NFL heads for uncharted territory
NFL heads for uncharted territory
Lack of labor deal will have big effect on free agency
SI.com asked Peter King eight questions about the NFL's inability to complete the collective bargaining agreement as free agency rapidly approaches.
SI.com: Where do we stand on the NFL labor agreement as of right now?
KING: You got a glimpse of the future late Wednesday afternoon when Denver cut three players integral to its recent success: DL Trevor Pryce, RB Mike Anderson and TE Jeb Putzier. This is an obvious indication that the NFL isn't going to make a deal with the players because Denver had to trim significant money from its 2006 salary-cap figure. If the owners had been able to make a deal with the players, the cap number would have been about $10 million higher than it's going to be -- probably about $95 million. So Denver becomes first team to puts its cards on the table and show what the new reality in the NFL is going to be like without a collective-bargaining agreement.
SI.com: Why is there a potential $10 million difference in the 2006 salary-cap number?
KING: Because the players want approximately 60 percent of all football revenue. That includes luxury boxes, local TV and radio rights and heretofore other premium dollars that have not been shared. The league is offering about 56.2 percent of all football revenue. The $10 million difference is the approximate difference in what the NFL would be giving the players if the two sides could reach a new labor agreement.
SI.com: How did it get to this point?
KING: As the NFL had tremendous prosperity in the 1990s, the value of franchises rose dramatically. When Bob McNair paid approximately $800 million to field a new team and stadium in Houston, owners were giddy the value of franchises had skyrocketed that high. But the flip side of that bonanza is being felt now. When someone puts down $800 million to buy a team, he doesn't take it out of his wallet. he has to borrow a good deal of the money. So an owner like McNair, as well as several others who bought franchises recently, have had to work extremely hard to raise revenue aside from the ticket sales and television rights fees all teams share. McNair has to sell luxury suites and use that money to help pay his debt. So players see all this money coming into Houston and say we want a bigger piece of the pie. McNair says "Whoa, I have to pay this massive debt. We already share enough money with you." And that has been one of the big problems that just can't get solved: How much from the multi-millions for premium seating should players be able to get their hands on? The two sides just can't agree on a number.
SI.com: What do the next few days hold?
KING: You can expect the NFL to give its teams a 2006 salary-cap figure at some point late today or Thursday. There isn't a last-second deal with the players in place and I have little hope that there will be. I expect that figure to come in at around $95 million. Even though that will be a healthy increase over the 2005 of $85 million, it won't be enough to help teams who were counting on a significantly higher cap number for the year.
SI.com: Why should any of us really care about this?
KING: That's a good question. The 2006 season will be like every season we've had since the salary cap began in 1994. But the 2007 season will be an uncapped year, which means all players will have a chance to make more money than they would in a normal year. But the one thing that not enough fans are focusing on right now -- and I don't believe players are focusing on it either -- is that in this uncapped year, players will have to have six years of NFL service to become a free agent rather than the current four. That will limit the number of free agents out there significantly. The uncapped year won't be the bonanza that players might think.
SI.com: So no matter what, there's going to be football?
KING: Yes. I heard one radio host breathlessly say Wednesday, "The NFL is on the verge of financial catastrophe." Silly rhetoric. Yes, the NFL has been the model sports league since adopting free agency with a cap 12 years ago. But if there's no cap, life will go on and football will be played.
SI.com: Are you saying that the NFL is not going to become like baseball, with tremendous difference in teams' ability to put competitive teams on the field?
KING: That's exactly what I'm saying. In baseball, the Yankees can spend $210 million on players, while a team in its own division, Tampa Bay, spends about $35 million. In the NFL, even if Daniel Snyder takes in $300 million over the course of the year and buys up five premier free agents every year, even the teams at the bottom of the financial totem pole -- e.g., Buffalo, Jacksonville -- will have $160 to $170 million of gross revenue to play with. Obviously, it won't be as egalitarian a system as the one the league has now. And it won't be as good a system, but we're not headed for any sort of football Armageddon. And don't let anyone tell you differently.
SI.com: How will this affect free agency?
KING: Free agency kicks off at 12:01 a.m. EST on Friday. And if there isn't a new deal, it will severely limit the amount of money this year's free-agent crop can earn. Too many teams have to make drastic cuts simply to get to the cap number, never mind spending additional money on free agents. In other words, it's a very bad year for Shaun Alexander to be looking for a six-year, $50 million contract. As I wrote in Monday Morning QB this week, only four teams -- Minnesota, Cleveland, Arizona and Green Bay -- have more than $20 million to spend in free agency this year. And so those teams could be shopping at Neiman Marcus and paying Target prices.
