The latest ESPN Magazine has a column on the recent CBA deal and asks if there’s enough help in this deal to compete in the era of the $100 million salary cap. Bolt fans might find it interesting that the Chargers rank, according to Forbes, 30 out of 32 when it comes to team revenues.
Publication:ESPN Magazine; Date:Mar 27, 2006; Page:24
THE NFL’S LATEST CBA TRIES TO SHARE LOCAL WEALTH. BUT WILL IT HELP YOUR TEAM?
By PETER KEATING
It’s great that NFL owners and players recently found a way to divvy up their billions without triggering war. But keep this in mind: Under football’s new labor deal, the richest clubs will keep splurging, and straggling teams will keep struggling to keep up.
As in any labor deal, there were a lot of numbers thrown out to explain who got what. But the key statistic in the new collective bargaining agreement isn’t 59.5%, the portion of total revenues that will go to player salaries. Nor is it $102 million, this season’s salary cap (up from $88.5 million in 2005). The most important number is $850 million: the estimated amount high-revenue clubs agreed to
give low-revenue teams over the next six years. The key thing about this stat? It doesn’t go very far.
NFL teams, you see, share national TV money and gate receipts (more than $6 billion last year) and keep most of the money they generate locally. For many years, such local revenues hardly registered. Then Jerry Jones started pushing hard to mine more cash from luxury suites and ad space at Texas Stadium. By 2000, the Cowboys’ home field
was generating more than $21 million a year. Robert Kraft’s Patriots installed 2,000 premium seats in Gillette Stadium when it opened in 2002, which by 2004 generated $26 million. The Packers, meanwhile, made a year-round fan destination out of the Lambeau Field Atrium, a five-story glass annex that hosts 1,600 events a year, including weddings every
weekend. The extra cash helps keep the league’s smallest city in the top half of NFL revenue producers. In the past decade, stadium cash league-wide climbed from about 10% of all team revenues to nearly 25%.But not all teams have large veins of local gold to mine, and a breach has opened between franchises adept at selling sponsorships, luxury boxes and signage, and those that aren’t. The Redskins, who’d charge rights fees to all fans named Washington if they could, raked in $287 million in 2004, according to Forbes. Arizona? Just $153 million.
At first it looked like NFL owners would try to remedy this by curtailing certain spending
practices, like huge player signing bonuses. But they realized that as long as some owners have vastly deeper pockets, they’ll find a way around the spending caps. Philadelphia, for example, devises contract
incentives that are “likely to be earned,� according to cap rules, but not likely to be met in reality. When a player falls short of the incentive, his team gets a salary cap credit the following season. And piling up such credits is one reason the Eagles were under the cap entering their 2004 Super Bowl season even after signing Terrell
Owens, Jevon Kearse and Dhani Jones.So the league attacked inequality directly, by transferring funds from wealthy clubs to the worst-off. That’s smart. But their mechanism (the 15 highest-revenue franchises will pump money into a pool dedicated to poorer clubs) is a compromise. Paul Tagliabue can’t demand that teams share all local revenues the way they do TV money, because the richest owners won’t stand for it. And the amount of money to be transferred, that crucial $850 million, is a compromise too. It’s a sizable pot, but nowhere near enough to close the growing gap between teams like Washington, New England and Dallas and the half-dozen clubs with revenues of less than $170 million.
Small-market Buffalo and Cincinnati understood this and voted against the deal. They lost, 30-2, because other struggling teams were terrified that without a new CBA, the salary cap would disappear in 2007, an even worse outcome.
The NFL’s new accord is in keeping with its traditional revenue-sharing spirit, but only partially. It’s a win for the players, for Tagliabue and for the rich teams that pioneered the development of local revenues. But nearly a quarter of the franchises, including Atlanta, Jacksonville, Oakland and San Diego, are already hard up for cash. If you’re a fan of one of them, you’ve got to wonder if there’s enough help in this deal to compete in the era of the $100 million salary cap.
