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The Honolulu Advertiser
Posted on: Tuesday, March 2, 2010

NFL: There’s no cap on questions


Q: What’s unique about an “uncapped” year?

A: For the first time since 1993, the NFL will operate without a salary cap. A bookkeeping formula based on salaries, bonuses and contract lengths, the cap has dictated that players receive a percentage of increasing revenue. Last season’s cap was $123 million (excluding an additional cash-adjustment of nearly $5 million that previously rolled into the following year’s cap). For the 2010 season, there is no limit on how much teams can spend on player salaries. But there’s also no minimum or “salary floor” that was part of the cap system. Last year’s floor was $107.7 million.
Rules for an uncapped year also mandate that a player must accrue six seasons before becoming an unrestricted free agent rather than four - a major twist expected to restrict 212 players with expired contracts in this year’s market.
Also, “final eight” rules limit options in signing free agents for the eight teams that advanced to the divisional playoffs in January, the most stringent rules applying to the final four teams. For instance: The Super Bowl XLIV teams, the New Orleans Saints and Indianapolis Colts, can only sign up to the number of unrestricted free agents (UFAs) off other teams as the number of UFAs lost from their teams.

Q: Why did it come to this?
A: In a nutshell, because the existing CBA doesn’t work for the owners. The union contends that owners have proposed an 18 percent reduction in the players’ share of revenue. The uncapped conditions for the final year of the CBA, meanwhile, were included as incentive to discourage its expiration. In the past, this helped keep labor peace. Since the CBA was struck in 1993, the deal was extended four times. But in May 2008, owners voted to exercise a clause to opt out of the deal in 2011.
Although the NFL generated at least $8.83 billion in revenue in 2009, owners maintain that players receive too high a share - 59.5 percent of total football revenue after $1 billion in cost credits - without assuming enough risk in growing the business. Cost credits pay for stadium financing, NFL Network, international marketing of the sport and other areas aimed to grow business.

Q: Is there any chance of an 11th-hour deal before the new rules kick in?
A: Probably not. Both sides have stated they expect the uncapped year will begin as scheduled at 12:01 a.m. ET Friday. Before the last extension was reached in 2006, the sides agreed twice to push back the deadline for beginning the league year as intense negotiations continued. This time, the sides are too far apart on the key issues. There are no around-the-clock negotiations. The sides have met twice in the last month (Feb. 6 and Feb. 25).

Q: Is the 2010 season in jeopardy of being interrupted or canceled?
A: No. But 2011 is a different story, with the union urging members to prepare for a lockout. Other possibilities for 2011 and beyond include more antitrust battles. As for this season, the most significant “work stoppage” could come during the offseason from restricted free agents who could delay signing the one-year tenders that allow teams to keep their rights - and effectively miss minicamps and organized team activities without being subjected to fines. For the first time, more premium players are in the class of restricted free agents than in the group of unrestricted free agents.

Q: What’s a key concern from players about how this year will play out?
A: The potential for a massive rollback in salaries. Without needing to reach a salary floor, there is nothing to prevent a team from significantly cutting player costs, which, in addition to pursuing free agents less aggressively, could include dumping players with higher salaries without the type of cap ramifications that previously affected decisions. During the last uncapped year in 1993, when the cap was calculated differently and revenue streams were smaller, the union contends that teams collectively spent 70 percent of league revenue on player costs. Also, each team will save about $10 million in reduced benefit costs.

Q: What’s among the biggest concerns of owners?
A: Competitive balance. Teams that have higher revenue - such as the Dallas Cowboys and New England Patriots - appear better equipped to lure players in an uncapped environment than lower-revenue teams. Even though the NFL equally shares its biggest source of revenue - a national TV contract that pays $3.6 billion per year - among its 32 teams, the disparity between teams at opposite ends of the revenue spectrum remains an issue. Some teams pay more than 70 percent of revenue on player costs and others pay less than 40 percent while operating under the same cap. The track record for trying to buy a title isn’t sterling, but an uncapped year provides some with better opportunities.