The 5 o’clock club is published from time to time during the season, and aims to provide a forum for reader-driven discussion at a time of day when there isn’t much NFL news being published. Feel free to introduce topics that interest you in the comments below.
The salary cap is driven by revenue.
In 2020, the NFL, like all pro sports, suffered a drop in revenue. In the case of the NFL, that drop was primarily due to loss of local revenue because of empty stadiums. TV viewership seemed to be down as well, but it is getting increasingly difficult to compare TV ratings as Americans turn more and more to alternate sources for accessing game broadcasts. The league is trying to stay relevant by signing deals to tap into those alternative broadcasting opportunities, but television broadcast rights remain the backbone of the NFL revenue model
One reason why the league was pushing to finalize the CBA ahead of this season, despite the fact that it had a full year left to run before expiring, was to demonstrate the stability and reliability of the NFL as it sat down to negotiate replacements for the TV contracts that expire in 2021 and 2022.
Well, Peter King reports that those lucrative television contracts are nearing the final stages and could be finalized within a month. The timing is not coincidental. Finalizing the television contracts prior to the start of the new league year in mid-March could allow the league to make a late adjustment to the expected salary cap, pushing it higher than the reported $180-181m that is currently expected.
This would be welcomed by the NFLPA, as it would mean more money earlier for its members. Of course, more money for players means more money for owners, since salary cap is not a normal expense, but is based on a revenue sharing formula. A bigger pie benefits both owners and players.
Here’s the report from Peter King’s Football Morning in America:
You may have noticed that the glam Super Bowl matchup of Brady vs. Mahomes didn’t deliver the TV rating the NFL would have liked. The ratings were down 9 percent from last year. That may be because ratings are the average number of people watching throughout the game, and surely people switched off the 31-9 contest when it was a snoozer midway through the second half. But the NFL isn’t too concerned. Ratings for the NBA Finals were down more than 50 percent in 2020 from 2019, even with LeBron James playing; prime-time programming across all networks is down more than 18 percent from last season. And the NFL’s streaming numbers—5.7 million Americans streamed the game eight days ago—were up more than 60 percent from last year.
Why am I telling you all this? Because the NFL is close—“within a month,” one source told me at the Super Bowl—to inking new 10-year contracts with its network partners that could result in an aggregate increase of 70 to 100 percent in rights fees from the last contract. The new contract may not be a revolution; I’m hearing most major packages will likely remain with their current broadcast partners, with the exception of a possible streaming package on Thursday nights. Amazon is the favorite there. Whether the Thursday night package, if streamed, would include a cable element like NFL Network, or simply be telecast on local channels of the two participating teams, is something I don’t know.
The ESPN package expires after the 2021 season, while the other deals are done after the 2022 season. Getting the deals done now could provide the league with the influx of cash it needs to not have the salary cap crush teams in March.
This is likely to be a fast-moving story over the coming three to four weeks, and I wouldn’t be surprised to see numerous conflicting reports with dueling sources and contradictions.
For the moment, though, Peter King has spoken and the NFL media members are listening — after all, what else is there to report on right now?
Stay tuned to this unfolding story over the coming days and weeks. It’s likely to become headline news as the middle of March approaches.
If the salary cap goes up, it goes up for all teams. If the 2021 cap goes up to, say, $200m instead of the current expectation of about $180m, will that create a relative improvement or deterioration for Washington in the coming free agency period?
This poll is closed
More money? That’s better for us!
More money for everyone? That erodes the current competitive advantage that we hold by having the 5th most cap space in the NFL.
Are you kidding me? A dollar is a dollar. Every team can only spend the dollar once, so every team gets the identical result from an increase in the salary cap.