NFL Salary Cap 2013: The World Really Is Flat
Andrew Weber-USA TODAY Sports
All NFL fans are familiar with the salary cap. It can be friend or foe, depending on how much your team can spend to keep your players, acquire free agents and sign draftees.
Most of these fans understand the cap functions like a budget. It imposes a limit on how much a team can spend and it was instituted in 1994 to be sure everybody is subjected to the same limitations.
If you will direct your attention to the graph above, notice the salary cap is basically at the same level for the fifth straight season (2009-13).
How can it be the most successful sport in America, one that brought in more money in 2012 than all other professional leagues, does not show any growth in how much it pays its players?
The simple answer is the current contracts for NFL broadcasting rights took effect in 2006 and are set to expire after the upcoming 2013 season. This applies to all outlets with the exception of NFL Sunday Ticket from DirecTV, which lasts through the 2014 season.
The main source of income for the NFL are these broadcasting rights, which comprise $3.1 billion (excluding Sunday Ticket) of the total $9.5 billion received in 2012. The balance comes from tickets and concessions sales, sponsorships and merchandise. This broadcasting income stream has been static for quite some time, but then so too has attendance.
According to the Sports Business Journal, stadium turnstiles have recorded around 17 million fans for every year from 2004 through 2012. Ticket prices keep going up, but have only risen 17 percent since 2007 per Statista.com (registration required). Between wide-screen televisions and the economic conditions that resulted from the 2008 financial meltdown, people would rather watch at home.
Help is supposed to be just around the corner. When the new broadcast deals kick in for the 2014 season, there will be $4.95 billion to divide among all 32 teams. That marks a very nice raise of 60 percent from the previous deal, but will TV viewership keep pace?
Not if it is anything like 2012, which Adweek.com said had a five percent ratings drop from 2011. The same article described ad rates going up for Fox, but down for CBS. Apparently, the growth of the fan base is not keeping pace with the demands of the TV networks.
With ratings relatively flat, and attendance at games definitely flat, one would hope that at least the salary cap will significantly increase, but that is not necessarily the case.
When the latest collective bargaining agreement was finalized in 2012, the players’ share of total revenues was reduced from an average of 57 percent to 47 percent. In essence, the NFLPA opted for a smaller piece of a bigger pie.
It is difficult to predict what the cap figure will be when the upsurge in TV funds hits the books. All the other sources of revenue have to be taken into account before it can be calculated. In the end, does it really matter what is the cap?
The players would certainly think so, and they deserve everything they can get. The average career is short and the damage to their health can last a lifetime.
As far as the fans are concerned, little will change in regards to whatever teams get to spend. The roster count will remain at 53, and 47 of those will dress on game day. That is just one more aspect of the NFL that will remain flat.
There is a new wrinkle in the latest CBA that can be also thought of as flat. If the salary cap represents a ceiling, there is now a salary floor as well.
Every organization is now required to spend 89 percent of their total revenues as player salaries. For 2013, each team will have to expend at least $109.5 million in compensation.
By comparison, there were seven salary slackers in 2012, where a similar minimum outlay would have been $108 million per team. The Jacksonville Jaguars were the stingiest of the bunch with a $91.9 million payroll.
This new stipulation will favor the most astute general managers, but teams will still tank in order to obtain the highest draft picks. That move will always be part of the GM playbook. The floor means they are paying large sums of money to inferior players for inferior performance.
Nearly three years ago, NFL Commissioner Roger Goodell set a goal of $25 billion in annual revenue for the league by 2027. To borrow from Vincent Vega and the movie Pulp Fiction, “That’s a bold statement.”
To reach their revenue goal, the cost of the game experience would have to go up. The broadcast rights might increase to the point where networks will be forced to institute a pay-per-view system.
Should that occur, NFL fans would be anything but flat. We could be talking about an uprising of surprising proportions.
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