When it comes to the 2020 NFL season, the focus has been on how to do it safely and on time, even amid the coronavirus pandemic. That remains paramount. However, there are financial issues many believe must be worked out before anyone can take the field, with or without fans.
Multiple sources say the NFL and NFLPA both acknowledge that important negotiations are coming quickly to determine how to handle yearly salary caps for 2020 and beyond, considering there are likely to be steep revenue losses with limited or no fans in the stands. This sets up a scenario where both sides will have to come to agreements on every possible contingency on how COVID-19 could affect the season before anyone plays a game.
While there is no deadline, the hope is to have agreements reached before training camps open, which is scheduled for late July. Theoretically, the NFLPA and NFL could talk throughout the preseason, but beginning the regular season without a deal is not considered feasible, sources say.
Currently, the league and NFLPA are studying how the revenue could be affected and what the sure-fire losses will look like. That’s one reason why there have been barely any contract extensions and few free agents have been signed after the initial free agency period.
The goal is to make sure the salary cap goes up or at worst stays flat. But what if that’s not possible?
The NFL has had the luxury of waiting, biding its time and watching the other professional leagues, while MLB and its union in particular has engaged in acrimonious and sometimes tone-deaf talks for how to compensate players and what the season will look like. Those involved in football want to handle it now before it gets to that point.
Here are the issues:
The salary cap (currently $198.2 million for 2020) is calculated based on expected revenue, but there’s also a mechanism where it rises or falls based on unexpectedly higher or lower revenue in the previous season. That will be the case this year in relation to the 2021 cap with fewer (or no) fans in the stands. How bad will the revenue losses be?
The worst-case scenario is that every game is played in a completely empty stadium, leading to what sources have estimated as a $4 or $5 billion drop — about a third of revenue. Under that scenario, teams could bring in $40 to $80 million less than expected. The losses are likely to be less than that, because it is expected that some fans will be able to attend games in some stadiums, although stadiums won’t be packed. Still, if there are huge revenue losses, the 2021 cap will be impacted.
But no one wants to see the cap drop because that has consequences for teams and players. And neither side wants a situation where the cap drops significantly in 2021 then rebounds with the new TV deals in 2022. It makes it extremely difficult for teams to conduct business or do extensions.
Among the possibilities for how to smooth the cap out given expected losses is borrowing from future TV deals. New deals usually create a spike in the cap due to influx of cash, but in this case could be used to create a smooth incline and make up for losses incurred during the 2020 season. The league and the NFLPA could also