20 questions about the uncapped year

As the NFL launches its first uncapped year since 1993, we’ve cobbled together 20 questions regarding life in the NFL without a salary cap.

The questions and the answers appear below.  With as little legalese and jargon as possible.

But maybe a little profanity.  And perhaps even a “shirthead” or two.

Q.  Why is the salary cap going away?

Since the early 1990s, the Collective Bargaining Agreement between the NFL and the players’ union consistently has included a final year in which the salary cap disappears.  The goal of the provision was to encourage the parties to get a new deal done more than a year before the current arrangement expires.

Previously, the strategy has worked.  At no other time has the NFL even come within a year of an uncapped season.  In 2006, the league and the union negotiated a new deal on the eve of the last season with a salary cap.

So this development and most if not all of its peculiar consequences have been contemplated for nearly two decades.  Before now, however, no one wanted the cap to go away.

Q.  How did we get to this point?

The 2006 CBA allowed the league and the union to terminate the contract two years early or one year early.  At first, some believed the NFLPA ultimately would choose to pull the plug prematurely.  In 2007, several influential owners including Pat Bowlen of the Broncos and Robert Kraft of the Patriots began to speak out regarding the financial strains created by the most recent agreement.

In May 2008, the owners voted unanimously to end the contract two years early.  The CBA expires in March 2011; the 2010 league year will therefore have no salary cap.

Efforts to negotiate a new CBA have failed for various reasons.  The sudden illness and death of NFLPA Executive Director Gene Upshaw in August 2008 and the process for selecting a successor delayed the negotiations into 2009.  But even once the bargaining sessions began, it became clear that progress would be elusive on the central question — the amount of money that the players will be paid.

The owners want to roll back the piece of total revenue (currently, 59.6 percent) paid to the players.  The players are reluctant to reduce their share without proof that owners aren’t making money under the current deal.  Currently, there is no reason to believe that either side will yield.

Q.  Will there be a salary floor?

No, and many owners are believed to be preparing to cut labor costs by choosing to spend less than the mandatory minimum, $107 million per team in 2009.

But even without a salary floor, certain thresholds apply.  Minimum salaries must be paid based on years of service.

Still, if a team is intent on enhancing profits, the team can dump high-dollar contracts and replace them with players making at or near the league minimum.

Q.  Will some teams overspend?

It’s believed that most teams will exercise restraint.  Several teams have said they’ll apply an artificial salary cap, better known in most businesses as a budget.

The reality, however, is that teams generating higher revenues will be in position to budget more money for players.

The Redskins are a team to watch in this regard.  Some think that new G.M. Bruce Allen will counsel against excessive spending.  Others think that owner Daniel Snyder won’t be able to resist the urge to splurge.

Another team that might be tempted to spend more than others is the Seahawks.  Owner Paul Allen occupies a position among the richest owners in the league, and new coach Pete Carroll learned at the college level that recruiting better talent increases dramatically the chances of on-field success.

At the NFL level, the best recruiting tool is cash.

Of course, some would say that it works well for college programs, too.

Q.  Will a salary cap return at some point?

Upshaw vowed for years that, if the salary cap ever disappears, the players never would agree to another one.  However, such a rigid position ignores the absence of a salary floor.

For both sides, the presence of a spending maximum and a spending minimum makes plenty of sense.  Whether a cap or a floor or both ever returns will hinge on the terms of the agreement that is reached between the owners and the players.

The contours of a new system also will be the product of bargaining between the league and the union, with the parties ultimately having to come to a consensus as to the spending maximum, the spending minimum, and other rules that currently are set forth in a lengthy written contract.

Q.  Can contracts be dumped in 2010 with no salary cap consequences?

Yes.  In past years, teams had to weigh the decision to cut a player against the acceleration of bonus money applicable to future years.  In some cases, it cost more under the cap to get rid of a player than it did to keep him.

In 2010, bad contracts can be wiped off the books with no ramifications, since there will be no salary cap and thus no acceleration of bonus money.

