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By Michael Lombardi Jun 1, 2020
The only sure thing about the future for the NFL is that there will be a decline in the salary cap next year. Those I talk with daily are optimistic that the NFL will indeed play games this season, but the lasting impact of COVID-19 means that getting back to work and that work looking the same as it did in the past are two different things. The new reality we must face as we head into this season is that if we want football this year, fans will be limited. Until we make significant gains in prevention, vaccines and cures, there will likely be no fans in the stands, and that means that substantial revenue streams will be absent from the accounting process this season, which will impact future years.
Without fans in the stands, the revenues will decrease for the owners, which means the players will take part in the losses since they are partners. As a result, next year’s cap (2021) might be significantly lower. The NFL salary cap system is a sliding scale — money comes in, owners and the players share the cash based on the revenue splits, minus the player benefits amount. Yes, the potential of increases in the television deal will help in future years, but without fans in the seats, money is flying out the window for players and owners.
No one knows how much the cap will decrease by yet, and they won’t find out the actual number until the 2020 season ends and the accounting process is complete. However, teams would be smart to use a $30 million reduction as a benchmark for planning purposes. (If the owners claim they could lose half a billion dollars from not having fans, then assuming a $30 million reduction in cap money next year is a conservative number.) The smart teams (the ones with money next year) will start looking at high cap number players in 2021 and trying to trade for them once the season begins, figuring dumping salaries for some teams might be necessary. Teams that budget 2021 into their decision-making methods for 2020 will be well ahead of the game next February.
Teams like the Colts, Chargers, Patriots, and Bengals won’t have to worry as they currently have more than $90 million of cap room based on the projected percentage of increase as well as the players they have under contract. Teams like the Eagles, Saints, Falcons, Texans and Steelers will need to do some trimming to fit under the current number. Once you take $30 million off the projected number, these teams will have to do more than trimming. It will not be a pretty market for sellers next free agency period.
As an example, the Eagles would be $50 million over the projected number heading into 2021, the most of any team for the 2021 season. But that would not be hard to reduce based on some inflated numbers for players who probably won’t be on the roster by then. It becomes a much harder problem if they need to reduce by $80 million —which might explain why the Eagles have not been as aggressive as usual in the late free-agent market.
With the number of quality players still available, teams would typically be interested in doing deals. There has always been a secondary market after the draft for players who were not the first ones signed when free agency began. Most of the time for players in this category, teams do a one-year deal now with a phony second year to prorate the money, which lowers the impact on the cap the current year. Yet if that phony year dumps money into next year’s cap, which might be way smaller than this year, that maneuver is fruitless. I keep wondering why isn’t Cam Newton signed, or Everson Griffen, or Logan Ryan, and in some cases, the uncertainty of next year might be the reason. With the ambiguity of the cap next year, any deal done today that impacts tomorrow might not be a smart long-term proposition, which might explain the hesitation.
Regardless of the uncertainty of the cap next year, teams with quarterback deals for the future must proceed. The Texans want to get Deshaun Watson’s deal done in the next few months as they want to be able to know their future cost at the most critical position. Watson, along with Chiefs quarterback Patrick Mahomes and Cowboys QB Dak Prescott, are due to make huge deals that will shatter the quarterback market on an average per year basis. All three deals will be hard to accomplish as each one is waiting for the other to set the bar, then exceed the bar.
Mahomes knows he is in the driver’s seat. He will become the highest-paid player in the history of the league and will hold that crown for the foreseeable future. The only issue for Mahomes is how far above $35 million can he get? Currently, Seattle quarterback Russell Wilson is the leader in the salary cap per year clubhouse at $35 million per year. You can fully expect the Wilson deal is the floor for the Mahomes negotiation. How much above that deal can Mahomes go? There lies the challenge.
For Prescott, so much has been made about the details of his contract that it’s hard to separate fact from fiction. The underlying issue is that his agent, Todd France, does not want to do a deal and then watch Watson and Mahomes immediately shatter his. What makes this trio of contracts so unique is that all three have different representations. Mahomes has Leigh Steinberg, and Watson has David Mulugheta. Both France and Mulugheta know Mahomes will win the deal; they just don’t want to be that far behind. The battle between agents is real — it impacts their future recruiting.
