The negotiations we’ve been quietly fearing for a while have arrived. As the NFL prepares for playing a football season during a pandemic, there are countless issues to address. Health and safety protocols are the most important, especially considering football’s unique challenge of having a 53-man roster per team plus coaches and assistants on each sideline. However, a close second issue to solve is the economic aspect of the sport.
Because fan attendance will be either limited or completely prohibited, the NFL is set to take a huge financial hit. While national revenue from TV broadcasts will likely remain the same (or maybe even increase as they seek new alternatives for sponsorships or other revenue streams), local revenue will cost every team a fortune.
Therefore, everyone is expecting the hit on revenues to impact the 2021 salary cap. After all, the cap is defined as a percentage of the league’s revenues, effectively making the players partners of the owners.
Every other sport has faced the uncomfortable moment of negotiating player salaries this year. The time has now come for the NFL and the NFLPA to address these issues prior to the season’s kickoff in September.
Unfortunately, the league got off to a terrible start a few days ago. The league’s first reported proposal was to hold 35% of the players’ salaries in escrow as a hedge for potential declines in revenue.
Quick note: For those unfamiliar with the term, Investopedia defines escrow as “the use of a third party which holds an asset or funds before they are transferred from one party to another. The third-party holds the funds until both parties have fulfilled their contractual requirements.”
While many are correct when noting Major League Baseball’s economy is way different than football’s because baseball has no salary cap, the NFL had a lesson to learn from MLB but didn’t pay attention.
The escrow proposal was not, unsurprisingly, received well by the players. Michael Thomas summed things up by tweeting “everyone will sit out and not play until they get their stuff together before we do this.”
Here’s the thing. The NFL and MLB are two worlds apart. However, people dismissing any comparisons by saying the MLB has no cap and the players are not partners of the owners are missing the point.
There will be baseball this year but only after things got ugly at the negotiating table between the union and the owners. How did things get so ugly for MLB? By throwing out these non-starter proposals at the beginning of the process.
Many around the NFL have proposed a lot of alternatives such as flattening the cap over the upcoming years instead of taking a big hit in 2021. Borrowing money from future TV deals and instead of having big increases on a yearly basis, slowing down those increases. There are alternatives to handle the situation, but proposing players to hold their money months after a new CBA got signed doesn’t look like a good idea.
Right now, not having football doesn’t seem like a realistic scenario. However, if they don’t get it right at the negotiating table, we might start getting concerned sometime in the near future.
The enemy here, for everyone, is the pandemic. It’s going to be a lose-lose situation for everyone. Baseball’s mistake was to add an animosity between players and owners during these tough times by throwing non-starter proposals.
The NFL has time to avoid this dangerous path. Let’s hope they do.