There’s one caveat.  A new agreement could, in theory, reallocate to 2011 and beyond bonus money that was avoided by contracts terminated or traded in 2010.  Whether and to what extent this occurs depends on the terms of the new CBA.  Still, it seems unlikely that the new deal would reach back to 2010 and impose cap charges against teams that took advantage of the absence of a cap to clean the slate.

Q.  Can contracts be negotiated with the bulk of the money being paid in 2010?

Again, the rules determined by the league and the union in the future will control this issue.  A large signing bonus paid in 2010 easily could be spread over the life of the deal, resulting in additional cap charges in 2011 and beyond.

One possible approach entails paying the bulk of the money as a roster bonus or base salary in 2010.  The problem with this concept, however, is that once a player has pocketed the full amount of money earned in 2010, he might be inclined to want more money in the out years, forgetting about the money he already has been paid.  Alternatively, he could be more apt to retire.

So while there are ways to engineer a contract in order to maximize the cap charge in 2010, the year with no cap, a team needs to have high level of trust that a player who would be getting most of his money in the first year of the deal will still show up and play — and not ask for more money — in 2011 and beyond.

Q.  Why is Shawne Merriman upset?

The Chargers linebacker is one of 200-plus players who would have been unrestricted free agents if a salary cap existed in 2010.  Because the CBA provides that, in an uncapped year, players must have six years, not four, in order to qualify for unrestricted free agency, Merriman and other players whose contracts are expiring but who have only four or five years of service will not hit the open market.

This means that teams easily can retain rights to all of these restricted free agents via the application of one of the various RFA tenders.  The Chargers, for example, have tendered four restricted free agents at the highest possible level.  In any other year, they would have been able to limit only one of the
four via the franchise or t
ransition tag, and the Chargers would have been forced to either re-sign the other three — or let them leave via free agency.

Merriman recently said that he is “speechless” regarding his predicament, but he shouldn’t be.  Long before he made it to the NFL, the rule pushing minimum eligibility for unrestricted free agency from four years to six in an uncapped year was on the books.  He should not be surprised, and if he’s upset the anger should be directed at the union for allowing these team-friendly provisions to apply even when the owners were the ones who decided to terminate the labor agreement two years early.

Q.  Will restricted free agents hold out?

Multiple reports have emerged recently regarding the possibility that restricted free agents who would have been unrestricted free agents will refuse to sign their one-year tender offers and skip all offseason activities and, possibly, training camp and the preseason.

For each such player, the key date is June 15.  At that time, teams can reduce the tender offer (if it hasn’t been accepted) to 110 percent of the player’s 2009 salary.  For some restricted free agents, the difference will be significant.  For others, the difference will be small, allowing them to boycott all of the activities before the start of the season without losing any salary and without being subject to a fine.

Though the teams may rescind the tender offers at any time, doing so would make them unrestricted free agents.

Q.  Will players under contract hold out?

Though players who have signed a contract covering 2010 are subject to fines for skipping mandatory offseason minicamps and training camp practices, it’s possible that players will decide to voice their overall discontent regarding the current situation by opting not to show up for optional offseason workouts.

It will be an interesting test of union solidarity.  If the NFLPA can’t persuade players to voluntarily stay away from the grind of April-to-June T-shirt-and-shorts practices for which they receive only a modest per diem, it will be difficult if not impossible for the union to get the players to stick together in the event of a lockout or a strike, when the price will be forfeited game checks.

Q.  What is the “Final Eight Plan”?

In an effort to ensure that the best teams from the last capped year won’t be able to corner the market on unrestricted free agents, the CBA places specific restrictions on the ability of the final eight teams — the Ravens, Colts, Jets, Chargers, Cardinals, Cowboys, Vikings and Saints — to sign players.

There are two distinct levels.  For the final four teams (Colts, Jets, Vikings, Saints), a UFA from another team can’t be signed until a UFA is lost to a new team, and so on.  Even then, the contract given to the new player must be comparable to the contract received by the player who left.

