Salary Cap Analysis

[Schneed10]

Originally Posted by 70Chip

Third, if there is a new CBA and I realize the clock is ticking, the overall revenue pool will go up because of the demand from smaller teams to include more revenue streams. In addition, the players share of that overall pie will be higher because this is Upshaw's central demand and he cannot face his members without some victory on this front. Therefore isn't it likely that a renewed CBA means that the cap will spike way up and save the Redskins from the article's hellish scenario? Would this increase the 2006 cap or would the affect/effect be delayed?

I would like to hear from our resident experts, Schneed and Canuck. Their projections are a little more crowd pleasing. Am I right in my basic asessment? No CBA = bad news for us and all other teams over the cap in 2006 and, Renewed CBA = much higher caps bail us out. I know we've been over this but the article makes it seem that we are screwed regardless and I don't see it that way.

I think you're onto something there. Crazy Canuck can help me out and correct me if I'm off base, but here's how I understand things. Upshaw is asking that the revenues be distributed based on Total Football Revenues, which includes all NFL revenues, from TV deals and local revenues. The owners have agreed to that at this point, agreeing that the entire pie of NFL revenues should be eligible for revenue sharing. What they can't agree on is what percentage of that pie should go to the players. Players are asking for 65%, owners are proposing 59%.

In 2006, this is what the current situation looks like:
Players get 64.5% of DGR (Designated Gross Revenues). Included in DGR is TV Revenue, ticket sales etc., but not local revenues like stadium naming revenues. This amounts to $93 million in salary cap space for each team.

But now, owners at this point have agreed to share more than just DGR, they've agreed to share Total Football Revenues (TFR), which amounted to $5.8 billion in 2005. If the two sides settle on a percentage somewhere between the 59% and 65% impasse, here will be the salary cap limits:

65% of TFR: (65% x $5.8 billion) / 32 Teams = $117.8
64% of TFR: (64% x $5.8 billion) / 32 Teams = $116.0
63% of TFR: (63% x $5.8 billion) / 32 Teams = $114.2
62% of TFR: (62% x $5.8 billion) / 32 Teams = $112.4
61% of TFR: (61% x $5.8 billion) / 32 Teams = $110.5
60% of TFR: (60% x $5.8 billion) / 32 Teams = $108.7
59% of TFR: (59% x $5.8 billion) / 32 Teams = $107.0

Now, what I don't know is whether or not those numbers would go into effect for 2006, or if they'd go into effect for 2007. If they don't go into effect until 2007, then the $5.8 billion used in the calculation would be a higher number (because the NFL's total revenue grows each year). That would mean the cap limits would be even higher than what's projected here.

[Schneed10]

I need to clarify my last post because I just realized I misread some things. The $5.8 billion actually represents all NFL revenues. The owners have agreed to share all football-related revenues, but that does not necessarily include some of the local business revenues that teams currently bring in. So the owners have not yet agreed how much of the $5.8 billion they're willing to share. Owners like Snyder and Jones want to share less, and these high revenue clubs are holding firm in their belief that local revenues should belong to them.

Sounds like not all of the $5.8 will be eligible for sharing with the players. The projections in my prior post will not likely come out that high. Tough to say what it will look like.

[CrazyCanuck]

My understanding is that they're arguing on 2 points:

1. Which revenues should be included in total football revenues, AND what % of these should go to the players.

2. Which revenues should be shared between teams.

While #2 seems more of an internal matter, #1 will have a more direct effect on the cap. I don't see the players agreeing to anything unless they get a real raise in dollar terms. So simply increasing the pie won't be enough. The new % of the new pie will have to represent a raise over the current % of the current pie.

So under this assumption, I'd expect a new CBA to allocate more dollars directly to the players, which in turn would raise the salary cap.

[CrazyCanuck]

Celts posted the CBS article in the newswire, figured I'd include it here.

Originally Posted by celts32

http://www.sportsline.com/nfl/story/9241944

By Pete Prisco
CBS SportsLine.com Senior Writer
Tell Pete your opinion!

How would you like to be Eric Schaffer, the cap man for the Washington Redskins? Your boss is the combustible Dan Snyder and your cap is a mess, so much so that two cap experts from other teams who looked at it say it's as bad as they've seen.

We pity poor Schaffer, who isn't to blame. It's not his fault Snyder throws money around as if he prints it, snubbing the reality that cap jail will eventually swallow his team whole.

"I'm glad I'm not Eric," said one of the cap experts. "That thing is a mess."

According to NFLPA figures, the Redskins have $115.4 million committed in salary for their top 51 players in 2006. The cap is expected to be $92 to $95 million. That means they have to trim $20 million or so. And that's not counting the $2 million or so the team will need to sign its rookies (thankfully, they don't have a first-round pick to pay, or that would be higher).

