Salary Cap Analysis

I think one point that Snyder should push in terms of revenue sharing relates to public financing of stadiums and facilities. Mr. Cooke spent about 300 million dollars on the Redskins Stadium in the nineties. Since then Mr. S has spent 100 million or more on additional improvements. P.G. County paid for some infrastucture improvements, access roads, etc. Around the same time, Denver succeeded in convincing local voters to authorize funding for their current home Invesco Field. A number of other localities (Baltimore, Cleveland) have done the same for their teams. In terms of real revenue the Redskins are actually operating a defecit as it pertains to these teams. When voters give a team a 500 million dollar stadium shouldn't that be regarded as revenue for that team and payed back to other clubs under a revenue sharing regime? Its not as though the skybox money goes back to the city or state. The team keeps that money. The team may not technically own the stadium, but they benefit from it just as though they did. This is a huge windfall.

The reality is that what the less entrepenuerial owners want is not revenue sharing but rather revenue redistribution. When its to their benefit they sing the "we have to do what's best for everyone" tune. In circumstances where they benefit from operating unilaterally, as in the example above, they seem to have a less egalitarian spirit.

While there are unique situations like New Orleans where teams face legitimate financial hardships, most teams should be creating ample revenue on their own. Is Paul Brown's name more sacred than Mr. Cooke's? Not to me. Cincinatti could sell the naming rights for at least as much as the Redskins did. They choose not to. Furthermore, we have to face the reality that N.O. may no longer be a sustainable market. Teams have moved before.

In the end any additional revenue sharing should be limited to revenue streams that all teams necessarily engage in. These might include radio, preseason ticket, preseason television, concessions, and even parking. Maybe these disincentives will have the unintended benefit of stabilizing the costs to fans. Again, an owner may say why raise prices and anger fans if I'm not getting the money? As Redskins fans that's the most we can hope for.

Finally, am I wrong in assuming that some owners are now using the possibility of an unrenewed CBA as a threat to pry concessions on revenue from other owners? I would really appreciate some instructive engagement from those of you who are so well versed in the financial aspects of all this.
Pretty good assessment from where I stand. I think you hit on some things that are real issues. I am sure Snyder has these as top of mind sticking points. The issue of communities pitching in is one I hadn't ever considered.

I do think that the more revenue challenged owners can't possibly be being the ones who are leveraging the current situation in their favor. It is far and away worse for them if the CBA goes unrenewed. Teams like the Skins will spend freely and potentially put teams like the Browns out of business or at least out of contention.

Finally, am I wrong in assuming that some owners are now using the possibility of an unrenewed CBA as a threat to pry concessions on revenue from other owners?

of course they are, otherwise it'd be signed. last i heard its the revenue sharing and not player % of profit that's really holding things up. And honestly i agree, if another team doesn't want to sell its naming rights, they shouldn't be allowed to profit from those who do... that's really close to stealing. Maybe if they made some clause that if you build your own stadium, there's less local shared revenue owed until the debt is gone and that could get smoe owners on board. Danny likes his local revenue though and wass probably in favor of killing the cba and buying up everyone until gibbs came back and the skins started winning.

some teams will benefit directly from a nuked cba, cause they're 30mill under the cap and teams like the skins wouldn't be able to restructure do to the 30% clause of player contracts in a year without a new cba. That means we'd have to release people right and left and the teams with good caps could just vacuum up cheap talent.

on another note, Gibbs is 2-0 in strike years...

I think one point that Snyder should push in terms of revenue sharing relates to public financing of stadiums and facilities. Mr. Cooke spent about 300 million dollars on the Redskins Stadium in the nineties. Since then Mr. S has spent 100 million or more on additional improvements. P.G. County paid for some infrastucture improvements, access roads, etc. Around the same time, Denver succeeded in convincing local voters to authorize funding for their current home Invesco Field. A number of other localities (Baltimore, Cleveland) have done the same for their teams. In terms of real revenue the Redskins are actually operating a defecit as it pertains to these teams. When voters give a team a 500 million dollar stadium shouldn't that be regarded as revenue for that team and payed back to other clubs under a revenue sharing regime? Its not as though the skybox money goes back to the city or state. The team keeps that money. The team may not technically own the stadium, but they benefit from it just as though they did. This is a huge windfall.

The reality is that what the less entrepenuerial owners want is not revenue sharing but rather revenue redistribution. When its to their benefit they sing the "we have to do what's best for everyone" tune. In circumstances where they benefit from operating unilaterally, as in the example above, they seem to have a less egalitarian spirit.

While there are unique situations like New Orleans where teams face legitimate financial hardships, most teams should be creating ample revenue on their own. Is Paul Brown's name more sacred than Mr. Cooke's? Not to me. Cincinatti could sell the naming rights for at least as much as the Redskins did. They choose not to. Furthermore, we have to face the reality that N.O. may no longer be a sustainable market. Teams have moved before.

In the end any additional revenue sharing should be limited to revenue streams that all teams necessarily engage in. These might include radio, preseason ticket, preseason television, concessions, and even parking. Maybe these disincentives will have the unintended benefit of stabilizing the costs to fans. Again, an owner may say why raise prices and anger fans if I'm not getting the money? As Redskins fans that's the most we can hope for.

