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“Pegged cap” was players’ idea, not league’s

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On Tuesday, Seahawks guard and NFLPA* player rep Chester Pitts joined PFT Live to talk about a range of issues relating to the labor situation.

At one point, Pitts suggested that the switch from a compensation model based on shared revenue to a “pegged cap” occurred at the behest of the owners.  Sources with knowledge of the situation contend that the players, not the owners, introduced the concept of the determining a team-by-team salary cap over a period of years, in lieu of focusing on a split in the revenue with a fluid cap based on the annual intake.

We’re told that the players pushed the concept of a “pegged cap” at the infamous meeting on the day before the Super Bowl, which produced multiple reports of Panthers owner Jerry Richardson disrespecting players like Colts quarterback Peyton Manning.

The “pegged cap” system uses revenue projections to determine the numbers.  If the actual numbers come in lower, the players still get paid.  One major area of dispute has arisen from the question of whether and to what extent the actual performance exceeds the projected revenue growth.  The owners’ offer of March 11 omitted that wrinkle; the players want to share in the upside.

The players, we’re told, prefer a “pegged cap” approach to expense credits because it entails simpler auditing and fewer disputes.

As of right now, the two sides are $10 million apart per team on the the “pegged cap” approach, which is driven by projected revenues.  The owners have offered $141 million per team in salary and benefits, and the players have requested $151 million.  If they can bridge the gap and devise a procedure for handling any excess growth, they should be able to do a deal fairly quickly.

As to 2012, it’s our understanding that the gap in the respective cap proposals is only $5 million per team, with the league agreeing to pay what the players have requested in 2013 and 2014.

Again, a fair procedure for sharing any excess must be developed.  And we think that, if/when the parties ever talk again, it can be.  But first they have to talk again.

That’s the most disappointing aspect of the 19-days-and-counting lockout.  No talks have occurred.

Even without negotiations, nothing stops the players from submitting a comprehensive written offer in response to the March 11 terms proposed by the owners.  The letter can even be signed by class counsel, to preserve the appearance that the NFLPA* isn’t calling the shots, even though folks like David Cornwell believe that NFLPA* executive director DeMaurice Smith continues to run the show.

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26 Responses to ““Pegged cap” was players’ idea, not league’s”
  1. JSpicoli says: Mar 30, 2011 11:24 AM

    tldr.

    wake me up when it is over.

  2. scudbot says: Mar 30, 2011 11:26 AM

    To be a bit more precise, the NFLPA walked out. Even though they no longer exist as an organization, they’ve suggested that the league can negotiate some kind of cave-in with the eight different legal teams that function as class counsel.

  3. bfridley says: Mar 30, 2011 11:29 AM

    What would be nice… would be if the concept of “pegged cap” was explained… I’m just a simple graphic designer…

  4. endzonezombie says: Mar 30, 2011 11:32 AM

    “we’re told….we’re told…”. Why continue to spread rumors instead of reporting facts? The proper title of this column should be ” Pegged Cap might have been player’s idea”.

  5. chapnastier says: Mar 30, 2011 11:33 AM

    “The “pegged cap” system uses revenue projections to determine the numbers. If the actual numbers come in lower, the players still get paid.”

    Hence the problem. Players feel like they should get paid the same or more no matter what happens and that just isn’t a sustainable system. It’s kind of similar to players demanding new contracts because they earned them but failing to give anything back if they don’t produce.

  6. angrycorgi says: Mar 30, 2011 11:37 AM

    *Shocker* The players want to share any excess over projections, but have no interest in sharing the burden of any short-falls.

    This is why I laugh when I hear a player say “we are partners in this business”. Partners ONLY share profits?? I don’t think its possible for these guys to be mentally weaker than they are now.

  7. vahawker says: Mar 30, 2011 11:41 AM

    The “pegged cap” system uses revenue projections to determine the numbers. If the actual numbers come in lower, the players still get paid. One major area of dispute has arisen from the question of whether and to what extent the actual performance exceeds the projected revenue growth

    *****************

    So… they want guarantees of full payment even if projected revenues they have based their salaries on come up short AND they want extra money if revenues exceed protections?!!?