The Redskins have done a decent job trimming their cap down in recent years, but this time it might not be possible -- certainly not without a new collective bargaining agreement. A new agreement could help relieve some of the cap problems, but even with one, the Redskins face a daunting task.

"If they reduced everybody to a veteran minimum, and that won't happen, they'd still be $4 million over the cap," said one of the cap experts. "That's before cutting anybody."

So how did it get this bad? The Redskins have paid out big money deals under Snyder, and some of them have blown up in the team's face, leading to the chase factor. You chase bad deals with more bad deals to compensate.

Thus, they have trouble.

When room got tight in the past, they extended players' deals to create room, spreading bonus amortization out over the years. Eventually, though, it becomes time to pay the piper.

That time is now.

Compare the Redskins' plight to a family that keeps putting off paying the credit card balance by paying minimums.

"All the deals, all the overpaying for years and moving money into future years has caught up to them," said the cap expert. "Last year they had to move $7 million in money into future years. That catches up to you at some point."

One cap expert said the Redskins might be forced to let good players walk, and could be forced to field a team with as many as 20 rookies -- or more.

If there's a new CBA, the Redskins might be able to get out from under the cap troubles a little easier, although it still will be a lot of work.

"Can you imagine the dynamics of what Schaffer is going through?" one cap expert said. "He has to go to Snyder and Joe Gibbs and tell them they have to cut players. That has to be ugly,"

Cap hell. It's as ugly as it gets in the NFL, and it's a jail that's hard to get paroled out of.

Still think the Redskins will be a playoff contender?

Joe Gibbs has his work cut out for him this season. Maybe auto racing never looked so good.

[CrazyCanuck]

As for the article, it's pretty much your run-of-the-mill Snyder bashing piece. But it does make some valid points. Without a new CBA we will be in trouble, but we won't be the only ones. If there is a new CBA we should be able to clean up our cap and be ok for 2006 and the future, but the writer doesn't spend much time discussing this.

I guess you can chalk this one up as more anti-Skins rhetoric, with a hint of credibility.

[CrazyCanuck]

And if Mr. Schaffer needs some help with his cap sheets, please don't hesitate to ask. Schneed and I can be there by 9am.

[70Chip]

When I first read the article, it concerned me. Then I realized that these outside people don't realize that we have been doing this cap dance every off-season for five years. There are some NFL fans who never have to give this a thought because their owners will never put them over the cap. How boring. And yes, I still think the Redskins will be contenders next year.

Canuck: If I were Snyder, Redskin 1 would be headed for the Great White North post haste.

[Schneed10]

Originally Posted by CrazyCanuck

As for the article, it's pretty much your run-of-the-mill Snyder bashing piece. But it does make some valid points. Without a new CBA we will be in trouble, but we won't be the only ones. If there is a new CBA we should be able to clean up our cap and be ok for 2006 and the future, but the writer doesn't spend much time discussing this.

I guess you can chalk this one up as more anti-Skins rhetoric, with a hint of credibility.

Yeah it struck me as a very narrow-minded piece. He absolutely trashes Snyder's cap management based solely on the assumption that the league will enter 2006 without a new CBA. Typical shoddy writing. Absolutely no foresight to mention the various scenarios that may play out, such as a CBA extension. And as usual, journalists show very little understanding of basic business; negotiations tend to go into the 11th hour for a reason. The writer seems to assume that since the two sides are far apart on CBA negotiations in the here and now, that there will be no CBA extension. It's irresponsible to trash someone based solely on that one possibility, especially when that possibility isn't even the most likely to actually play out.

It's your typical Chicken Little piece. OMG THE SKY IS FALLING!!!

[Pocono]

Originally Posted by 70Chip

When I first read the article, it concerned me. Then I realized that these outside people don't realize that we have been doing this cap dance every off-season for five years. There are some NFL fans who never have to give this a thought because their owners will never put them over the cap. How boring. And yes, I still think the Redskins will be contenders next year.

Canuck: If I were Snyder, Redskin 1 would be headed for the Great White North post haste.

This is the final capped year at present and the CBA says that most of the steps in that cap dance teams do every year can't be used. Just about every Skin's contract is written right up against the 30% rule so to change 06's cap hit will require changing every other year of the contract downward and agents and players aren't going to let that happen. My guess is if 3/1 comes without an extension the Skins will cut down to the minimum of 43 players and hope an extension is done after 3/1. Most of the logical cut targets had their cut savings reduced last year when Snyder did a wave of restructures so he could do the Coles/Moss deal so the largest amount the team can save by cutting one player is 2M by axing Bowen or Harris and those amounts are small bites of a 21-23M apple.