Finally, am I wrong in assuming that some owners are now using the possibility of an unrenewed CBA as a threat to pry concessions on revenue from other owners? I would really appreciate some instructive engagement from those of you who are so well versed in the financial aspects of all this.

I agree with your example regarding stadium naming rights and such. And I'd agree that revenue sharing should be limited to business activities common to every franchise. But that's already largely in place as it is; TV revenues make up for the largest portion of the shared revenue as it is now. The owners are certainly going to argue about stadium naming revenue and items like this, because a few extra million dollars means a lot to them. But it shouldn't mean a lot to us fans, because it doesn't have a big impact on the size of the salary cap. TV Revenues are what really drive the salary cap.

I agree with your example regarding stadium naming rights and such. And I'd agree that revenue sharing should be limited to business activities common to every franchise. But that's already largely in place as it is; TV revenues make up for the largest portion of the shared revenue as it is now. The owners are certainly going to argue about stadium naming revenue and items like this, because a few extra million dollars means a lot to them. But it shouldn't mean a lot to us fans, because it doesn't have a big impact on the size of the salary cap. TV Revenues are what really drive the salary cap.

I agree that TV revenues drive the cap and we should all be thankful that the sharing of these funds is already in place. While the amounts the owners are arguing about are substantial, they still represent a small part of the total pie. That's why I think they should be able to come up with something that most owners can accept.

The NFL is lucky because they get to negotiate one major tv deal that covers all the clubs. This is why baseball is such a mess in my opinion. The MLB TV market is so fragmented. The Yanks have YES, the Braves have TBS, the Cubs have WGN, etc. The only way to clean up baseball's mess is to merge the tv contracts under one umbrella, so the league can split the revenues evenly.

The only solution I see is to sell the entire MLB package to Fox Sports. They already broadcast the games for many different teams, and they have enough regional networks to cover all the different markets (FSE, FSNW, etc.).

Of course this is a huge pipe dream and I'm not holding my breath. People don't like to share money unless they are forced to. The greater good is of little consequence. That's another reason why the NFL is lucky - they agreed to revenue sharing when there was no revenue.

All is fair in love, war, and selling commercials on the YES network. They'll have to wait until Angelos and and Steinbrenner(?) and all of their evil seeds die.

CBA Update from Pasquarelli (I must say he does a good job covering the business aspects of the NFL)

http://sports.espn.go.com/nfl/columns/story?columnist=pasquarelli_len&id=2305744

"Indeed, the new league year commences March 1, and free agency begins just two days after that. Without an extension to the CBA, the 2007 season will become a so-called uncapped year, meaning teams will be able to prorate signing bonuses over just four years, the smallest term ever. That will make free agent contracts, along with deals for first-round draft choices, much more difficult to negotiate."

Could it be that the Redskins had the foresight to realize that signing their 2006 first round pick could become difficult, convincing them that it made sense to trade for the rights to select Jason Campbell in 2005? Hard to know if that was their thought process, but if it was, kudos. Good planning.

"Rumors have been that Tagliabue is poised to move forward with the labor accord, even if it means delaying an internal agreement on revenue sharing among his constituents, but several owners said privately this week they prefer their internecine issues be resolved before they engage NFLPA executive director Gene Upshaw again. The fear among the smaller-revenue teams remains that clubs such as the Washington Redskins, who are paying their offensive and defensive coordinators more than several franchises are paying their head coaches, have gained too big a spending edge."

I have my answer from the hated Lenny P. They're ganging up against us.

"Rumors have been that Tagliabue is poised to move forward with the labor accord, even if it means delaying an internal agreement on revenue sharing among his constituents, but several owners said privately this week they prefer their internecine issues be resolved before they engage NFLPA executive director Gene Upshaw again. The fear among the smaller-revenue teams remains that clubs such as the Washington Redskins, who are paying their offensive and defensive coordinators more than several franchises are paying their head coaches, have gained too big a spending edge."

I have my answer from the hated Lenny P. They're ganging up against us.

On that note, this article says that Upshaw doesn't view it as a roadblock to extending the CBA. Of course he wouldn't because he doesn't represent the coaches, the owners have to decide amongst themselves what to do about this. We'll see what happens with all of this stuff, it seems to be getting more complicated by the day.

http://www.washingtontimes.com/sports/20060127-114644-3194r.htm

Schneed/Canuk,

I am a little confused, we keep talking about this 30% rule. If there is no extension of the CBA, and NO salary cap next year, what does it matter? Couldn't we have a payroll of $200M without a salary cap?

Schneed/Canuk,

I am a little confused, we keep talking about this 30% rule. If there is no extension of the CBA, and NO salary cap next year, what does it matter? Couldn't we have a payroll of $200M without a salary cap?

You are correct that with no salary cap our payroll could be as high as we want. However this no-cap environment would only exist in 2007.

The 30% rule has more to do with our cap situation in 2006. The Skins are currently like $20 million over the 2006 cap. We can save about $15 million off our 2006 cap by restructuring a bunch of roster bonuses due to key players. By restructuring we can push a bunch of money to 2007 and subsequent years. Unfortunately the 30% rule would prevent us from doing so, and we'd lose all these potential savings.

So without a new CBA it's gonna be really hard for the Skins to keep their core intact, and make any new free agent signings basically impossible.