What Effects Lower NFL Salary Cap Will Have on the Sport

For the 47 years I have represented NFL players, and there has always been one constant - team revenue as well as salaries have always gone up. In 1975, each NFL franchise received $2 million from their share of the national television contract - today each franchise gets more like $200 million per year. When Tampa Bay and Seattle entered the NFL in 1976, their purchase price was $16.5 million, while today the Dallas Cowboys are valued at $5 billion. My first contract for former Falcons’ quarterback Steve Bartkowski made headlines with a 4-year, $600,000 package. Today, the top quarterback makes around $47.5 million per year. Television revenue, gate, off the field income and stadium revenue has always risen...until now. 

Caution over live attendance due to the threat of the coronavirus pandemic resulted in a precipitous drop in gate revenue. The dual occupants of Los Angeles' stunning new SoFi stadium had no fans in attendance all season, and live attendance occurred in numbers from 13,000 to 30,000 at the maximum. The drop in gate revenue saw a decrease in cap allocations from $198 million in 2020 to $182.5 million for the upcoming season, an 8% drop. Teams must be at or under that number by Wednesday March 17th at 4PM Eastern Time.

At that time frame on Wednesday, many players will have already been approached to restructure their contracts. This generally is achieved by substituting a signing bonus for a high salary. Signing bonus counts against the cap by being spread over the life of a contract, while all salary counts against the current year of the cap. In some cases where a restructure is not agreed to, valuable players will simply be waived. The decreased cap will have the effect of breaking up some otherwise happy football marriages, like the waiving of both offensive tackles by the Kansas City Chiefs. Many veterans find taking a pay cut with their incumbent team to be distasteful and will end up signing with another team, even if the offer is comparable or less. The NFL has evolved into a two-tier salary structure. Critical starting players will continue to receive increased compensation, but the first free agents to sign in 2021 will still get handsome contracts. Once those top free agents are signed, the market will dry up and the pace of signings will become glacial.

The way NFL franchises have balanced their cap in recent years is to divide the team into replaceable, fungible players and non-replaceable stars. This offers lower round draft picks and undrafted free agents the ability to have a better chance to make the team. Having a large number of backup and special teams players at the minimum offsets high veteran salaries. There is a special cap exception for veteran players that allows teams to pay them more money with a lower cap hit.

Since early indications are that the network television rights fees will increase, along with vaccinations potentially allowing normal attendance in 2021, this may prove to be a one-year blip. The NFL remains America's highest sports passion and should return to traditional cap increases by next year.