For the next four teams (Ravens, Chargers, Cardinals, Cowboys), the same rule applies, but each team may sign one UFA for a contract with a first-year value of $5.8 million or more and no restriction on future growth, along with an unlimited number of unrestricted free agents to contracts with a first-year value of $3.8 million or less, with specific limits on future growth.

Q.  Can final eight teams sign restricted free agents?

Yes.  The “Final Eight Plan” applies only to unrestricted free agents — that is, players with six or more years of service whose contracts expired when the uncapped year began.

This means that the final eight teams can pursue as many restricted free agents as they wish, regardless of whether the restricted free agents received a tender offer.  For example, Chargers running back Darren Sproles, a restricted free agent with no restrictions because he received no tender, can be signed by any of the final eight teams.

Q.  Can final eight teams sign players who were cut?

Yes.  Though the CBA is vague on this point, the NFL interprets it to permit players with six or more years of service whose contracts are terminated to be signed by any of the final eight teams.

As a result, veteran running backs like LaDainian Tomlinson, Thomas Jones, and Brian Westbrook may be signed by one of the final eight teams.  For running backs like Chester Taylor and Willie Parker, however, the limitations apply.

Q.  Can final eight teams make trades?

Yes, with one exception.  They cannot trade for players that they could not have signed as unrestricted free agents.

In other words, if the Saints wish to acquire Panthers defensive end Julius Peppers, they cannot arrange for another team to sign him as an unrestricted free agent and then make a trade with that team for Peppers’ contract.

Q.  Will there be a lockout?

A lockout would come, at the earliest, in 2011.  The union firmly believes that the NFL is preparing for a lockout.  Some think the league is merely trying to make the players believe a lockout is coming.  And some think that the union actually wants to force a lockout, in order to eventually get the best deal by creating havoc for the NFL via political and public pressure.

At this point, no one knows what the NFL will do.  For specific reasons relating to labor law principles, the NFL will say only that it intends to bargain in good faith toward a new agreement.

David Cornwell, a finalist for the NFLPA Executive Director position last March, believes that the owners will not lock the players out, and that the owners will ultimately impose new work rules after the contract expires and after an impasse is reached via collective bargaining.  Then, the players would have to decide whether to work under the new terms or strike.

Q.  Will there be a strike?

Though at times there have been scattered rumors of a player walkout, the CBA contains a clear provision preventing a lockout or a strike before expiration of the deal.  Thus, there will be no strike or lockout in 2010, and the full football season will be played.

After that, no one knows for sure what will happen.

Q.  Will there be more or less movement in free agency?

At this point, no one knows.  The reduced number of unrestricted free agents and the “Final Eight Plan” will necessarily shrinks the pool of available players and suitors.  But there could be a more robust market for restricted free agents after the pursuit of unrestricted free agents dies down.

Regardless of the amount of movement, the union has vowed to monitor team spending.  Eventually, the union could launch a P.R. attack against the league for not spending enough — or specific players may speak out regarding their own teams’ decision not to attempt to improve by acquiring free agents.

For now, the prevailing view is that teams will spend less, if for no reason other than to further pad the league’s 2011 lockout fund — regardless of whether the league plans to lock the players out or whether it’s all an elaborate bluff.

Q.  Can players under contract get more money?

Yes, but with limitations.  The so-called “30 percent rule” applies to any renegotiation, which will complicate the ability of teams to give significant raises to players alrea

dy under contract.

Those nuances might be lost on veteran players who believe that the money should flow freely in an uncapped year, especially if they signed their contracts with the expectation that their 2010 compensation would take into account the existence of a salary cap.

Q.  Will more trades occur?

Probably.  In a capped year, trading a contract triggers cap consequences.  In an uncapped year, the cap no longer will be an issue.

Thus, player trades could happen with greater frequency than in past years.  Player-for-player trades specifically could increase.

