Monday, March 06, 2006

NFL Free Agency Confusion

The breakdown in current NFL CBA negotiations has created some interesting circumstances for players and owners alike. The continued push-back of the free agency deadline has been a particularly intriguing situation, as an extension to the current CBA would involve restructuring the league's current salary cap. If the NFLPA and the owners were to come to an agreement and extend the current CBA, a substantial increase to the 2005 salary cap of $85.5 million would occur. As in previous CBA extensions the owners and the NFLPA would have to come to terms on certain aspects of the agreement such as Determined Gross Revenue (DGR). DGR is an essential component in determining the league salary cap and many teams have structured their teams' salary under the assumption that the DGR for 2006 will be greatly increased, ergo the salary cap will increase proportionately. I won't pretend to understand the complexities of DGR, but an explanation, along with an explanation as to how the salary cap is determined, is available here. Without an extension to the CBA, which expires after the 2007 season, the salary cap will increase to $94.5 million in 2006, which is a significant jump, but not as large as some teams have anticipated. This will mean that teams that have structured player contracts under the assumption that the cap would increase by more than $9 million this season may struggle to find cap room and would consequently be forced to cut players in a hurry. Teams with a large amount of cap space would then be able to capitalize on the glut of free agents, as the value of individuals available would undoubtedly drop in the face of increased volume.

The free agency deadline has been postponed four times, the latest deadline has been set for Thursday, March 9 at midnight. I am extremely interested to see how this pans out, as it may lead to a lot of major changes being made to teams that are close to, or are already over the cap. Several players have already been let go by teams anticipating the deadline to occur on Wednesday, March 1, and I would assume that, if an agreement to extend isn't reached, we will see some big changes occuring. The most interesting aspect of this phenomenon may be that it is the higher revenue teams, such as the Washington Redskins or the Dallas Cowboys, who will likely have to cut the most, which in turn benefits teams who do not have the revenue needed to spend close to the cap.

According to an article from there are, in fact, teams that have prepared for such a problem and who are poised to benefit from it. The article does not detail how these teams have prepared themselves to take advantage of the situation, but judging by the list, which includes the Browns, Ravens, Eagles, Bears, Vikings, Cardinals and Packers, it has a lot to do with making sure that they are well under the cap.

Here is a partial list of teams ordered by how much cap room they currently have (where the Vikings have $26.5 million dollars in cap room and the Raiders are $18.3 million dollars over the cap):

1 Minnesota Vikings $26.5 M
2 Green Bay Packers $26.411 M
3 Cleveland Browns $24 M
4 Arizona Cardinals $24 M
5 San Francisco 49ers $20.5 M
6 San Diego Chargers $19.6 M
27 NY Jets $-10 M
28 Denver Broncos $-13.5 M
29 Tennessee Titans $-15.5 M
30 Washington Redskins $-17.5 M
31 Kansas City Chiefs $-18.2 M
32 Oakland Raiders $-18.3 M


I have only listed the bottom six and top six teams and their respective cap room, the complete list, along with some good insight into what each team might do can be found here. One certainly has to suspect that the Raiders are in a pretty difficult situation coming off a 4-12 season and potentially 18.3 million dollars over the cap before the draft.

It is a complex and exciting situation and, to be honest, there is a part of me that secretly hopes that the CBA is not extended, thereby causing a big shakeup in this league that will benefit managers with foresight and good business sense.


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