Just like other major sports leagues in America the NFL employs a salary cap in order to keep costs around the league under control as well as maintaining a competitive balance between the teams competing in the league. The NFL operates with a ‘hard cap’ instead of a soft cap that is used in the NBA and the difference is that with the hard salary cap teams are restricted from spending more than the allocated salary cap where as soft salary caps give teams the ability go above the cap but that results in diminished privileges in free agency. The salary cap in the NFL has been on a consistent rise but due to the emergence of this current COVID-19 pandemic the future of salary caps has been thrown out the window and it will be hard for anyone to predict what happens next.
In regards to the current 2020 salary cap, the NFL had set the salary cap according to (nfl.com) at $198.2 million but that will rise to $242.9 million when you include the $44.7 million that is set aside for player benefits and performance bonuses, this new cap for the 2020 season was an increase of $10 million compared to the previous season. With the NFL increasing in popularity not just in America but around the world, this has resulted in much more income for the league and with the increased profits the salary cap was also projected to keep rising exponentially and mind-blowing statistic to back that up is that, since 2011, the cap has increased roughly 65 percent and $76 million per club according to NFL insider Ian Rapoport but as mentioned this has all changed.
The NFL were one of the lucky sports that did not have their season devastated by this pandemic as the league was well into its offseason when sports were shutdown where as the likes of basketball and baseball had to find a way to resume the season and get it finished. But with that said the NFL has a season coming up and will inevitably be damaged financially by this virus. This pandemic means that people can not gather in mass groups which implies that fans will not be allowed to attend games for the upcoming 2020/21 season which will cause massive losses around the league in game day income. According to Forbes the NFL would lose $5.5 billion of stadium revenue (the sum of tickets, concessions, sponsors, parking and team stores)—or 38% of its total revenue—based on figures for the 2018 season. It is also worth mentioning that these losses will not be lost evenly as teams such as the Dallas Cowboys and the New England Patriots make much more than the average when it comes to game-day income so they have more to lose as a franchise.
Due to the fact that the salary cap is tied to league revenue and league revenue for the upcoming season is projected to be very low in comparison to previous years, reports state that the NFL salary cap will be reduced considerably for the upcoming season, in terms of how far it can drop ESPN.com say that if revenue-loss projections are accurate and no other action is taken, next year’s cap could drop into the range of $120 million to $130 million per team. There have also been other reports floating around the media about suggested ways franchises will take less of a hit for the upcoming season such as owners working out ways of holding a percentage of the players’ 2020 income in escrow and also borrowing money from future caps to smoothen the current situation, but nothing yet is for certain.
As mentioned it is looking very likely that the salary cap will be dropping to around $120 million to $130 million region so who does this affect? Well, this drop would affect every franchise in the NFL, every team will have to start making cuts and beginning negotiations with players for reduced salaries over the year. There are also situations where some teams over the last year or two have handed out mega contracts to their stars in which they have to honour, most notably Patrick Mahomes recently signing a 10 year $450,000,000 contract with the Kansas City Chiefs, including a $10,000,000 signing bonus, this puts the franchises in a difficult situation where they now have one or two players taking up a ridiculous percentage of the cap. In regards to the players, the older players on the back-end of their contacts looking for a final contract and younger players coming off their cheaper rookie deals looking for a big pay raise on their second contract will be the most affected because owners will be very careful where the money is being spent and will be reluctant to give out big-money deals unless there is a great chance it will pay off.
To conclude, the future of the league’s salary cap is looking very bleak and I imagine that it will be a long time until the cap returns to where it was in the last year but the quality of the field should not change and the owners will be financially safe long term but the people who will be most damaged will be the fringe players and staff that will likely be cut, these people around the league will lose their jobs and the chances of finding another one in the league will be slim with teams reluctant to sign because of the reduced cap. In terms of hope for the future, there are suggestions that fans could make it back to stadiums before the end of the new season which would bring back some revenue. Also the TV rights deal is up for renewal in 2022 which will bring in more additional revenue for the league (Current deal brings in $5 billion a year). If I was to make a prediction on the future of the cap based of reports around the league I would say it will be reduced for the next two years and as fans are allowed back into stadiums and revenue starts flowing into the league again the cap will slowly start to rise year upon year, that is what we all have to hope is the case.
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