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OWNERS FACING MUTUALLY ASSURED DESTRUCTION?
As NFL management types get together in Texas for the annual crop report (i.e., the 2006 salary cap number, which is expected to be in the range of $100 million per team), there is an emerging theory among the attendees regarding the potential impact of the looming uncapped year of 2007.
Although the prevailing assumption is that a handful of teams, maybe more, will take full advantage of the uncapped year by buying up all of the talent available with those hundreds of millions in unshared revenue, there's growing concern that the process could begin as early as 2006.
The most obvious strategy for accomplishing this -- signing players to contracts with low salaries in 2006 and a huge raises in 2007 -- isn't available, since teams are limited to a 25-percent salary increase in the uncapped year.
But what the CBA doesn't address -- and what teams and agents have been using for years to circumvent the rookie spending pool -- are devices such as so-called "Not Likely To Be Earned Incentives."
These NLTBE's can come in various forms, and are premised upon the player or the team improving in one of various statistical categories. For example, an NLTBE can be tied to the team winning one more game than it did the prior year, or to the team improving in the rushing yards statistics by one spot. Although none of these kinds of triggers is a sure thing (making them, in theory, not likely to be earned), the use of multiple different NLTBE triggers make it far more likely than not that the incentive will be earned.
Because, however, the incentive technically is not likely to be earned, the money doesn't count against the cap for the year in which it is earned, but in the next year.
So if, for example, Redskins owner Dan Snyder decides to make a play for Colts receiver Reggie Wayne and includes in the offer a smattering of NLTBE's, any of which trigger, say, a $10 million payment, that money will count against the year in which there is no spending cap.
The problem, of course, is that if the CBA is eventually extended and a cap is in place for 2007, any team that employs such devices will be scuh-rewed when '07 comes around and all of the NLTBE's from 2006, or similar devices, hit the books.
But since it requires only nine votes to block agreement on a new CBA, it likewise requires only nine teams to start signing players to deals that push money into 2007 to ensure, as a practical matter, that any new CBA will maintain the uncapped year for 2007.
And some league insiders believe that once one team takes advantage of this huge loophole, the dominoes will start to fall as other revenue-rich teams try to keep up.
If the 'Skins, for example, do it, so will the Cowboys. Then the Giants could get involved. And if that dynamic spreads to six more teams, there will be no way to avoid an uncapped year in 2007.
Then the issue will be whether the NFLPA will agree to return to a cap-based system after, as a practical matter, getting two years of free spending. NFLPA executive director Gene Upshaw has said that there's no going back to a salary cap, if/when the uncapped year hits.
So perhaps the only way to avoid the problem is for all owners to use restraint come 2006. But the desire to win is very strong, and guys like Dan Snyder and Jerry Jones have a lot of money. Our guess is that one of them will get it started, and the question then will be whether enough others join in to render the uncapped year a certainty.
As NFL management types get together in Texas for the annual crop report (i.e., the 2006 salary cap number, which is expected to be in the range of $100 million per team), there is an emerging theory among the attendees regarding the potential impact of the looming uncapped year of 2007.
Although the prevailing assumption is that a handful of teams, maybe more, will take full advantage of the uncapped year by buying up all of the talent available with those hundreds of millions in unshared revenue, there's growing concern that the process could begin as early as 2006.
The most obvious strategy for accomplishing this -- signing players to contracts with low salaries in 2006 and a huge raises in 2007 -- isn't available, since teams are limited to a 25-percent salary increase in the uncapped year.
But what the CBA doesn't address -- and what teams and agents have been using for years to circumvent the rookie spending pool -- are devices such as so-called "Not Likely To Be Earned Incentives."
These NLTBE's can come in various forms, and are premised upon the player or the team improving in one of various statistical categories. For example, an NLTBE can be tied to the team winning one more game than it did the prior year, or to the team improving in the rushing yards statistics by one spot. Although none of these kinds of triggers is a sure thing (making them, in theory, not likely to be earned), the use of multiple different NLTBE triggers make it far more likely than not that the incentive will be earned.
Because, however, the incentive technically is not likely to be earned, the money doesn't count against the cap for the year in which it is earned, but in the next year.
So if, for example, Redskins owner Dan Snyder decides to make a play for Colts receiver Reggie Wayne and includes in the offer a smattering of NLTBE's, any of which trigger, say, a $10 million payment, that money will count against the year in which there is no spending cap.
The problem, of course, is that if the CBA is eventually extended and a cap is in place for 2007, any team that employs such devices will be scuh-rewed when '07 comes around and all of the NLTBE's from 2006, or similar devices, hit the books.
But since it requires only nine votes to block agreement on a new CBA, it likewise requires only nine teams to start signing players to deals that push money into 2007 to ensure, as a practical matter, that any new CBA will maintain the uncapped year for 2007.
And some league insiders believe that once one team takes advantage of this huge loophole, the dominoes will start to fall as other revenue-rich teams try to keep up.
If the 'Skins, for example, do it, so will the Cowboys. Then the Giants could get involved. And if that dynamic spreads to six more teams, there will be no way to avoid an uncapped year in 2007.
Then the issue will be whether the NFLPA will agree to return to a cap-based system after, as a practical matter, getting two years of free spending. NFLPA executive director Gene Upshaw has said that there's no going back to a salary cap, if/when the uncapped year hits.
So perhaps the only way to avoid the problem is for all owners to use restraint come 2006. But the desire to win is very strong, and guys like Dan Snyder and Jerry Jones have a lot of money. Our guess is that one of them will get it started, and the question then will be whether enough others join in to render the uncapped year a certainty.