    Yeah…sure looks like the players are “partners”. Jackwagons.

  8. truvikingfan says: Mar 30, 2011 11:43 AM

    Pegged-cap, unpegged-cap, stocking cap….it really doesn’t matter. If they won’t talk, and continue to shovel the sh*t at each other, than the only cap that matters is the cap the fans will put on them in regards to the amount of crap we will take.

    I fully realize that no games have been missed, and we have no idea if any games will be missed. Here’s the thing though, the NFL is a “year round” game. the off-season holds as much, or more, drama than the regular season. I know myself, that I look forward to free agency, and the draft, to see who goes where, and to see if “my team” gets the pieces to the puzzle.

    The NFL has grown to big for it’s own britches, i.e. NFL Network. That alone proves that it is year round. Many fans are disappointed that free agency hasn’t started, and are sick of these overly rich a**holes complaining that the pie isn’t big enough. STFU!!!! Go get a real job, and feel the pressure of everyday americans facing foreclosure and job loss, and than tell me the pie ain’t big enough!!!!!

  9. commoncents says: Mar 30, 2011 11:46 AM

    Imagine that, the players want to share in the growth from year to year but not in contraction. hey players, deals get done with counter offers, maybe you should figure out what it is you think you want!!

  10. ianwhetstone says: Mar 30, 2011 11:48 AM

    “Again, a fair procedure for sharing any excess must be developed.”

    Why? Upon what rational grounds do the players make such a demand? If they prefer not to share in the risk of less-than-projected growth, then by what basis can they claim a right to “their share” of excess growth?

  11. jlb10 says: Mar 30, 2011 12:01 PM

    bfridley i agree completley! be nice to know exactly what was being talked about here.

    truvikingfan says: Mar 30, 2011 11:43 AM

    Pegged-cap, unpegged-cap, stocking cap….

    LMAO!

  12. mcwest1 says: Mar 30, 2011 12:02 PM

    We as fans can give the NFL a smaller pie to divide. Aside from season ticket holders (I wouldn’t want anybody giving up their season tickets), fans should refrain from buying tickets and all NFL paraphernalia for one year. Maybe if we give them a smaller pie, they’ll be able to easier decide on how to divide it. A smaller pie would also make it easier to make the portions more equal.

  13. poweredtoast says: Mar 30, 2011 12:13 PM

    So what a player rep – a personal involved in the negotiations – is not as ‘close to the situation’ as your unnamed source? Riiiiight.

    Seriously, someone needs hold this fool liable for the crap he writes.

  14. thefiesty1 says: Mar 30, 2011 12:40 PM

    The players don’t know what they want from a new CBA. They had it too good with the old agreement. They can’t agree on anything.

  15. endzonezombie says: Mar 30, 2011 12:56 PM

    ” It’s kind of similar to players demanding new contracts because they earned them but failing to give anything back if they don’t produce.”

    The NFL has no guaranteed contracts. Except for guaranteed money upfront, if players don’t produce, they get cut. Even if they produce, they might be forced to renegotiate their original contract or get released. How would most fans like their boss coming to them and saying ‘ You’ve done a pretty good job, but either take a pay cut or we will let you go. We think we can offer your job to a new hire who will except less money.” Try MLB and NBA for guaranteed contracts that must be paid in full whether or not the player lives up to it. If the NFL players wanted to negotiate give and take options,, they could demand guaranteed contracts in line with other major sports leagues. That wouldn’t be so unreasonable, but it would complicate the process more than it already is.

  16. endzonezombie says: Mar 30, 2011 12:58 PM

    CORRECTION: ‘accept less money ‘ (above).

  17. CKL says: Mar 30, 2011 1:09 PM

    My link post didn’t take…go to NFP and read Andrew Brandt’s article on the cap from March 28. It’s a good one.

  18. realpetereally says: Mar 30, 2011 1:28 PM

    @endzonezombie

    “How would most fans like their boss coming to them and saying ‘ You’ve done a pretty good job, but either take a pay cut or we will let you go. We think we can offer your job to a new hire who will except less money.” ”

    This happens all the time in the real world, where have you been? The only exception is bosses won’t give you the option to accept less pay, they just let you go.