Lack of labor deal will have big effect on free agency
SI.com asked Peter King eight questions about the NFL's inability to complete the collective bargaining agreement as free agency rapidly approaches.
SI.com: Where do we stand on the NFL labor agreement as of right now?
KING: You got a glimpse of the future late Wednesday afternoon when Denver cut three players integral to its recent success: DL Trevor Pryce, RB Mike Anderson and TE Jeb Putzier. This is an obvious indication that the NFL isn't going to make a deal with the players because Denver had to trim significant money from its 2006 salary-cap figure. If the owners had been able to make a deal with the players, the cap number would have been about $10 million higher than it's going to be -- probably about $95 million. So Denver becomes first team to puts its cards on the table and show what the new reality in the NFL is going to be like without a collective-bargaining agreement.
SI.com: Why is there a potential $10 million difference in the 2006 salary-cap number?
KING: Because the players want approximately 60 percent of all football revenue. That includes luxury boxes, local TV and radio rights and heretofore other premium dollars that have not been shared. The league is offering about 56.2 percent of all football revenue. The $10 million difference is the approximate difference in what the NFL would be giving the players if the two sides could reach a new labor agreement.
SI.com: How did it get to this point?
KING: As the NFL had tremendous prosperity in the 1990s, the value of franchises rose dramatically. When Bob McNair paid approximately $800 million to field a new team and stadium in Houston, owners were giddy the value of franchises had skyrocketed that high. But the flip side of that bonanza is being felt now. When someone puts down $800 million to buy a team, he doesn't take it out of his wallet. he has to borrow a good deal of the money. So an owner like McNair, as well as several others who bought franchises recently, have had to work extremely hard to raise revenue aside from the ticket sales and television rights fees all teams share. McNair has to sell luxury suites and use that money to help pay his debt. So players see all this money coming into Houston and say we want a bigger piece of the pie. McNair says "Whoa, I have to pay this massive debt. We already share enough money with you." And that has been one of the big problems that just can't get solved: How much from the multi-millions for premium seating should players be able to get their hands on? The two sides just can't agree on a number.
SI.com: What do the next few days hold?
KING: You can expect the NFL to give its teams a 2006 salary-cap figure at some point late today or Thursday. There isn't a last-second deal with the players in place and I have little hope that there will be. I expect that figure to come in at around $95 million. Even though that will be a healthy increase over the 2005 of $85 million, it won't be enough to help teams who were counting on a significantly higher cap number for the year.
SI.com: Why should any of us really care about this?
KING: That's a good question. The 2006 season will be like every season we've had since the salary cap began in 1994. But the 2007 season will be an uncapped year, which means all players will have a chance to make more money than they would in a normal year. But the one thing that not enough fans are focusing on right now -- and I don't believe players are focusing on it either -- is that in this uncapped year, players will have to have six years of NFL service to become a free agent rather than the current four. That will limit the number of free agents out there significantly. The uncapped year won't be the bonanza that players might think.
SI.com: So no matter what, there's going to be football?
KING: Yes. I heard one radio host breathlessly say Wednesday, "The NFL is on the verge of financial catastrophe." Silly rhetoric. Yes, the NFL has been the model sports league since adopting free agency with a cap 12 years ago. But if there's no cap, life will go on and football will be played.
SI.com: Are you saying that the NFL is not going to become like baseball, with tremendous difference in teams' ability to put competitive teams on the field?
KING: That's exactly what I'm saying. In baseball, the Yankees can spend $210 million on players, while a team in its own division, Tampa Bay, spends about $35 million. In the NFL, even if Daniel Snyder takes in $300 million over the course of the year and buys up five premier free agents every year, even the teams at the bottom of the financial totem pole -- e.g., Buffalo, Jacksonville -- will have $160 to $170 million of gross revenue to play with. Obviously, it won't be as egalitarian a system as the one the league has now. And it won't be as good a system, but we're not headed for any sort of football Armageddon. And don't let anyone tell you differently.
SI.com: How will this affect free agency?
KING: Free agency kicks off at 12:01 a.m. EST on Friday. And if there isn't a new deal, it will severely limit the amount of money this year's free-agent crop can earn. Too many teams have to make drastic cuts simply to get to the cap number, never mind spending additional money on free agents. In other words, it's a very bad year for Shaun Alexander to be looking for a six-year, $50 million contract. As I wrote in Monday Morning QB this week, only four teams -- Minnesota, Cleveland, Arizona and Green Bay -- have more than $20 million to spend in free agency this year. And so those teams could be shopping at Neiman Marcus and paying Target prices.
posted by The Gryphon at 7:21 AM
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