Cash over Cap
Millions of words have been written and spoken in the past several days about the NFL's current labor situation, more of them devoted to empty rhetoric than to reality.
But as the two sides settled in Friday afternoon, in New York, to resume negotiations aimed at avoiding the kind of labor enmity that has so severely impacted other professional sports leagues, they did so with three little words taking on monumental importance.
Cash over cap. ? It's human nature. People that have money eventually decide they'll solve an issue by throwing money at it. And people who have less money, and feel the pinch, are by nature going to hang in a little longer, because they feel they have to, that their [financial] security is being threatened. ?
?An unnamed owner
As reported Friday morning by ESPN's Chris Mortensen, cash over cap, certainly a hot-button term for the NFL's lower-revenue franchises, has become a key issue in the labor debate. And it's certainly integral to any eventual resolution that successfully addresses the double-edged components currently keeping the league and the NFL Players Association from striking a deal.
In the simplest terms, cash over cap is essentially the difference between a team's true payroll and the NFL salary cap in a given season. Many of the league's high-revenue teams, but certainly not all of them, have a considerable advantage over the clubs occupying the low-revenue rungs in terms of cash over cap.
To understand the concept of cash over cap, one must understand that the salary cap is just a bookkeeping number, one that can be massaged by amortizing signing bonuses and with other mechanisms. The cap has never been indicative of a team's payroll. The Washington Redskins, believed to be the highest revenue producing machine in the league, have had payrolls well over $100 million the last few seasons, even though the highest salary cap level ever was in 2005, at $85.5 million.
For the fans who can't get their heads around how this works, here's a simple example: Let's say the Redskins signed an unrestricted free agent to a five-year deal that includes a signing bonus of $10 million and a base salary of $1 million for the first season of the contract. In salary cap terms, the Redskins are charged only $3 million, arrived at by prorating the signing bonus over five years and then adding the base salary. But in real dollars expended, or payroll, that player cost the Redskins $11 million for the first year. That's a difference of $8 million between what the player was actually paid and what his cap charge was for the initial season of the contract.
Multiply that example by several player acquisitions, prominent free agents or high-round draft choices, and the total cash over cap is considerable.
So why is the issue of cash over cap suddenly such a potentially galvanizing element? Because for several years, some owners, such as Mike Brown of Cincinnati, have regarded cash over cap levels as dangerous. And because, over the past 18 months, NFLPA executive director Gene Upshaw has been identifying cash over cap as an element of the widening disparity between the NFL's have and have-not franchises.
Because it cuts at the heart of the revenue sharing debate over which owners have been internally battling for more than a year, cash over cap could be a critical issue in Friday's negotiations. There is a feeling that if the NFL and the NFL Players Association can divine a formula that addresses cash over cap -- maybe one that penalizes franchises for breaching various cash over cap thresholds -- it will somehow ameliorate the low-revenue teams' angst.
As noted earlier this week by ESPN.com, it's actually a well-bonded alliance of nine to 10 low-revenue clubs that has demonstrated far more solidarity in recent days. Sources have suggested to ESPN.com that, in an effort to strike a deal that will preclude them from having to make deep roster cuts, some high-revenue teams have begun to reach out to their low-revenue fraternity brothers. But the lower-revenue teams have not budged from their insistence that they will not ratify an extension to the NFL collective bargaining agreement that does not adequately address their revenue-sharing issues.
"It's human nature," said one owner. "People that have money eventually decide they'll solve an issue by throwing money at it. And people who have less money, and feel the pinch, are by nature going to hang in a little longer, because they feel they have to, that their [financial] security is being threatened."
By dealing with the concept of cash over cap, though, negotiators on both sides of the bargaining table might have a way to bring owners and players together. And, right now, it would seem that Upshaw has more urgency to upgrade the unity in his rank and file.
In the last two days, the one voice previously missing from the ongoing labor negotiations, that of the players, has been heard with more frequency. While lauding the advances that Upshaw has promulgated for the players over his long tenure, Miami defensive end and Dolphins player representative Kevin Carter reiterated during a Thursday appearance on The NFL Network the need to strike a deal. Minnesota Vikings center Matt Birk, in an interview with the Minneapolis Star Tribune, used an especially unflattering term in laying blame on Upshaw for the current situation.
That doesn't quite qualify as an insurgency but clearly, there is some unrest in the ranks, both from players and agents.
Whether all of the dynamics currently at work result in an agreement before the new deadline remains to be seen. That the two sides huddled again on Friday, after declaring earlier in the week that the start of the league year would move forward, presents some reason for optimism. But there has been optimism before in these negotiations, and it remains a long shot that the two sides can accomplish in 72 hours something they've been unable to achieve for a year and a half.
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