When it comes to the 2020 NFL season, the focus has been on how to do it safely and on time, even amid the coronavirus pandemic. That remains paramount. However, there are financial issues many believe must be worked out before anyone can take the field, with or without fans.
Multiple sources say the NFL and NFLPA both acknowledge that important negotiations are coming quickly to determine how to handle yearly salary caps for 2020 and beyond, considering there are likely to be steep revenue losses with limited or no fans in the stands. This sets up a scenario where both sides will have to come to agreements on every possible contingency on how COVID-19 could affect the season before anyone plays a game.
While there is no deadline, the hope is to have agreements reached before training camps open, which is scheduled for late July. Theoretically, the NFLPA and NFL could talk throughout the preseason, but beginning the regular season without a deal is not considered feasible, sources say.
Currently, the league and NFLPA are studying how the revenue could be affected and what the sure-fire losses will look like. That's one reason why there have been barely any contract extensions and few free agents have been signed after the initial free agency period.
The goal is to make sure the salary cap goes up or at worst stays flat. But what if that's not possible?
The NFL has had the luxury of waiting, biding its time and watching the other professional leagues, while MLB and its union in particular has engaged in acrimonious and sometimes tone-deaf talks for how to compensate players and what the season will look like. Those involved in football want to handle it now before it gets to that point.
Here are the issues:
The salary cap (currently $198.2 million for 2020) is calculated based on expected revenue, but there's also a mechanism where it rises or falls based on unexpectedly higher or lower revenue in the previous season. That will be the case this year in relation to the 2021 cap with fewer (or no) fans in the stands. How bad will the revenue losses be?
The worst-case scenario is that every game is played in a completely empty stadium, leading to what sources have estimated as a $4 billion or $5 billion drop -- about a third of revenue. Under that scenario, teams could bring in $40 million to $80 million less than expected. The losses are likely to be less than that, because it is expected that some fans will be able to attend games in some stadiums, although stadiums won't be packed. Still, if there are huge revenue losses, the 2021 cap will be impacted.
But no one wants to see the cap drop because that has consequences for teams and players. And neither side wants a situation where the cap drops significantly in 2021 then rebounds with the new TV deals in 2022. It makes it extremely difficult for teams to conduct business or do extensions.
Among the possibilities for how to smooth the cap out given expected losses is borrowing from future TV deals. New deals usually create a spike in the cap due to influx of cash, but in this case could be used to create a smooth incline and make up for losses incurred during the 2020 season. The league and the NFLPA could also agree to curtail or eliminate performance-based pay for a few years.
But some have proposed looking at the present, instead of the future, for relief. And this will require cooperation between the NFL and NFLPA.
The players' union would have to agree to give back some money this year, thus taking on some pain in the short term to offset more in the long term. With roster bonuses, workout bonuses, option bonuses and signing bonuses already paid in the spring, the trim would likely come from the players' base salaries, which are paid in weekly installments during the season. It's unclear at this point, with negotiations not even underway, how big of a cut the league would request and what kind of structure the players would accept for the giveback.
Surely, the players would be reluctant to agree to such cuts. But teams would argue the alternative isn't ideal, either. In anticipation of revenue losses, teams could opt to part with veterans with big, non-guaranteed base salaries in 2020. Players such as the Browns' Olivier Vernon ($15.25 million), whose future in Cleveland has already been questioned by some, could find themselves in jeopardy of getting released.
Plus, if the players agree to a trim now, it would save some jobs in 2021. The smaller the drop in next year's salary cap, the fewer number of veterans would be released then.
The NFL declined comment for this story. The NFLPA declined comment for this story, as well, but sources informed of the union's thinking said the organization is aware of the potential for significant revenue loss this year and would be amenable to negotiating with the league to smooth out the salary cap as much as possible. And of course, they will surely have requests for what they would receive from the league in return for salary concessions.
And then there is the other, major issue that looms -- what if the coronavirus cuts short the season after it started? While there is nothing firm and final, one could expect players to argue there is a strong legal argument to be made that once a single regular season game is played, teams would owe players their entire base salaries for the season, no matter how many games are ultimately played.
In that scenario, if the season were cut short, teams would lose an overwhelming amount of revenue, but still be on the hook for full salaries for their rosters. That is not considered by teams as tenable.
Agreements need to be reached on every possible contingency -- if the season starts and stops, what if they play with no fans, if they play half the season with fans, somewhere in between. What if there is a resurgence in the fall or an outbreak so serious that it forces some games to be cancelled?
All issues must be resolved by an agreement between the NFL and NFLPA.
The two sides came together on a new CBA earlier this season. The next looming set of negotiations may prove just as important.