[70Chip]

Originally Posted by Pocono

This is the final capped year at present and the CBA says that most of the steps in that cap dance teams do every year can't be used. Just about every Skin's contract is written right up against the 30% rule so to change 06's cap hit will require changing every other year of the contract downward and agents and players aren't going to let that happen. My guess is if 3/1 comes without an extension the Skins will cut down to the minimum of 43 players and hope an extension is done after 3/1. Most of the logical cut targets had their cut savings reduced last year when Snyder did a wave of restructures so he could do the Coles/Moss deal so the largest amount the team can save by cutting one player is 2M by axing Bowen or Harris and those amounts are small bites of a 21-23M apple.

Yes. No deal means drastic measures, beyond the "logical" cuts. I think the owners may want to avoid putting Snyder in this position, though, because they want concessions from him on revenue sharing. This is his hole card.

[Pocono]

http://sports.espn.go.com/nfl/column...ohn&id=2332991

Another article about why getting under the cap in 06 is different from any other year.

[MTK]

Here's the cap situation for each team in the league

http://www.askthecommish.com/salarycap/numbers.asp

[Schneed10]

Originally Posted by Pocono

http://sports.espn.go.com/nfl/column...ohn&id=2332991

Another article about why getting under the cap in 06 is different from any other year.

Nice link.

The cap rules for '06 are dependent upon whether the CBA gets extended or not. If we go with the assumption that the CBA will not get extended, the Redskins are in serious trouble, along with a number of other teams. But if the CBA does get extended, the Redskins should be able to fit under the cap right nicely.

I'm betting that the CBA gets extended. When push comes to shove, I see free agency getting postponed, and a CBA extension getting signed by mid-March as all interested parties begin to give ground to preserve their best interests.

[70Chip]

Matty's link demonstrates that we will not be the only team blowing the bridge if there is no CBA. (How could the awful Raiders be so far over?) I agree with Schneed that a CBA will be worked out although not necessarily by 3/3. Both sides have too much to lose to allow this thing to spiral away.

The interesting thing to watch is how much Snyder, Jones, Kraft et al have to give up on the revenue side before the other owners get serious with the CBA. The worst scenario for the Skins, IMHO, would be broad revenue sharing with a player's percentage at say 60% rather than 64%. If Snyder shares his coffee cake, he should insist on the 64% (or higher). Since the point of the revenue sharing is a level playing field, as much of that shared money should go to the players as possible. To me, it seems silly for clubs to demand more revenue when they are not spending the money they get now for players. From the looks of the list, several teams payroll is below the TV alottment alone.

[CrazyCanuck]

Originally Posted by 70Chip

The interesting thing to watch is how much Snyder, Jones, Kraft et al have to give up on the revenue side before the other owners get serious with the CBA. The worst scenario for the Skins, IMHO, would be broad revenue sharing with a player's percentage at say 60% rather than 64%. If Snyder shares his coffee cake, he should insist on the 64% (or higher). Since the point of the revenue sharing is a level playing field, as much of that shared money should go to the players as possible. To me, it seems silly for clubs to demand more revenue when they are not spending the money they get now for players. From the looks of the list, several teams payroll is below the TV alottment alone.

You make a great point here 70Chip, but raising the 64% max only hurts Snyder at the end of the day - he makes less money. I don't think even he would sacrifice his own money just to stick it to the other owners, then again...

The number Snyder should be concerned about is the 56% min cap not the 64% max cap. Let's say the 64% max cap for 2006 is $95M. That means the min cap would be about $83M. So assuming the Skins max out (which they always do), that means the other teams can pocket an extra $12M. Why would Snyder want to share his money so it can go into the other owners' pockets?

But it brings up an interesting debate. If you're Snyder, do you want a large discrepency between the min cap and the max cap? If the gap is large, Snyder would stand to gain a bigger competitve advantage on the playing field, since many teams would not max out and some would be at the min. But this would also mean that the other teams could pocket more of his money.

And another thing... when they all bash Snyder for his free spending ways, what are they really bashing him for? If you want to curse his choice of coaches, free agents, etc., fine. But they bash him for spending his own money??? The guy maxes out the cap every year, and tries every trick within the rules to gain a competitive advantage - and that's a bad thing??? THAT'S WHAT HE'S SUPPOSED TO DO!

Where are all the articles about the greedy owners who only spend the min cap and pocket an extra $12M every year? Even pocketing a few extra million off the cap is shortchanging the fans imo. It's not like these guys are losing money. Plus they were all rich before they became owners, that's how they can afford to buy an NFL team in the first place.