Agents are sensitive when it comes to doing a deal that appears excellent one minute then stupid the next. France will never admit this, but he knows Prescott is not the same as Watson or Mahomes. Prescott is an excellent starter and deserves to be compensated in the top echelon of quarterbacks, but his talent is closer to other quarterback deals already in place. He is not the best, nor should he be near or above Watson or Mahomes — or higher than Wilson — but he will be. France knows the market, the timing, the lure of their deals allow him to far exceed his expectations. The longer he holds off doing a deal, the more time the market has to settle. He wants Watson to go first so he can present his data to support his claims that Prescott deserves more.
Often deals of this magnitude stall because of timing, not always money. Many suspect that, in fact, timing is the core issue with securing Dak’s deal. France wants a shorter term, four years; the Boys want at least five. All agents want shorter deals, but when you shorten the deal, the guarantees become slightly lower. Remember, deals are always about time and money — more time, more guaranteed money. In addition, if the Cowboys placed a massive number like $45 million in year five, that might not be an inflated number by the year 2025. Future year numbers that are not guaranteed are meaningless to most teams, as they know it does not hinder their flexibility. All teams view the first three years of any deal as the most significant, never the entire contract.
When fans and others reacted to the Cowboys signing Andy Dalton as if the Boys insulted Prescott, it was utterly misguided. France knows the outside pressure won’t affect the Jones family from doing the right deal. The Boys signed Dalton to protect their season, to ensure what occurred in Philadelphia last year would never happen again. Prescott had a bad shoulder heading into Week 16, and his availability to play was in question. Prescott is an all-time tough guy, has never missed a game in his career, and would not miss the Eagles game as a chance to compete in the playoffs was on the line. Yet, his shoulder required serious attention, and because he was not 100 percent, the Eagles kept the Boys offense in check and won the game. Had the Boys had Dalton as their backup, then maybe Dak does not play. The move to sign Dalton has zero impact on the Prescott contract.
Even though the cap will come down, the deals for these three players will not be impacted. All of them will get their money, but there will be others who won’t be as lucky. It’s the middle-tier players who will pay a heavy price if the cap tumbles. Players who serve as quasi-starters with inflated cap numbers will find rookies breathing down their necks. Rookie deals will become more popular as the only way to work the cap successfully is with a cheap workforce.
This has already been a difficult and unique time for NFL teams and players as they navigate unfamiliar territory. NFL teams must use this time to prepare for the long-term impact of that challenging terrain that lies ahead.
The only sure thing about the future for the NFL is that there will be a decline in the salary cap next year. Those I talk with daily are optimistic that the NFL will indeed play games this season, but the lasting impact of COVID-19 means that getting back to work and that work looking the same as it did in the past are two different things. The new reality we must face as we head into this season is that if we want football this year, fans will be limited. Until we make significant gains in prevention, vaccines and cures, there will likely be no fans in the stands, and that means that substantial revenue streams will be absent from the accounting process this season, which will impact future years.
Without fans in the stands, the revenues will decrease for the owners, which means the players will take part in the losses since they are partners. As a result, next year’s cap (2021) might be significantly lower. The NFL salary cap system is a sliding scale — money comes in, owners and the players share the cash based on the revenue splits, minus the player benefits amount. Yes, the potential of increases in the television deal will help in future years, but without fans in the seats, money is flying out the window for players and owners.
No one knows how much the cap will decrease by yet, and they won’t find out the actual number until the 2020 season ends and the accounting process is complete. However, teams would be smart to use a $30 million reduction as a benchmark for planning purposes. (If the owners claim they could lose half a billion dollars from not having fans, then assuming a $30 million reduction in cap money next year is a conservative number.) The smart teams (the ones with money next year) will start looking at high cap number players in 2021 and trying to trade for them once the season begins, figuring dumping salaries for some teams might be necessary. Teams that budget 2021 into their decision-making methods for 2020 will be well ahead of the game next February.
Teams like the Colts, Chargers, Patriots, and Bengals won’t have to worry as they currently have more than $90 million of cap room based on the projected percentage of increase as well as the players they have under contract. Teams like the Eagles, Saints, Falcons, Texans and Steelers will need to do some trimming to fit under the current number. Once you take $30 million off the projected number, these teams will have to do more than trimming. It will not be a pretty market for sellers next free agency period.
As an example, the Eagles would be $50 million over the projected number heading into 2021, the most of any team for the 2021 season. But that would not be hard to reduce based on some inflated numbers for players who probably won’t be on the roster by then. It becomes a much harder problem if they need to reduce by $80 million —which might explain why the Eagles have not been as aggressive as usual in the late free-agent market.