    Regardless, I would just like to see the players make a concession or two. I seriously haven’t seen or heard anything from the NFLPA* that resembles negotiating, it’s only been a “my way or the highway” philosophy. And if any group deserves that right, it’s the owners who assume ALL of the financial risks and cut the paychecks.

  19. endzonezombie says: Mar 30, 2011 1:33 PM

    The evidence of league shills coming to this site can be found in the two ‘ thumbs down’ I was given for making a spelling correction above. LOL. The correction was made for those who know how to spell.

  20. airraid77 says: Mar 30, 2011 1:41 PM

    @ realpeterreally,
    WHY DO YOU THINK EVERYBODY SENDS JOBS OVERSEAS?
    25 cents an hour or 7.25 an hour?
    ITS SIMPLE MATH. The owners have the final say, because they take their ball home, and close the doors, the players will be forced to work “real jobs”
    Your first scenario happens all the time in the real world. I can hire somebody for a dollar less and get the same work, so thanks for your service, move on.

  21. blantoncollier says: Mar 30, 2011 1:45 PM

    This is all too sad.

    Lets see if I have this correct. Players make an offer using something called a peg cap. They want no downside to actual revenue declines and to demand to share in the upside of revenue beyond the projections.

    Owners counter this offer.

    Players walk out because Owners dont accept their offer. And players dont Counter?

    DeSmith calls this the worst offer in the history of sports

    Come on..get with the program. Desmith has one goal..DESTROY pro football as we know it. I hope he has job training programs for Dez Bryant and the Jolly Green Bay Packer currently in jail. Lets see these guys live on $60,000.

  22. endzonezombie says: Mar 30, 2011 1:45 PM

    @realpeterreally:

    “How would most fans like their boss coming to them and saying ‘ You’ve done a pretty good job, but either take a pay cut or we will let you go. We think we can offer your job to a new hire who will except less money.” ”

    This happens all the time in the real world, where have you been? The only exception is bosses won’t give you the option to accept less pay, they just let you go.

    _____________________

    It generally doesn’t happen to people doing a good job in private enterprise. If a company has to cut back, yes, they will regretfully reduce budget by laying off some of their work force – usually non-essential personnel. But few companies will insult their good employees by threatening to cut salary or be replaced. They would not be able to recruit or keep their good employees if they did so – resumes would be in circulation. NFL players know if they are doing a good job or not, but many fans may think they are doing a good job while their boss is aware they are surfing the internet…lol.

  23. commentcentral says: Mar 30, 2011 3:11 PM

    If the actual numbers come in lower, the players still get paid . . . One major area of dispute has arisen from the question of whether and to what extent the actual performance exceeds the projected revenue growth . . . the players want to share in the upside.

    My annual review is coming up soon, and I think I am going to try and run this idea by my boss.

    If the company is going down the toilet you still pay me normal, but if it’s doing good I’d like to have a cut.

  24. ltrain11 says: Mar 30, 2011 4:09 PM

    How about giving it back to the fans who are the ones actually paying the owners and players. Give it back to them in gift cards they can use at the stadium. Also, they could reduce ticket costs for once as oppose to constantly raising season ticket prices.

  25. endzonezombie says: Mar 30, 2011 4:31 PM

    “My annual review is coming up soon, and I think I am going to try and run this idea by my boss.”

    @commentcentral: It will be hilarious if your boss is tracking your surfing during work and presents you with the third option: the company is doing well but you aren’t going to share in its future. Slackers should never be rewarded.

  26. touchdownroddywhite says: Mar 30, 2011 5:28 PM

    “If they can bridge the gap and devise a procedure for handling any excess growth, they should be able to do a deal fairly quickly.”

    Why should they devise a procedure for handling excess growth when there is no procedure for handling things when the growth projections aren’t met?

    That would be a terrible deal for the owners. It’s like making a bet with a guy who you know will say, “C’mon. You know we weren’t actually betting” if he loses.

    The players are just @$$-holes.

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