Arguably one of the most popular and largest American sports is officially underway. Yes, the National Football League (NFL). However, like many other professional sports, most of the season is predicted to be played in a COVID-19 environment. Although the NFL will not be playing in a bubble format like the NBA and NHL it will still have a similar structure. To add, 6 out of the 32 teams will plan to host fans at a reduced capacity this year. With revenue and salary cap hits on the line, I take a look into how the players are handling the owner negotiations and what the future looks like for the league (Sporting News, 2020).
Due to the privacy and surrounding controversies it is challenging to put a face value on how much the NFL actually makes in a single season. However, Bloomberg has estimated the league earned around $15 billion during the 2018 season. In addition, the league is expected to grow to about $27 billion by 2027 (a 6% annual growth rate). The league is broken up into two categories; national revenue and local revenue. National revenue consists of merchandising, TV, and licensing deals. These deals are spilt up between the 32 teams evenly. Therefore, in terms of Covid-19 impacts, this has not been impacted as much as local revenue. The local revenue stream consists of individual team ticket sales, concessions, and sponsors. As an example 43% of the Green Bay Packers revenue in 2018 was local (Investopedia, 2020). Therefore, local revenue will be hit the hardest by Covid-19.
It is without a doubt that this season will have a long lasting financial impact for the NFL. However, how do the players and owners feel about the financial impact? In short, there has been and will continue to be a debate between both parties. In early March of 2020 the players approved a new collective bargaining agreement (CBA) that allowed NFL teams to start negotiating with free agent players right away and the first sign of the league to begin. This agreement extends into 2030 allowing NFL owners valuable new content for their media partners in a 17th regular season game and expanded playoff games. The problem, more games to be played and minimal salary recognition (Forbes, 2020). Wide Receiver Torrey Smith explains his frustration with the final vote as: “That spilt explains why the NFL will always be the bottom of player power in the sports world. Dudes only care about themselves and the moment. People aren’t afraid to lose anything. They only worry about their check” (Forbes, 2020). This comment goes to show the lack of respect that the players and owners share. On one side of the table, the owners are planning for the long term. Since most owners plan to own a team for at least a decade they want the best structure for that time frame. As for the players they are only focused on however long their contract is and the season ahead. Many of the veteran players actually disagreed to vote on behalf of the CBA and any who did vote did so do avoid further problems with any owners.
As of today, according to USA Today, the ongoing problem is the idea that owners believe both them and the players should anticipate financial burden. The players disagree on this opinion. While owners had proposed holding 35% of players’ salaries in escrow, the union didn’t see that as a fair deal and the owners have abandoned that idea. However, owners are now suggesting a decrease to this year’s salary cap by around $8 million while eliminating roughly $17 million in benefits (including performance based pay for late round draft picks or undrafted rookies). As for salary cap calculations, it is based on the previous year’s revenue which would indicate the NFL’s 32 teams could be looking at a loss of $70 million each team for the 2021 cap. Furthermore, with the current cap figure of $198.2 million and the expectation that revenue would continue climbing in future years. This causes problems for players who have just signed contracts and might find themselves out of luck in the near future. In addition, if the cap goes below $130 million, high priced stars will be endanger too (Ftw usatoday, 2020).
Currently, owners are willing to spread out any cap shortfalls over the next two years but no further. However, players argue that the spread out of any cap shortfalls should go longer and to be less severe. The players’ and league have also mentioned that future broadcasting revenue is expected to continue to soar, thus owners will continue to profit. This is the main reason making the players’ skeptical of the owners’ asks and salary negotiations in a flooded market (Ftw usatoday, 2020).
It is in evident that money is not the only motivating factor for the players to return to the NFL. Players’ want the chance to play the game, however in a non-bubble scenario the risk of COVID-19 transmission is much higher than other sports. In July, a series of tweets were posted that had players such as; JJ Watt, Russell Wilson, and Drew Brees spoke out about the return to football.
Overall, it is without a doubt the players want to return to the game. However, this comes with the knowing that the league is doing everything to keep players and families safe. The owners and players negotiations continue to be a consistent topic on the sidelines. While much of the financial impacts have yet to been announced it is obvious that the players, owners, and league are concerned for the future. As for my opinion, I believe the players’ should expect some kind of salary cap reduction. However, I believe the timeline for recovery should be strung out, thus making the impact less severe, given that owners will continue to profit off of broadcasting revenue.
Eckstein, J. (2020, August 28). How The NFL Makes Money: TV is King, Streaming and Gambling on Horizon. Retrieved September 22, 2020, from https://www.investopedia.com/articles/personal-finance/062515/how-nfl-makes-money.asp
Schwartz, N. (2020, July 19). NFL superstars speak out: We want to play, but figure out health protocols first. Retrieved September 22, 2020, from https://ftw.usatoday.com/2020/07/nfl-players-we-want-to-play-twitter-campaign-coronavirus
Haislop, T. (2020, September 21). NFL COVID rules, explained: Everything to know about coronavirus and football in 2020. Retrieved September 22, 2020, from https://www.sportingnews.com/us/nfl/news/nfl-covid-rules-coronavirus-football-2020/rovse8r08zbu1quh7y3joydah
Jones, M. (2020, July 23). NFL players, owners continue to haggle about COVID-19’s expected financial fallout in 2020 and beyond. Retrieved September 22, 2020, from https://www.usatoday.com/story/sports/nfl/columnist/mike-jones/2020/07/23/nfl-owners-players-covid-19-financial-impact-salary-cap/5496706002/
Badenhausen, K. (2020, March 16). The NFL’s Biggest Mismatch: Owners Vs. Players In CBA Negotiations. Retrieved September 22, 2020, from https://www.forbes.com/sites/kurtbadenhausen/2020/03/16/the-nfls-biggest-mismatch-owners-vs-players-in-cba-negotiations/