Okay, maybe the title is over-dramatic, but you are curious, aren't you?
This is old news for NFL fans, but the new collective bargaining agreement (CBA) between the NFL and the players union was negotiated at the 11th hour after several delays of free agency.
The new agreement saves the salary cap (with a significant boost for this season and presumably for those to follow) and includes yet more revenue sharing between the rich owners and less rich owners.
For some, the agreement means that the NFL will remain king of all professional sports without any possible labor disruptions for another six years.
However, others maintain that the end of the salary cap wouldn't have been a death knell for the NFL and may even have returned the league to its "dynasty era" and given the league back to traditional power teams.
We will never know how the scenario would have played out if the agreement had not been reached and 2006 was the last capped season and the NFL operated under a no salary cap year in 2007. Some doomsayers believe that the owners would have locked out the players after 2007 in search of the re-introduction of the salary cap.
Still others believe that the NFL would have continued with a "de facto" cap since owners wouldn't pay outrageous sums for players and the league would continue without disruption and eventually a deal would get done since both sides realized how good they had it.
Didn't some say that about the NHL?
We don't need to wonder anymore about the NFL without a salary cap, we only need to wonder about the NFL with a salary cap.
While we were watching, the NFL has become a billion-dollar business (more than $5.8 billion in 2004 according to Forbes). Teams are always looking for new revenue streams in order to raise more money and profit.
But the salary cap makes for an even playing field, you say?
No way. The salary cap places limits on spending, but the rules can be worked around with the number of expert "capologists" around the league. While signing bonuses are pro-rated and teams need to fit under the cap each year, there is no real limit on how much bonus money can be paid out.
Here is where the next problem for NFL fans will lie.
Some teams don't have the money to dish out a $30 million dollar signing bonus to the premier athletes. While the cap dictates how much of that bonus will be pro-rated over the life of the player's contract, the guaranteed money needs to come out of someone's pocket.
Guys like Washington Redskin owner Dan Snyder can use the revenue from the stadium he owns to generate the cash to sign big-name players. While we can debate how smartly the money was paid out and how effective the spending was, the fact is the money was paid out and not every team has that ability.
The NFL has been very aggressive and successful in getting new stadiums built for their teams. Nearly two thirds of the teams are playing in relatively new or massively renovated stadiums with all the luxury boxes and high-revenue streams that go with it.
How did that happen? Sometimes with the promise of a Super Bowl, in the cases of the Houston Texans and the Jacksonville Jaguars, and sometimes with the threat of the team moving to greener pastures such as the Houston Oilers and Los Angeles Rams.
Don't underestimate the revenue power of the luxury suites. The Dallas Cowboys generated $21 million from these suites in 2000 and the New England Patriots generated $26 million in 2004.
Renovated Lambeau Field has been turned into a year-long tourist attraction complete with a shopping mall and the capacity for holding weddings. The NFL's smallest market is in the top half of the league in terms of revenue generation.
Throw in fees for seat licenses, naming rights for signage outside the stadium, network TV revenue, merchandise sales, and local cable TV deals and the alternate revenue streams seem like they are almost exhausted.
What does all this have to do with the CBA?
The new agreement calls for more sharing of revenue. However, there is no way the richest teams are going to share a majority of their hard-earned money.
So, that leaves the small-market teams with the same problem. The salary cap limits the payroll, but doesn't limit the size of the signing bonus that can be paid to a marquee player.
While only two teams voted against the CBA, they were both small market teams namely Buffalo and Cincinnati. These teams believed that the amount of money that will be shared, $850 million over the next six years, will not go very far in closing the gap between high revenue and low revenue teams.
And Bills owner Ralph Wilson, for all his 80-odd years, is correct. Using NFL revenue data from 2004 again, the difference between Washington, the highest revenue team and Arizona, the lowest revenue team, was $134 million.
Over six years, assuming the same growth for each team, the total difference in revenue is $804 million. While the idea was not to equalize team revenue, clearly $850 million is not going to solve the challenges for low revenue teams.
The new CBA increases the money available for players, it allows for limited sharing of extra revenue, and so allows richer teams to keep their money. One group of losers in the deal could very well still be the low revenue teams.
With a salary cap of $100 million or more, a number of NFL teams will find that salary cap or not salary cap, their problem is generating more revenue in order to keep up with the higher revenue teams.
Where can this money come from? The NFL has the best TV deals going, the best merchandising going, the best stadiums available. Where does more money come from?
In my view, it will come from you and me. The NFL has yet to completely move into their final frontier and that is complete ownership of the TV deals. Already, the NFL Sunday Ticket is available for NFL fans to pay more than $100 for the season of games. For many, this is a great deal and money well spent. But the NFL must believe (at least I do) that the majority of NFL fans do not subscribe to Sunday Ticket. These fans watch the games on the various networks.
