Hogs Haven published an article in May that introduced the discussion of what is likely to happen to the salary cap in 2021 if there were to be a significant drop in revenue in 2020 as a result of the COVID-19 pandemic.
That article focused on the key provision of the 2020 CBA:
Cancelled Games. If one or more weeks of any NFL season are cancelled or AR [All Revenues] for any League Year substantially decreases, in either case due to a terrorist or military action, natural disaster, or similar event, the parties shall engage in good faith negotiations to adjust the provisions of this Agreement with respect to the projection of AR and the Salary Cap for the following League Year so that AR for the following League Year is projected in a fair manner consistent with the changed revenue projection caused by such action.
That article, and most analyses I’ve seen prior to today, said that the 2020 salary cap is set in stone, and that any potential revenue loss would have its impact on the salary cap in 2021 and beyond.
From NFL Now: A brief look at what comes next for teams financially, as the NFL and the NFLPA need to figure out how projected loss of revenue this season affects the salary cap moving forward. pic.twitter.com/Vculv0H8Wb— Ian Rapoport (@RapSheet) June 1, 2020
The most commonly talked-about course of action in the media over the past several weeks has been the idea of “borrowing” cap space from future years in order to “smooth things out”, preventing any sharp single-year upward or downward spikes in salary cap, which are considered bad for the league and bad for the players, as such spikes make it difficult to plan contracts effectively.
NFL.com this week published an article with a triple byline of Ian Rappaport, Mike Garafolo and Judy Batista accompanied by a video or Mike Garafolo reviewing the key points in the article that takes the conversation in a new direction.
The article began by supplying the same background discussed in the articles previously published here on Hogs Haven, and re-stating estimates that the league faces the potential loss of roughly one-third of its revenue, which the article pegged at between $4b and $5b. The writers went on to detail some of the commonly discussed remedies such as borrowing from future TV deals or curtailing or eliminating performance-based pay for a few years.
But then the article introduced the idea that “some have proposed looking at the present, instead of the future” for cap relief; specifically, they discussed the possibility of adjusting the 2020 salary cap, saying that this would require cooperation (and negotiation) between the NFL and the NFLPA.
The players’ union would have to agree to give back some money this year, thus taking on some pain in the short term to offset more in the long term. With roster bonuses, workout bonuses, option bonuses and signing bonuses already paid in the spring, the trim would likely come from the players’ base salaries, which are paid in weekly installments during the season. It’s unclear at this point, with negotiations not even underway, how big of a cut the league would request and what kind of structure the players would accept for the giveback.
Surely, the players would be reluctant to agree to such cuts. But teams would argue the alternative isn’t ideal, either. In anticipation of revenue losses, teams could opt to part with veterans with big, non-guaranteed base salaries in 2020. Players such as the Browns’ Olivier Vernon ($15.25 million), whose future in Cleveland has already been questioned by some, could find themselves in jeopardy of getting released.
Plus, if the players agree to a trim now, it would save some jobs in 2021. The smaller the drop in next year’s salary cap, the fewer number of veterans would be released then.
The authors said in the article that both the NFL and NFLPA had declined comment on the story, but went on to say that “sources informed of the union’s thinking said the organization is aware of the potential for significant revenue loss this year and would be amenable to negotiating with the league to smooth out the salary cap as much as possible.”
If such negotiations do, in fact, take place, it would mark the third set of key negotiations this year; the two sides finalized the CBA in March and agreed to a virtual offseason plan in April. Any new negotiation would need to deal with potential scenarios related to the COVID-19 pandemic, its effect on the season and its potential reemergence in a ‘second wave’.
While the article pointed out that these negotiations do not have to be finalized by training camp, it would be ideal, although the authors noted that the salary cap part of these talks could drag into the preseason. Both sides, presumably, would like to avoid the ugly public bickering currently going on in Major League Baseball.
With no comment from either side of the NFL salary cap discussion and no concrete reporting on what steps would or could be taken to adjust the 2020 salary cap, this report looks a bit speculative, but the fact that NFL.com put the bylines of three major reporters on the story is an indication that they believe this is more than just a vague rumor, a “what if” or a trial balloon. The NFL.com and NFL Network reporting on this seems to be in its very early stages, but may be an indicator of a new development in the continuing NFL salary cap story that will likely be with us for at least the next 12-18 months.