Q.  Once the uncapped year begins, is there any chance a deal will be struck during the 2010 season?

It’s highly unlikely that any agreement will be reached before the end of the 2010 season.  Once salary commitments are made based on the absence of a salary cap and a salary floor, teams will have no desire to adopt new cap rules during a league year that already has begun.

Of course, an agreement can be reached in 2010 that would make new rules applicable as of 2011.  But with teams and players focused on the football season once the football season starts, it makes more sense to defer any final deal until the period of time after Super Bowl XLV has been played and before the CBA expires in March.

So while an agreement won’t come until 2011, the lack of one looms large over the 2010 season.  While the question of whether that’s a good thing or a bad thing will depend largely on perspective (and on the outcome of the coming season), things will be different this year.

But the game, at least for one more season, will endure.

45 responses to “20 questions about the uncapped year

  1. Thank you for a great article. In today’s times I side with the owners. Things simply need to be scaled back to protect all ultimately. If there is a strike, I still will watch NFL games.

  2. While all these lawyers work this out maybe they can work out a new health plan and help out Congress because neither of these groups can seem to get anything done.

  3. I heard NBC wanted you to provide 25 questions but you only wanted to offer 15 questions.
    Overall I think 20 was a wise choice.

  4. Great article, Florio! This clears up a lot of misunderstandings I had.

  5. What happens to a player who was not drafted and is now a restricted free agent? Because the player entered the league as a rookie free agent, would tendering him at the lowest level would essentially make him an unrestricted free agent?

  6. #21: Will Florio give us an average of three Brett Favre stories per day during the offseason?

  7. The owners want to roll back the piece of total revenue (currently, 59.6 percent) paid to the players.
    What constitutes “total revenue” under this agreement? 59.6% of gate receipts, luxury box revenues, concession receipts where applicable, marketing revenues, licensing, Broadcast revenues? What is the definition of total revenue? Total what?
    If you agreed to a 59.6% deal in the movie business or the music business, of the total net revenues you might end up owing the studios or record companies money after they finished calculating the net.

  8. If there is no new CBA by the next March when the current CBA expires, and the owners elect to just unilaterally impose new work rules, would they be able to have a college football player draft in 2011? Or would all eligible college players become free agents?

  9. Well, at least you were able to stay awake for 5 minutes in order to write this.
    Quick question – It seems that everyone is on board for a rookie salary slotting system á la NBA. Even though there is nothing in place, couldn’t the Rams stuff down the throat of whever they select a heavily incentive laden, bare bottom of the barrel base salary type deal and break the outrageous lottery deals that the overall #1s have been getting? If they perform, good. The player gets the loot. If he doesn’t, then he gets the boot, but doesn’t leave the team cash strapped until the Styx freezes over.
    Think about it – If they refuse, then the Rams can squat on their rights for a year; i.e. no money. Next year, only God (and the owners) know if there is going to be a lockout or not, but if there’s no football, so that turns into no money again. The year afterwards, it is very probable that there will be a salary slotting system in place and another two year’s worth of college players in the waiting, so that would translate into losing the overall #1 draft position and ending up with much less lolly than if they had taken the original Rams offer.
    It seems to me that, if the Rams GM has the petticoat, er I mean the bollocks to do it, they’ll be able to pull a Scrooge and keep the lolly to themselves instead of handing out a ‘get rich quick, no effort required’ card (see Russell, JaWalrus and Reaf, Lyan).

  10. You forgot to answer the most important question Florio…. Will the Hampsters be ready?

  11. I know Kevin Mawae intends to continue playing. But for argument’s sake, let’s say he retires. What recourse do the Ravens have in signing a FA to replace Mawae?
    I’m not sure if this is unique to the Ravens, or if there’s other teams who have FAs who might retire.

  12. I bet whatever team wins the Superbowl this year the other 31 team’s fans will make excuses why it wasnt fair and say it was only because of the rules of the uncapped year. No matter how asinine the arguement is.

  13. What happens to Cheerleaders salaries in an uncapped year and can they be hired for less than the normal vet. minimum?

