CBA status quo could stifle 2020 spending by up to $700 million

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Vote yes, vote no, vote for Pedro. Whatever the case, it’s important that all players cast a vote on the new labor deal — and that all players do so with enough information to allow them to make a reasoned and rational decision.

For players who are poised to become free agents, or who would like to sign new contracts, the failure of the CBA proposal would mean that the NFL and NFL Players Association will embark on the final year of the current labor deal. Per multiple league and union sources, it’s believed that this would shrink the available cash for free agents by up to $700 million.

The NFLPA views the difference to be in the range of $600 million to $650 million, with $700 million being the upper limit of the difference between cash available under what is the final year of the current CBA and what would be the first year of a new CBA.

And this isn’t “fear of what may happen.” It’s a bipartisan assessment of what will happen based on the specific rules that apply in the final year of the labor deal, and based on the features of the new deal (such as immediately increased minimum salaries).

First, the availability of two tags under the last year of the current CBA will keep extra players off the open market. Although many teams won’t choose to apply both the franchise tag and the transition tag, several will consider it — and some surely will. The Cowboys will, barring new deals, apply the franchise tag to quarterback Dak Prescott and the transition tag to receiver Amari Cooper. The Titans likely will apply their tags to quarterback Ryan Tannehill and running back Derrick Henry. (While the transition tag provides only a right to match with no compensation, it makes the player less attractive because a team looking for a player at that position won’t want to wait up to five days before learning that the offer has been matched.)

Second, there can be no spreading of cap hits for releases or trades after June 1, or for players released before June 1 with the post-June 1 designation. For example, if a player who signed a five-year deal with a $5 million signing bonus 2019 is cut or traded at any time in 2020, his team will absorb the full remainder of the $4 million cap charge in 2020. Under a new CBA, the charge would be $1 million this year, and $3 million year year.

Third, the rules regarding incentives will result in greater cap charges in 2020, with the ability to use “Not Likely to Be Earned” incentives to give players money in the current year with the cap hit in the next year dramatically curtailed.

Fourth, the 30-percent rule will apply to all deals signed in 2020. This rule provides that, for contracts signed in the last year of the CBA, salaries cannot grow by more than 30 percent in any year of the contract. For example, if a player gets a $1 million salary in 2020, the maximum salary he can have for 2021 will be $1.3 million.

Fifth, the “Deion Rule” will prevent a team from minimizing cap hits with a huge signing bonus that can be spread over up to five years and low salaries, since the amount of the player’s salary and compensation in future years can’t be lower than the annual allocation for the signing bonus. If, for example, one of the high-end quarterbacks signs a four-year deal with a $40 million signing bonus, his salary will have to be at least $10 million in 2020, resulting in a cap hit of $20 million for 2020. In other years, a large signing bonus ($40 million) could be coupled with a low salary ($1 million) to keep the cap hit at $11 million.

The Deion Rule also will make it harder to accomplish a simple restructuring of an existing deal, since (for example) teams won’t be able to convert a $20 million salary to a $19 million signing bonus and a $1 million salary. The salary will have to at least match the signing-bonus allocation for 2020, driving up the cap dollars in 2020.

In combination, the Deion Rule and the 30-percent rule will make it harder for teams to push cap dollars into future years, either through a large signing bonus and a small 2020 salary or future salaries that spike. And the disappearance of the June 1 rule will force teams to take a full reckoning now for past contracts that they want to escape. And rules regarding incentives will severely limit the ability of teams to pay money in 2020 that gets charged to 2021.

The end result, given the rules of the old CBA and the absence of the rules of a new one, will be an environment in which teams will be forced to jam much more 2020 spending into the 2020 cap. Throw in the two-tag provision, and the end result will be an environment in which teams that want to spend will see their hands tied by cap accounting rules that make it much harder to do so.

Again, this isn’t “fear of what may happen.” It’s a description of the specific pieces of the current CBA that, in the absence of a new CBA, will necessarily make less money available in free agency. And it’s a dynamic that both the league and the union acknowledge.

8 responses to “CBA status quo could stifle 2020 spending by up to $700 million

  1. “the amount of the player’s salary and compensation in future years can’t be lower than the annual allocation for the signing bonus. If, for example, one of the high-end quarterbacks signs a four-year deal with a $40 million signing bonus, his salary will have to be at least $10 million in 2020, resulting in a cap hit of $20 million for 2020. In other years, a large signing bonus ($40 million) could be coupled with a low salary ($1 million) to keep the cap hit at $11 million.”

    This is engineered to reduce large signing bonuses for the teams. It is not good for the players

  2. The uncertainty must be driving team front offices, nuts. Thankfully, this coming Thursday everyone should know what CBA is in effect for 2020.

  3. Nate Solder is right for signing this deal, putting the entire membership’s best interest first. Young players will benefit. Seems like only multi millionaire players who’ve gotten paid are against. An expanded reg. season is coming. Do players want their temp taken in the mouth? Or ….

  4. What’s lost in all of this is the wonderful job Demaurice Smith did. He won this negotiation on almost every point. While people like Richard Sherman are content to play Russian Roulette (with 5 bullets in the chamber) with other peoples futures

  5. curtfj says:
    March 7, 2020 at 3:04 pm
    That’s an average of almost 415k per player, gone forever…
    ~~~~~~~~~~~~~~
    Only in a math sense. Realistically, that money would all go to the top 30-50 players getting new contracts. The rest would not be impacted much if at all.

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