Who gets this money? Cable companies do. Sure, the NFL gets their cut, but others make money on the product also and why should the NFL let anyone get any of their money?
If you need more money to share, it may become time for the decision-makers in the NFL to look seriously at owning all the TV rights and keeping all the money for themselves.
What if all fans had to pay for watching the NFL? What if all the games were only available on a TV channel devoted entirely to the NFL?
Funny we should ask.
There is a channel devoted entirely to the NFL. NFL Network is available widely in North America (and presumably elsewhere).
What if the NFL broadcast their games on NFL Network exclusively? That would mean millions of people subscribing to the service. It would mean all advertising dollars would go to the NFL. There could be millions and millions more for the NFL by taking control of the broadcast of their games.
Don't think so? You think the NFL has been so successful in negotiating TV contracts that they don't need to take full control of the TV broadcast?
Take a look at this season. The TV schedule is changing. ABC and ESPN are leading the change along with NBC coming back into the fold. The NFL is not afraid to change TV networks. They shocked everyone when FOX gained the rights to broadcast NFC games.
The NFL is not afraid to play with the schedule to create more television opportunities. "Sunday Night Football" is a huge success, "Monday Night Football" continues, the season begins on Thursday night now.
And as a final indication of where the game is going to go, check out the schedule for Thanksgiving. Detroit game in the afternoon, Dallas game later in the afternoon and ... a night game on NFL Network in Kansas City.
Fans, you are looking at your future. Once regular season games get broadcast on the NFL's own network, they will like what they see. The league will have complete control over media personality, content, interview questions, advertising, sponsors, half-time shows.
The days of NFL games on cheap network TV are numbered and this will go a long way to solving the league revenue generation problem. Need more revenue to share, charge a fee for every NFL game. Need more money next year, just charge more.
Enjoy the late Thanksgiving game this year if you have NFL Network. If you don't have NFL Network, contact your local cable company — and your local bank.
April 5, 2006
Kevin Beane:
“However, others maintain that the end of the salary cap wouldn’t have been a death knell for the NFL and may even have returned the league to its “dynasty era” and given the league back to traditional power teams.”
You say that like it’d be a good thing.
Seriously, this scaremongering screed doesn’t mention a) that there’s a salary FLOOR in addition to a salary cap, meaning every team is operating in the same window. There are loopholes, but they aren’t so great as to render the cap moot for the revenue-generating teams as you suggest. Only one team, the Patriots, has been able to be consistent winners the last few years, and the reason is because of the salary window. I sense you are not necessarily a big fan of parity, but I enjoy the idea that 20 teams have a shot at going to the Super Bowl every year, and a lot of it comes down to who plays their salary window the smartest. No other sport can say that, or has the parity-driven results that the NFL has had.
Honestly, if any of this doomsday drivel was true, why HAVEN’T the big money teams been more consistently successful already?
One of the reasons the NFL is as successful as it is is because it’s relatively responsive to fans and the idea of competitiveness. Towards that end, I will bet you a thousand dollars against a donut that the NFL will never make a majority, let alone all, NFL games pay per view. This paranoid, breathless hell-in-a-handbasket piece is ridiculous from beginning to end.
April 7, 2006
Mike Round:
Actually Jeff made some excellent points which the last poster either missed or chose to ignore, prefering insult to reasoned debate.
A point he could have added is the scandalous price of an NFL ticket, though in terms of revenue ticket prices are irrelevant next to tv money, but it is another example of the NFL ripping off the fans.
In terms of Kevin’s claim that no other sport has the parity-driven results of the NFL, I suggest you take a peep at the records. Of the last 6 SB’s, New England has won 3. MLB has had 6 different WS winners in this period but only has a luxury tax. The only thing a salary cap guarantees is extremely wealthy owners, players changing teams every year and highly paid capologists.
By the way Kevin - some of us substitute mediocrity for the word parity.
August 15, 2006
Garen Tahquechi:
What bargaining agreement does the nfl have if the fans lock them out of the stadiums that the taxpayers pay for? Yes I know some owners own their stadiums but a majority are taxpayer owned. Is it time for a Pro Sports Fan Union that would demand to be included in the bargaining agreement with the players association and the league?
What would they do if they did not have these multimillion doller sports complexes?
These are the questions I never hear asked.
I can afford to go to games but, what about the poor? A ticket to an nfl game should cost no more than 40 dollars on the high end and the nfl should be forced to survive off that. I also beleive that an nfl player earning 50,000 a year would play just as hard as a player making 500,000 a year.