PFW discusses CBA, Salary Cap, and how '07 is going to suck!

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PFW discusses CBA, Salary Cap, and how '07 is going to suck!

Postby Pudge » Sun Dec 04, 2005 12:27 pm

Good writeup about how with the Collective Bargaining Agreement on its deathbed, how the league is going to totally change this off-season. The league has to get this thing done by next summer, or it's going to suck pretty badly.

PFW wrote:CBA impasse raises new issues

Salary-cap, free-agency rules could change beginning in March

By Jeff Reynolds
Dec. 4, 2005

Nearly three weeks ago, representatives from all 32 teams and the NFL Players Association met in Kansas City to advance discussions geared toward reaching an extension of the current Collective Bargaining Agreement.

The existing CBA runs through the 2007 league year, which begins March 1, 2007, through February ’08. Under the terms of that pact, ’07 could play out more like a free-for-all than the NFL system we know. That’s because several rules, including the existing universal hard salary cap, would either change or disappear at the conclusion of the 2006 league year.

Troy Vincent, president of the players’ union, believes the threat of entering an “uncapped” year without a new agreement might be enough to close the current gap between the owners and players.

Further stalled negotiations could have wide-ranging implications on business starting in March, when free-agency bidding opens.

“(Players) understand the pros and cons of going to an uncapped year,” Vincent said, adding that revenue sharing was the greatest obstacle between the two sides coming together on a new deal. “We don’t want the sport to do that because we know what that creates. You’ll get some (team) with a payroll (of) $200 million like we saw the Yankees have, and you get (at the other extreme) the Tampa Bay Devil Rays.”

That’s the big-picture perspective, that those in a position of power will only gain power by losing a collectively bargained deal that sanctions how each club operates on a day-to-day basis. Indeed, the ’07 season might be the black cloud on the horizon. Yet, the inability to extend the CBA has more immediate effects.

The final “capped” league year begins next March, when free agents are eligible to sign with other teams. As spelled out in the current CBA, a few new hurdles could exist:

Amortization. Currently, signing-bonus money and salary money can be spread over the length of a contract. A $15 million signing bonus on a five-year contract would create a cap charge of $3 million per year. Beginning in March, amortized bonuses can be spread across no more than four years. That same $15 million signing bonus spread over only four years results in an annual $3.75 million cap charge. Amortization is critical in signing first-round draft picks, especially players in the top 10 who traditionally earn double-digit signing bonuses.

Signing bonuses are certain to decrease, and teams in the best salary-cap shape would be at a huge advantage by using high salaries early in the contract or roster bonuses to lure top talent. Teams who play cap roulette each year — Denver and Oakland project to be more than $28 million over the ’06 salary cap — won’t be in good shape.

Limited salary increases. Unable to divide a signing bonus into as many portions, teams could — see Redskins, Washington — choose to “backload” player contracts. Naturally, a club could propose a contract with little signing bonus but write in a $20 million base salary in 2007, the uncapped year. In anticipation of just that, the NFL closed that loophole. With no CBA in place, a salary cannot increase by more than 30 percent over what it was in 2006. Were the contract signed next March, Bills WR Eric Moulds’ deal wouldn’t fly. Moulds makes $1.5 million in base salary this year. He’s due $6.089 million in 2006, an annual salary increase of 306 percent. Under the parameters outlined by the CBA for March, Moulds could earn a maximum of $1.95 million.

June 1 has no significance. Clubs are able to cut players from their roster on or after June 1 to delay any salary-cap hit to the following league year. For example, Kurt Warner was released by St. Louis after June 1, 2004. Even though he later signed with and played for the Giants in ’04, Warner counted almost $7 million — the amortized portion of his contract — against the Rams’ salary cap this season because he was cut after June 1. This coming March, because there is no salary cap in ’07, any player a club releases will result in an immediate cap hit.

Possible 2007 changes

Why doesn’t Vincent want it to get to an uncapped year? One gigantic reason is the impact it could have on younger players being denied free agency. Right now, restricted-free-agent status goes to veterans with three accrued seasons, and a fourth season results in unrestricted free agency. That’s all close — as in March 2007 — to changing.

A third-year pro, such as 49ers WR Brandon Lloyd, becomes a restricted free agent in March. But if the 49ers retain Lloyd with a one-year tender and don’t sign Lloyd to a long-term deal, he has no guarantee of unrestricted free agency in ’07. That’s because if the CBA is not extended, it states that starting in 2007, players need five accrued seasons to reach restricted free agency and six to be unrestricted. Lloyd wouldn’t hit the open market until 2009.

To go one step further, 2007 free-agent headliners Javon Walker, Ed Reed and John Henderson — first-round picks in 2002 with five accrued seasons — would only be restricted free agents. In an uncapped year, even small-market ownership in Green Bay and Jacksonville would likely execute their right of first refusal. Walker, Reed and Henderson would all be UFAs in March 2007 assuming the same system sticks should the CBA be extended between now and then.

Rookie cap remains? Even with no salary cap, the NFL can choose to keep a rookie pool in place. The rookie pool, the club-specific rookie salary cap generated by the NFL based on draft position and number of picks a club owns, has been somewhat bastardized in recent years — 2005 first overall pick Alex Smith had $24 million in bonuses stuffed into his contract. But, with the amortization of those bonuses potentially limited to four years for next year’s rookie class, expect more complex contracts for less money ... and more holdouts. Also with regard to rookies, don’t expect many to be cut in cost-saving moves. It just won’t happen, because the salary of any rookie who is released before training camp disappears from the books in name only. Some 85 percent of his salary must be evenly spread among the club’s other rookies. That’s right, if Joe Seventh-rounder can’t cut it, you’ll have to let him go and pump his $230,000 salary into the accounts of the other rookies on your roster.

The Final Eight Rule. As in 1993, the final eight playoff teams in 2006 would be limited in free agency the following season. The CBA says, “each of the four clubs that participated in the NFC and AFC championship games in the prior league year shall not be permitted to negotiate and sign any UFA to a player contract except any UFA who acquired that status as a result of waivers; any UFA who was under contract to said club on the last day of the last league year.” The other four teams who make the NFL’s final eight but don’t pass to the championship games are less limited but are restrained shoppers based on the amount of salary they can take on. They can sign one player with a first-year salary of $1.5 million or more and any number of players with a salary of no more than $1 million.
"Vincere scis, Hannibal, victoria uti nescis" -- Maharbal, 216 B.C.E.

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Postby Capologist » Sun Dec 04, 2005 8:06 pm

Bottomline: No extension equals pure chaos, not a good thing...

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Postby dirtybirdnw » Mon Dec 05, 2005 4:33 pm

That would morph the NFL salary cap into something very similar and just as restrictive as the NBA salary cap. Egads!

It would also appear that many teams will act as those they were handcuffed in the coming off-season. Looks like the draft might be the only route to resolve any of Atlanta's current roster issues.

Watch, we finally get to the Super Bowl again or even win it and we are handcuffed in the following seasons free agency unable to sign anyone. That Final 8 rule makes no sense.
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