Collective Bargaining Agreement Update

"The NFL salary cap and the collective bargaining agreement between owners and players don't normally get much attention during the grind of the regular season, but recent news events raise some interesting questions about the future of the league, and its relationship with the players."

The NFL salary cap and the collective bargaining agreement between owners and players don’t normally get much attention during the grind of the regular season, but recent news events raise some interesting questions about the future of the league, and its relationship with the players. I’m now forced to take a break from wringing my hands over our underachieving Seahawks and look at the big picture for a moment. Don’t worry; we can all get back to micro-analyzing every crappy dropped pass after this brief discussion.

Before training camp, I described the status of the CBA and its impact on our ability to sign our numerous free agents after this season. The current agreement expires after 2007, so on the surface 3 more years remain after 2004. However, the CBA contains some traps that force both sides to come to the table well ahead of the actual end of the deal. The biggest trap is the last year is “uncapped”, meaning there are no constraints on contracts in that year. Good for players. Bad for owners. Right?

However, the players are squeezed in the 2 years prior to 2007. In 2005, signing bonuses can only be spread over only 5 seasons, and in 2006 the limit is 4 seasons. Essentially, the Seahawks have several key players who will want big contracts this off-season, but they will be limited to 5-year deals, unless the parties become pretty creative with tiered bonuses, escalators and other gadgets that pump up the value of player deals.

Those gadgets could still haunt the team, because of a little-known rule called the “Deion Sanders” rule. The Deion rule limits how much of a contract can be pushed into uncapped years (currently 2007 and beyond). Let’s say the Seahawks sign Ken Lucas to a contract that is cap-friendly for 2005, but contains an option bonus in 2006. (Don’t make me explain what an “option bonus” is anymore, frankly I bore myself sometimes….) If 2007 is still uncapped, the Seahawks could find themselves being charged a big hit against the 2006 cap. That could lead to key players being cut, and the next big earthquake, tsunami and lahar aren’t far behind!

OK, I’m quickly skidding off the rails. The important point is that if the CBA stays unchanged in 2005, several players are going to find it harder to see the contracts they feel they deserve.

And yet we’ve been hearing mutterings that the two sides are negotiating. NFLPA head Gene Upshaw broke media silence a few weeks ago, expressing the union’s desire to see the pool of dollars that is shared with players expanded. The salary cap is determined as a percentage of “defined gross revenue” which is shared by all 32 teams. Currently, shared revenue mostly comes from TV deals and ticket sales. Other stadium revenue, luxury suites, concessions, parking and advertising stay with the local teams. It’s easy to see why the union wants to add those ever-increasing dollars to the player’s pot (no pun intended…)

I’m just not sure the union is going to be able to convince the teams to hand over that revenue. If revenue isn’t shared among teams, the teams can’t all pay it to players. Otherwise, lower-revenue teams like San Diego would be put in more dire financial straits. Over the last 10 years, owners have leveraged cities to gain new stadiums for the express purpose of increasing revenue that isn’t shared with players or other owners. Most of the owners made substantial individual investments to achieve that goal.

And what of Houston Texans owner Bob McNair, who paid $700 million for expansion rights just 5 years ago? He paid a huge amount and expects to recoup part of it with a very favorable stadium deal. His huge payment to the other 30 owners will certainly give him a say in the direction of the next collective bargaining agreement.

We can hope that the new TV deals that were announced recently provide enough cash for players to accept a deal that doesn’t require owners to share more local revenue. Early reports show network revenue increasing around 25% annually over the current contracts with Sunday/Monday deals yet to be finalized. If the players drop their demand for a larger pie, they should be able to negotiate a larger piece of the current pie.

That should be quite enough pie for everyone.

"The Hawkstorian" writes about Seahawks history, the salary cap, and many other things for Seahawks.NET on an alarmingly regular basis. You can reach him at hawkstorian@yahoo.com.


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