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Who stands to lose the money?

Discussion in 'General NFL Talk' started by Stone, Jun 14, 2020.

  1. Stone

    Stone Well-Known Member

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    We know that NFL football will be a limited version this year, possibly up to complete cancellation of the season.

    Regardless of what plays out, the revenues will be down significantly. So who will bear the brunt of the loss?

    The owner of a business is typically responsible for economic downturn which then flows down to the employees via lay-offs and down sizing, and then the employees file for unemployment, but in professional sports, the owners can't really do that and the unemployment doesn't work for the players.

    I doubt if the CBA has stipulations in it for a pandemic.

    So who stands to eat more of the loss?

    Will government bail out the team owners?
     
  2. Roonatic

    Roonatic Well-Known Member

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    The fans will pay for it both through higher prices & any bailout.
     
    • Agree Agree x 1
  3. Brice

    Brice Well-Known Member

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    We are seeing this play out right now in the MLB; where the owners and players are miles apart on what to do for Player salaries and reduced revenue.

    I do not see how a small market team like the Pirates can survive this year without fan revenue.

    It is still too early to tell about the NFL; but the NFL has pushed forward all this off season even though all the experts and even their own coaches tried to stop them. Will the NFL owners be asking the players to take a pay cut like the MLB is doing come September?
     
  4. Steel_Elvis

    Steel_Elvis Staff Member Mod Team

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    In my quick read of relevant sections of the 2020 CBA, I think the revenue reduction may be at least partly reflected in the subsequent year's salary cap. However, I only spent about 10 minutes with the CBA, and it's around 450 pages, so I certainly could have missed something key to that answer.

    Article 12, Section 1(a)(xii) of the new CBA says:

    "(xii) Cancelled Games. If one or more weeks of any NFL season are cancelled or AR for any League Year substantially decreases, in either case due to a terrorist or military action, natural disaster, or similar event, the parties shall engage in good faith negotiations to adjust the provisions of this Agreement with respect to the projection of AR and the Salary Cap for the following League Year so that AR for the following League Year is projected in a fair manner consistent with the changed revenue projection caused by such action."

    In the clause above, "AR" means all revenues. The question is - what is meant by "changed revenue projection?" Is it a prospective changed revenue projection associated with estimating whether the cancellations will extend to the next season, or is it related to the "revenue projection" that established the cap for the current year? I believe it's the latter, but I'd have to read a crapload more of the CBA than I want to in order to be sure.

    Also, Article 12, Section 1(a)(i)(8) says:

    "(8) Recoveries under business interruption insurance policies that are received by any League- or Club-related entity, to the extent that such recoveries compensate such entity for lost revenues that would have been included in AR. The amount of such recoveries shall be included in AR net of (1) premiums paid for the policy/policies recovered under in the League Year(s) that include the events and the recoveries; and (2) deductible and unreimbursed expenses arising out of or related to the events giving rise to the insur- ance claim/recovery. Any lump sum payments will be allocated under the method separately agreed to by the parties"

    This passage implies that the league (or teams) carries business interruption insurance, and any proceeds from that mitigate the reduction of dollars.

    One interesting thing: the impact of a pandemic is usually covered under a force majeure (act of God) clause. I've negotiated large commercial contracts for decades, and have never negotiated one where the FM clause wasn't a key part of the negotiation. In the CBA, there is no FM clause. The only mention of FM is in the section that covers international games. I've never negotiated a CBA, but the NFL CBA is more of a commercial contract than normal CBAs. Very interesting (to me anyway)
     
    • Winner Winner x 1
  5. Steel_Elvis

    Steel_Elvis Staff Member Mod Team

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    I just read an article that suggests that the cap could go down by $70-80 million for 2021 if the season is played in empty stadiums. I can’t vouch for the numbers, but it makes sense.
     
  6. Roonatic

    Roonatic Well-Known Member

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    :eek:
    Cut Ben or the defense?
     
    • Hilarious Hilarious x 1
  7. bigbenhotness

    bigbenhotness Well-Known Member

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    Both means we are screwed
     
    • Agree Agree x 1
  8. Wardismvp

    Wardismvp Well-Known Member

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    I would not be for the Government bailing out
    Billionaire owners. They have already raked over the taxpayers
    with new Stadium deals thru out the years.
     
    • Winner Winner x 1
  9. AskQuestionsLater

    AskQuestionsLater Writing Team

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    Such events in the CBA could have been avoided by the players had they stood their ground and asked for more incentives, the CBA would not look so haphazard and rushed. Then again, had that come to pass, Pittsburgh's Roster could potentially look different as well given the financial restraints the team was in at the time. Either way, a lose-lose situation due to semantics and haste.
     
  10. AskQuestionsLater

    AskQuestionsLater Writing Team

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    Owners like Dan Snyder would love this. Not so much due to their State Governments bailing out the owners though. Such owners would not only have the cash to assist their bottom line but also use it as a basis for future ventures; Snyder's being a new Stadium..... again... :facepalm:
     
  11. SteelersFanIrl

    SteelersFanIrl Well-Known Member

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    That would be about right but that’s very much a worst case scenario. 30-35% of league revenue is local revenue, ie tickets sales, merchandising etc and that would be the area decimated if there are no fans. 70m is roughly 35% of the cap. Advertising revenue and sponsorship could also take a hit if the economy goes in to a tailspin.

    I think ultimately the owners will take the brunt of the hit and the league will agree to a cap freeze or small decrease, borrowing from future years rather than implementing a dramatic reduction. Players may be asked to take a pay reduction but nobody wants to see rosters decimated with high profile cuts in an effort to fit under the cap. The players would never stand for it and would likely hold out in solidarity with those that lose their jobs. Some owners will be better able to take the hit than others.
     
  12. Steel_Elvis

    Steel_Elvis Staff Member Mod Team

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    I think so too. However the owners will likely seek some concessions from the players (Possibly in items unrelated to the 2020 $$$) so that it’s not just a case of owners bearing all of the dollar impacts.
     
  13. SteelersFanIrl

    SteelersFanIrl Well-Known Member

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    Absolutely, pay deferment might be an option for higher paid guys or even a % reduction for guys above a certain salary.

    I just don’t see a situation where they can impose a large cap reduction. Even a 5% cap reduction would cause havoc as teams have based medium term roster plans around continual incremental cap increases. Bens cap hit is tipping $40m next year after the most recent restructure for example. If the cap goes down they’ll be in trouble. Mahomes is due a contract in KC, how on earth do you do that deal now?

    I’m sure the owners have discussed the issue and discussed possible contingencies as well. There seems to be a reluctance to get deals done with players right now which is understandable. I think a safety net will need to be put in place.

    Could we see the top guys like Mahomes sign deals that give them a set % of the cap annually rather than a set figure? This would be a good way to put a lid on the crazy QB contracts that we are seeing, Dak looking for $45m for example
     

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