With the number of quality players still available, teams would typically be interested in doing deals. There has always been a secondary market after the draft for players who were not the first ones signed when free agency began. Most of the time for players in this category, teams do a one-year deal now with a phony second year to prorate the money, which lowers the impact on the cap the current year. Yet if that phony year dumps money into next year’s cap, which might be way smaller than this year, that maneuver is fruitless. I keep wondering why isn’t Cam Newton signed, or Everson Griffen, or Logan Ryan, and in some cases, the uncertainty of next year might be the reason. With the ambiguity of the cap next year, any deal done today that impacts tomorrow might not be a smart long-term proposition, which might explain the hesitation.
Regardless of the uncertainty of the cap next year, teams with quarterback deals for the future must proceed. The Texans want to get Deshaun Watson’s deal done in the next few months as they want to be able to know their future cost at the most critical position. Watson, along with Chiefs quarterback Patrick Mahomes and Cowboys QB Dak Prescott, are due to make huge deals that will shatter the quarterback market on an average per year basis. All three deals will be hard to accomplish as each one is waiting for the other to set the bar, then exceed the bar.
Mahomes knows he is in the driver’s seat. He will become the highest-paid player in the history of the league and will hold that crown for the foreseeable future. The only issue for Mahomes is how far above $35 million can he get? Currently, Seattle quarterback Russell Wilson is the leader in the salary cap per year clubhouse at $35 million per year. You can fully expect the Wilson deal is the floor for the Mahomes negotiation. How much above that deal can Mahomes go? There lies the challenge.
For Prescott, so much has been made about the details of his contract that it’s hard to separate fact from fiction. The underlying issue is that his agent, Todd France, does not want to do a deal and then watch Watson and Mahomes immediately shatter his. What makes this trio of contracts so unique is that all three have different representations. Mahomes has Leigh Steinberg, and Watson has David Mulugheta. Both France and Mulugheta know Mahomes will win the deal; they just don’t want to be that far behind. The battle between agents is real — it impacts their future recruiting.
Agents are sensitive when it comes to doing a deal that appears excellent one minute then stupid the next. France will never admit this, but he knows Prescott is not the same as Watson or Mahomes. Prescott is an excellent starter and deserves to be compensated in the top echelon of quarterbacks, but his talent is closer to other quarterback deals already in place. He is not the best, nor should he be near or above Watson or Mahomes — or higher than Wilson — but he will be. France knows the market, the timing, the lure of their deals allow him to far exceed his expectations. The longer he holds off doing a deal, the more time the market has to settle. He wants Watson to go first so he can present his data to support his claims that Prescott deserves more.
Often deals of this magnitude stall because of timing, not always money. Many suspect that, in fact, timing is the core issue with securing Dak’s deal. France wants a shorter term, four years; the Boys want at least five. All agents want shorter deals, but when you shorten the deal, the guarantees become slightly lower. Remember, deals are always about time and money — more time, more guaranteed money. In addition, if the Cowboys placed a massive number like $45 million in year five, that might not be an inflated number by the year 2025. Future year numbers that are not guaranteed are meaningless to most teams, as they know it does not hinder their flexibility. All teams view the first three years of any deal as the most significant, never the entire contract.
When fans and others reacted to the Cowboys signing Andy Dalton as if the Boys insulted Prescott, it was utterly misguided. France knows the outside pressure won’t affect the Jones family from doing the right deal. The Boys signed Dalton to protect their season, to ensure what occurred in Philadelphia last year would never happen again. Prescott had a bad shoulder heading into Week 16, and his availability to play was in question. Prescott is an all-time tough guy, has never missed a game in his career, and would not miss the Eagles game as a chance to compete in the playoffs was on the line. Yet, his shoulder required serious attention, and because he was not 100 percent, the Eagles kept the Boys offense in check and won the game. Had the Boys had Dalton as their backup, then maybe Dak does not play. The move to sign Dalton has zero impact on the Prescott contract.
Even though the cap will come down, the deals for these three players will not be impacted. All of them will get their money, but there will be others who won’t be as lucky. It’s the middle-tier players who will pay a heavy price if the cap tumbles. Players who serve as quasi-starters with inflated cap numbers will find rookies breathing down their necks. Rookie deals will become more popular as the only way to work the cap successfully is with a cheap workforce.
This has already been a difficult and unique time for NFL teams and players as they navigate unfamiliar territory. NFL teams must use this time to prepare for the long-term impact of that challenging terrain that lies ahead.
