Andrew Brandt predicts a drop of $3 billion in league revenues if games are played without fans

Andrew Brandt appeared on the Pat McAfee show recently and spent a lot of time talking about the potential for decreased NFL revenues this year, and the flow on effects on salary cap.

Brandt indicated that he thinks the owners and NFLPA will need to negotiate a “smoothing” of the salary cap — something we’ve talked about on Hogs Haven recently.

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Related:

CBA nuggets - What happens to the salary cap if 2020 games are cancelled?

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Here are a few of the highlights from Brandt’s appearance.

He started out talking about the issues MLB is having, saying that we may not have baseball this year, “not because of health issues — because of the money, and we’ve seen comments from the players about that.”

For the NFL, Brandt identified the key issues with revenue and salary cap.

“We’re gonna see a diminution of revenues coming up.... People don’t realize how many revenues are wrapped up in gameday,” said Brandt.

He went on to predict a reduction of “fifteen to twenty-five percent of total revenues”.

That’s huge.

Brandt went on to put a rough dollar amount on that. He said that a ‘normal’ year’s revenue is roughly $15 billion, and suggested that with the loss of local revenues, “now your talking about $12 billion.”

So, Brandt, in very approximate numbers, is projecting a reduction of around $3 billion in 2020 based on the loss of local revenues, which is consistent with recent estimates from Adam Schefter and OverTheCap. At 47% divided by 32 teams, this would result in a salary cap reduction in excess of $40 million per team,

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Adam Schefter:

“Now i want people to think about this going forward — because it is something that the NFL and the NFLPA soon is going to have to be thinking about — and that is if there are no fans in the stands this season that would equate essentially to about on average roughly $100 million less in revenue per team for each of the 32 NFL teams in the NFL. If we multiply that $100 million by the 32 we get $3.2 billion in lost revenue, and why is that a big deal? Because the Salary cap is based off the total revenue that comes in...

“So if there is $3.2 billion in less revenue, which is a rough number... but well within the range that is expected and as other people pointed out there are other financial losses as well, we are looking, potentially, at the salary cap dropping in 2021....”

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After pointing out that the salary cap for 2020 is set at $198.2m per team, Andrew Brandt states, “Teams may look to go under this year because....there’s not enough threshold minimum spending to keep teams accountable.”

He goes on to say, “We know the 2021 cap is gonna be a problem.”

He suggests that the owners will attempt to negotiate with the NFLPA to insure that the 2021 cap isn’t lower than the 2020 cap — a situation that Brandt describes as “something that’s never happened in the history of sports.” That’s not, in my opinion, totally accurate. We don’t have to go back very far to find a situation where the salary cap went down — and it happened in the NFL.

• In 2009, the NFL salary cap was set at $123m per team.
• In 2011, the NFL salary cap was set at just $120m.

It didn’t return to the 2009 level until 2013, when it was again set at $123m.

Technically, Brandt is right that the cap wasn’t lower in the next season, but it certainly did fall, and it took three years for the cap to recover.

Brandt relies on this idea that the salary cap in 2021 won’t be lower than in 2020 for the rest of the discussion. I tend to think that this will be the most likely outcome from the NFL - NFLPA negotiation, but I don’t think it’s as set in stone as Andrew Brandt indicates with his comments.

Brandt said that he thinks veterans “are gonna be squeezed even more this year and next year”, meaning that teams will cut veteran players with expensive, non-guaranteed contracts, relying more on lower-cost rookies. He repeats that the lack of meaningful minimum spending requirements in the CBA opens up the opportunity for NFL front offices to dump expensive players in an attempt to prepare for the reduced salary cap that will result from loss of local revenu if games are played without fans. “Accountability is low, so we might see teams just offload veterans with non-guaranteed contracts to go light this year [knowing] the cap is less next year. We’ll see all this happen.”

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There might be a good reason for the Redskins to dump salary cap charges now

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Brandt expanded on the idea: “The reason I think it’s gonna happen before 2020 and not just wait till 2021 [is] because the effect of perception on the union, on players saying, ‘you’re taking a cap lower in 2021 than 2020?’ is not a good one.” He’s suggesting that the NFLPA will negotiate with the owners now to avoid the PR and membership issues that would arise from a 2021 cap that is lower than this year’s.

He wrapped up by talking about “smoothing”; that is, avoiding a sharp upward or downward spike in the salary cap for a single season.

While Pat McAfee seemed to interpret Brandt’s comments as a renegotiation of individual player contracts, Brandt seemed to be focused instead on renegotiation of salary cap. Most media commenters who have discussed this recently have suggested that the league and the NFLPA will “borrow” cap space from future years in order to normalize (“smooth”) the cap as we move into the decade of the 20s.

Brandt also suggested that NFL owners will be proactive in anticipating the squeeze on cap space, saying that veteran players with non-guaranteed contracts will be sacrificed by individual teams in an effort to create immediate cap space that could be use in 2021 to mitigate the effects of lost local revenue.

There is a lot to unpack from this discussion between McAfee and Brandt. As long as there is doubt about the number of games or uncertainty as to whether fans will be able to attend NFL games in 2020, there will be anxiety and discussion surrounding the implications for the NFL salary cap.