will need to take place in the 2020 season, itself. Such adjustments, obviously, will take place following the end of the season, so teams will need to carefully prepare for potential adjusments.

Per OTC:

[T]eams with a great deal of incentives in their contracts will likely need to prepare for the first scenario to avoid in-season problems. Preparing most likely means hoarding a few million extra in cap room.

The Redskins, like all NFL teams, incorporate incentives into their contracts. Washington does not rely heavily on incentive clauses, however, so this situation should be easy for the front office to manage.


Related articles from Hogs Haven

A primer on salary cap management

Why calculating Total Contract Value, APY and Total Guarantee for an NFL contract can be really hard

March 2019: A deeper dive on the salary cap - Rule of 51 & the Rookie Pool

NFL Teams have paid out 101 percent of the salary cap over the past 4 years


No. 5 - Void years may be a problem

The explanation on this gets a bit technical, but I think we can avoid the short tutorial that OTC offers its readers.

The Redskins rarely use void years, though other teams (again, the Eagles spring to mind) use them much more often. The only recent Redskins contract that I recall including void years was the Desean Jackson deal.

I’m unfamiliar with the practices of the Carolina front office, but, as long as they go into the free agency period aware of the restriction on void years, this should be no issue at all for the Redskins franchise.

No. 6 - Expect a second salary cap adjustment

Per OTC:

Usually the NFL salary cap is set around the combine in late February/early March. That number is then firm for the rest of the year. Normally the accountants then go over various items to determine where things may have been off and whatever that number is usually gets baked into the cap the following year. This time around I believe they have to issue the adjustment for this season and it should come in later April or early May. The last time this happened in 2010 every team got an additional $4 million or so in cap space to use. If that happened here it would be a help for teams that may have been relying on that June 1. Of course the adjustment could be negative too but Id think that is much more unlikely.

No. 7 - There may be no “rollover” or carryover to the 2021 salary cap

Normally, at the end of any season, the Redskins front office can opt to “roll over” any cap surplus into the following season, meaning that if the cap dollars aren’t spent this year, they simply become available in the following season.

If we reach the end of the 2020 season with no new CBA in place, then the possibility exists that teams could be in a “use it or lose it” situation, where they will not benefit by being under the cap allocation for the year.

Obviously, Item No. 4 on the list above may impact this late in the season, creating a web of issues that need to be understood and accounted for.

This may not be as daunting a situation as it seems at a glance. As OTC points out:

Rather than chance losing it the smart teams should be putting voids and buyback options into player contracts this year which should be a way to accelerate future prorated money into 2020 and thus use up the cap room. Likewise if you want to cut a player who is underperforming you can do it after the season is over and use up some of that cap room that you have and get the player off the books for 2021.

Summary

None of this is terribly complex or arcane; this is second-semester, freshman year salary cap management at Cap University. I don’t think any NFL front office will be caught off-guard by any of these provisions, but it does point out why teams need dedicated salary cap gurus. There are tons of hidden sand traps for young players.

As fans, we should be prepared for an off-season that may hold some surprises. Would anyone really be shocked if Bill Belichick outsmarted everyone by utilizing some obscure provision of the CBA to his advantage that other teams seem to be unaware of?

The real fun will come when we see the new CBA, whether it is signed this February, next February, or much later. The new agreement will offer pitfalls and opportunities that will keep me up many nights reading and trying to understand the fine print.