  14. Probably the most informative article you’ve ever written. Well done, Florio.

  15. awesome post.
    just think, in only a few short hours we can hear how stupid this article is and why you should never be able to write on anything, especially football.
    i can’t wait.

  16. Good work. You made it through over 1,000 words without once using the word “tampering”.
    I would add that a very rational reason that free agent spending may end up being down is due to the 200 would-be UFA’s who will be RFA’s. In other words, the pool of available free agents, as a whole, sucks.

  17. I am not a Mike Brown fan, but he was one of the first, if not the first, to voice his concern about the CBA and want to back out.

  18. players wont strike, makin way to much money at this point. its one thing to strike back in the eighties when salaries were much lower. you think the guys making the big bucks are gonna walk away from tens of millions of dollars

  19. Great article. Very informative
    I stand still at the owner’s side. The only pay increase needed by nfl players is the veteran minimum

  20. I believe the 59% paid to the Players is the major sticking point. Normally, I’d side with the millionaires over the billionaires. But if you got guys like Kraft and Bolen crying foul, then the economics of the current CBA must be out of whack. I don’t see why the two sides can’t come to an agreement on this. I liken the business of the NFL similar to Hollywood. You pay the big stars the lions share, then you pay the minor role players, directors, and crew their due. The only difference is that a movie can become a huge hit or a flop, so the revenues may be uncertain. In the NFL, there are a set number of seats and games, so the revenues should be known. Now go split it up accordingly and lets play football.

  21. Really, really good stuff. To be honest, I didn’t understand all of the details.
    I have a much better grasp now. I would imagine that all union negotiations have similar complicated issues.

  22. An excellent, factual based article.. and yet some people STILL complain!! How miserable are your lives?! LOL

  23. The NFL is falling apart! First it started with excessive commercials (nothing like a touchdown followed by commercials, only to have the kickoff and go right back to more commercials), then comes the lost right of even touching the Quarterback. I’m starting to think that the game would be improved if we remove pads; like Rugby. Then the refs won’t be able to call “protective gear” a “weapon”… what a joke! And now this!? I can’t believe I’m saying this, but GO Soccer! At least they run around like mad-men for 90 minutes with like 1 or 2 commercials max! Football’s gone soft.

  24. bub4lyfe says:
    March 4, 2010 8:51 AM
    players wont strike, makin way to much money at this point. its one thing to strike back in the eighties when salaries were much lower. you think the guys making the big bucks are gonna walk away from tens of millions of dollars
    Dude, google the word lockout. I am amazed by all the people on this site that cannot grasp the concept. The players are not going on strike. Imagine if your boss came to you and said next weeks paycheck will be less than what you’re currently getting and if you don’t like it, I’ll change the locks so your key won’t fit the door. Get it? Sheesh.

  25. It was mentioned before that the Saints could not sign or trade for a player like Julius Peppers because he is an UFA and they are top-4. Is the only scenario for the Saints or one of the other top-4 players to be able to sign a UFA that another team signs one of their UFAs? I understand the idea of limiting the best teams from being able to just spend money to get the players they want, but the not being able to trade for the player seems excessive. The team would be giving up assets to acquire an asset, and it seems pretty silly to not allow it. How long are they unable to make trades for that player? A season? The length of the new contract?
    Also, I think it is sad that the players get targeted in this as the bad guys. The players are content with the current arrangement. The players not NOT asking for more money, they simply do not want a pay cut. The owners are the ones that have decided that they should get a larger cut of the revenue. They are the ones that have terminated the contract early creating the uncapped season. They are the ones that are not willing to reestablish the CBA now. If a lockout occurs, it will be because of the owners. The players cannot lock themselves out.
    The owners were well within their rights to terminate the CBA early. But, the players are well within their rights to reject a new CBA that they do not wish to get into. If my work came to me and said they wanted to cut my pay but refused to show me that the company was making less money, I would refuse, too. Chances are I would quit and find a new job. NFL players don’t have that option based on how the NFL forces contracts to be set up.

