Salary Cap, Revenue Sharing Set For Review At NFL Meetings

The NFL’s current financial model, based in large part on the twin pillars of a salary cap and a revenue-sharing agreement, will come under intense review this week from team owners as they gather in Palm Beach, Fla., for their annual league meeting.

The fallout from any changes made to the system probably would hit small-market teams like Cincinnati the hardest.

At issue is the NFL’s 2-year-old collective bargaining agreement with the NFL Players Association, which features a salary cap, and the future of revenue sharing between big- and small-market teams.

An increasing number of owners are unhappy with the CBA, and they have until Nov. 8 to opt out of the deal. It could happen as soon as this week; just nine votes are needed from the NFL’s 32 teams to kill the agreement.

If owners do opt out, the salary cap, which limits the amount of money each team can spend on players, would end after the 2009 season.

Simultaneously, the league’s system of sharing revenue between the haves and the have-mores is showing signs of strain. That’s because there is a growing pool of unshared revenue, such as advertising and local broadcasting rights, which tend to be greater in larger markets or among teams with new stadiums.

Small-market teams - such as the Bengals, Buffalo Bills and Jacksonville Jaguars - say they have to spend significantly higher percentages of their revenue (70 percent compared to 40 percent) on player costs than big-market teams, and that the highest-revenue clubs continue to push up player costs for the whole league.

These twin factors - the potential of no salary cap and the increasing disparity in unshared revenue - should make Bengals fans nervous, said Sports Illustrated NFL writer Peter King.

“Here’s what would scare me more than anything if I were a Bengals fan,” King, a former Bengals beat reporter for The Enquirer, said.

“It’s (Cowboys owner) Jerry Jones talking about how the (labor) deal is no good while simultaneously charging tens of thousands of dollars for seat licenses in his stadium that opens in 2009.”

In March 2006, Mike Brown of the Bengals and the Buffalo Bills’ Ralph Wilson were the only team owners among the 32 in the league to vote against the union’s proposal to extend the labor contract through 2011.

Brown and Wilson saw the proposal, which gave players 60 percent of league revenues - another $850 million of the more than $6 billion NFL - as disastrous for small-market teams.

Now some notable big-market owners - Jones in Dallas, Robert Kraft in New England and Pat Bowlen in Denver - are saying the deal is not good for the NFL.

They have said teams will struggle because players have too much money.

And though increasing numbers of team owners now think the deal was, in the words of Bowlen to the Rocky Mountain News, “not our smartest move,” they aren’t aligned in their vision for the league’s future.

For instance, it’s no secret that Jones wants to turn the Cowboys into the New York Yankees of pro football.

Not having to deal with a salary cap would put him one step closer to that goal.

“Nothing will be able to stop Jerry Jones from giving a great player like (Bengals quarterback) Carson Palmer a $50 million signing bonus as a free agent,” King said.

Compare the ghost of NFL future with that of big-league baseball’s present. The Reds, who open their season Monday, are among the 75 percent of teams who are outspent 2-to-1 by big-market clubs like the Yankees, Red Sox and Mets. The spending disparity makes it almost impossible for small-market teams to compete consistently for championships.

Now apply that model to the NFL.

King said that without a salary cap, Dallas would be among a small group of NFL teams - along with New England, Philadelphia, Washington, and the two New York teams - that would be able, and probably willing, to outspend the rest of the league for top talent.

Most of the rest of the league would have to operate like the Oakland A’s in baseball: Draft well, develop young talent, try to win in a three- to four-year window and then start all over again because they can’t afford to re-sign their top players.

Brown declined to be interviewed for this story, citing the fine that would result in ignoring the league’s call for silence on the issue.

But in interviews with Bengals beat reporters in March 2006, and again with The Enquirer in 2007, he warned of the competitive imbalance that would affect his team as well as such hallmark NFL franchises as the Packers, who play in the league’s smallest market, Green Bay, Wis.

“If you look at the baseball pattern and what happened over there, and which would be the likely result here, over time you would begin to see some teams spending a multiple of what other teams are spending (for players),” Brown said.

And the players union would like nothing better than to lose the salary cap. Once it’s gone, it’s not coming back, NFL Players Association executive director Gene Upshaw has said.

The twin issue to the labor agreement is revenue sharing. Upshaw contends the biggest disagreement isn’t between owners and the players union - it’s within the league, among small-market and large-market team owners who disagree over non-shared revenue.

Each team in the NFL receives $102 million from the league’s television contracts. And last year at the league meeting in Phoenix, owners adopted a supplemental revenue-sharing plan in which the top 15 revenue-producing teams - almost all of them in the NFL’s largest markets, such as Washington, Philadelphia, New York, Houston and Boston - pay into the pool.

Teams such as the Bengals, Buffalo, Jacksonville and Minnesota - which ranks last in team revenue - are among the 17 that will receive money.

The problem is the growing pool of unshared revenues. The Bengals were among the most low-revenue teams in the league in 2006 - in the bottom third, with revenues of about $177 million. The top third of the teams - including the New York teams, Dallas, Washington, Chicago, Philadelphia and New England - generated revenues on average of $256 million.

The league average was $211 million in revenue per team. Each team is required to spend the same on players; the salary cap will be $116 million in 2008.

Brown said teams such as the Bengals spend 70 percent of their revenue on players, though big-market teams spend only 40 percent on their on-field talent. That means big-market teams have more money to spend on head coaches and high-priced coordinators and assistant coaches, as well as on scouts and facilities.

Brown, Wilson and other owners of small-market teams say the rift is growing and threatens the league’s competitive balance. The cliché that any team could defeat any other team on “any given Sunday” could become a thing of the past.

“What is not in question is the Bengals’ ability to compete over the next few years,” Brown said in 2007 - a call that’s even more urgent in 2008. “What is in question is the Bengals’ viability over the long term. We are coming to the point where that is going to have to be addressed.”

- Marc Curnutte, Cincinnati Enquirer