  26. You guys know that the bulk of a player’s salary is paid per game, right? So, a guy with, say, an $8mil salary gets a check of around $500,000 a few days later.
    Put yourself in those shoes and consider in your mind what you’d be thinking if your friends asked you to strike.
    No more checks. Another birthday rolls around. Ferrari in the driveway needs pricey maintenance and you’re down to 5 figures in your bank account. Mortgages, payments and taxes start probing your conscience…
    They won’t strike.

  27. Really good article.
    As much as I don’t want a strike it would be nice to see these rich owners and overpaid players take a hit in the pocketbook to bring them back to reality.

  28. bluestree says:
    March 4, 2010 9:45 AM
    Dude, google the word lockout. I am amazed by all the people on this site that cannot grasp the concept. The players are not going on strike. Imagine if your boss came to you and said next weeks paycheck will be less than what you’re currently getting and if you don’t like it, I’ll change the locks so your key won’t fit the door. Get it? Sheesh.
    A new labor agreement (or lack thereof) wont affect the amount of money players under contract get paid as long as they show up. An owner couldn’t tell a player under contract that their salary will be reduced and if they dont like it then they’ll be locked out. At least that’s my understanding of how a contract works. as long as the player is willing to show up and honor their end of the contract dont the owners have to fulfill their obligations to pay the man?

  29. Great article, there are so many rules but it is hard to understand what is going on.
    Island, thats a great idea, it would be great if the owners had the sack to do it. If the Rams hold fast then the other owners would have to as well.

  30. Florio, I want to know how this effects the 2011 draft. I understand the draft will occur before the lockout if it comes to that. If a rookie is drafted in the top 10 by a team he doesn’t want to be on and is going to get locked out and not paid anyway, what is the probability that he would hold out and re-enter the 2012 draft? You’ve said the biggest recruiting tool is cash. With no cash-incentive in 2011, why sign with a crappy team? Likewise, a crappy team with a high first rounder in 2011 risks losing that draft pick without compensation if the player decides to re-enter in 2012, right?

  31. I’m still not totally clear on the restricted free agents: If a player refuses to sign his tender, does he just sit out a year and become a free agent next season or does the team continue to hold his rights? Also, how long of a window do other teams have to negotiate with restricted free agents? Until training camp? Preseason? The start of the regular season? Would teams be able to wait until after the draft so they could give up next year’s picks for one of these players instead of a pick this year? A team like the Redskins would benefit because this year they have the 4th pick in the rounds and next year it may be a bit lower (one can dream, anyway) making after the draft much more attractive for getting a RFA…. Thanks for the great info already!

  32. Thanks for the FAQ PFT crew!
    I’ll side with the greedy players until the greedy
    owners open their books.
    With D. Rooney in Ireland, are their any reasonable owners available to broker the new deal
    in 2011?
    -Go Stillers

  33. In response to Brewster’s question, Total Revenue (TR) is defined under the 2006 CBA. Consistent with the previous CBA, TR includes broadcasting revenue, gate receipts revenue, revenue generated by NFL Ventures (which encompasses NFL Properties, NFL Enterprises, NFL Productions, etc.), and various other sources listed under Article XXIV, Section 1(a). The major difference between the previous CBA and the 2006 CBA was the inclusion of the following revenue streams under TR: concessions, parking, local advertising and sponsorship agreements, and stadium club and luxury box income.
    Including the aforementioned revenue streams under TR, thus forcing owners to share the majority of available revenue opportunities, allowed owners to reduce the total percentage of revenue shared under the 2006 CBA. The reasoning behind including these revenue streams as shared revenue was to reduce the widening revenue gap between large market teams and small market teams that was threatening parity in the league. The advent of guaranteed money allowed the high-revenue teams to spend more in sigining bonuses, attracting big time players with a minimal cap effect due to the proration of signing bonuses over the term of a contract. With more revenue available, they could dedicate it towards attracting players with large guaranteed money committments. Thus, restructuring the amount of revenue shared was an attempt to prevent this imbalance from continuing.

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