A CBA Math Problem

[Patler]

I see your point. The Salary Cap does not appear to include benefits; however, there are separate limitations and trigger points (minimums and maximums) regarding "player costs," which do include benefits.

Isn't that the issue I brought up on the previous page, the limit of 61.68% of "Projected Total Revenue" for the cost of ("Salaries" + "Benefits")?

As I said before, that would seem to mitigate the problem expressed by Murphy, that some combination of costs (whether "Player Costs" which is defined as "Salaries" + "Benefits" or some other undefined combination of expenses) is increasing faster than revenues. "Salaries" and "Benefits" would seem to be the largest components of whatever Murphy was talking about, and the increase of those is limited.

[sharpe1027]

Isn't that the issue I brought up on the previous page, the limit of 61.68% of "Projected Total Revenue" for the cost of ("Salaries" + "Benefits")?

As I said before, that would seem to mitigate the problem expressed by Murphy, that some combination of costs (whether "Player Costs" which is defined as "Salaries" + "Benefits" or some other undefined combination of expenses) is increasing faster than revenues. "Salaries" and "Benefits" would seem to be the largest components of whatever Murphy was talking about, and the increase of those is limited.

Yes. My point above was that the 61% immediately follows the discussion of the salary cap being at least has high as the previous year, so it appears to be mainly directed toward that situation.

Murphy's point could then still be valid, because the non-salary portion of the player's costs could rise significantly before the 61% was reached. Sure it is mitigated, but I do not think that the mitigation was setup for that purpose.

[Patler]

The mitigating impact of the 61.68% limitation can really have only two purposes; to guard against sky-rocketing benefit costs, or to protect against a sudden decrease in Total Revenue (most likely to happen only if the broadcast rights packages went down for some reason). I don't know what other situation it might seek to anticipate.

[sharpe1027]

I am suggesting that the context indicates that the intent was likely to protect against the latter. Since player benefits are relatively small, I am not sure they would have expected them to ever be high enough to hit the 61% mark. Confirming would require more data and also be more work than I want to do right now.

[NewsBruin]

I never thought about the playoff bonuses, underpaid player production bonuses, and other "found" money counting against the players' total compensation. I was also surprised that pension payments and the head-injury/dementia program, Combine physicals, OTA transportation, and 1/3 of the trainers' tape is considered in the "Benefit" section of "Player Costs."

It's great that the NFL has expanded its role to support and protect past players, but once that Player Cost figure hits 61.68%, then a dollar added to those programs is a dollar taken away from current player compensation.

Since Salary is directly proportional to Shared Revenue, I completely see how the "Player Costs" is rising faster than Shared Revenue.

[Guiness]

NewsBruin?
NEWSBRUIN?
NEWSBRUIN?

Been a while since I've seen you in these parts!

[NewsBruin]

Meh. I keep up with the board on my crappy 4-year-old BlackBerry (as a side note, what do NFL staff read when they're trying to procrastinate? Widget-maker messageboards?), so I'm content with following the conversation, rather than posting. We have some great posters here, so my thoughts and questions are usually well represented before I get home to post.

I just wanted to chip in that the rising "Player Costs" may not always have something to do with current players, and that kind of irritates me. I wish the 86 Plan and pensions were not included as "Player Cost" values, and I feel similarly for pre-drafted players' costs. To be fair, I haven't read the owners (Except that Jones idiot in Dallas) actually blame the players for rising costs, but the implication is there.

I also don't think the owners should look at anyone but themselves for any extravagant services and facilities they've built "for the players," like practice facilities and the like, if they weren't required in the CBA. Much like salaries, the owners choose what capital they're investing. Same goes for escalating coaches' salaries. They may cause a problem with usual profitability, but none of that should be laid at the players' feet.

Anyway, the better points are made without my help, so carry on and give me something better to do than my job.

[pbmax]

Great work folks. I have only a limited amount of time, but the idea that the cap covers salaries and benefits was in the second link of the OP, from an interview of Smith and off the Union's CBA website.

Its possible that contention is consistent with the 61.xx% figure that some have found and is not included in the 59.6% cap calculation.

I actually look forward to rereading it later, as I have had trouble with insomnia lately.

[Guiness]

Anyway, the better points are made without my help, so carry on and give me something better to do than my job.

Don't be so self-deprecating NB - I'm sure a lot would love it if you posted a little more around here.


Ok, let's see if I can make sense of this last string of posts.

59.6% of TR is the salary cap number, for salaries only.

61.68% of TR is the number that can not be exceeded by total player costs*. This means that an NFL team that is up against the cap has 2.08% of TR to spend on 'soft costs.'

*Total player costs include all of the regular soft costs like health care, worker's comp and pension plans. Items like work related travel, food and lodging are also pretty normal. There are also some unique items in there, like the '88 benefit' and post-season pay, although a parallel to that last might be performance based bonuses.

[Guiness]

Re-reading this section carefully

The actual dollar amount of the Salary Cap shall not be less than the actual dollar amount of any Salary Cap in effect during the preceding League Year, provided, however, that at no time shall the Projected Benefits, plus the amount of the Salary Cap multiplied by the number of Teams in the NFL, exceed 61.68% of Projected TR.

I've got another idea what the purpose of this clause may be, and the key is in the unbolded part.

It states that the amount of the salary cap can not decrease. If the cap was calculated at 59.6% to be $100million, and TR went that year so 59.6% is actually $99million, the cap would actually stay at 100. This could quickly cause problems.

The 61.68% number would be a safety net in case TR decreases too much. Continuing the previous example, if TR decreased to the point that 59.6% was going to be $90 million, but the cap was stuck at $100million, this clause would take effect.

Damn, maybe I should've been a lawyer. I certainly owe one enough!

[sharpe1027]

Re-reading this section carefully


I've got another idea what the purpose of this clause may be, and the key is in the unbolded part.

It states that the amount of the salary cap can not decrease. If the cap was calculated at 59.6% to be $100million, and TR went that year so 59.6% is actually $99million, the cap would actually stay at 100. This could quickly cause problems.

The 61.68% number would be a safety net in case TR decreases too much. Continuing the previous example, if TR decreased to the point that 59.6% was going to be $90 million, but the cap was stuck at $100million, this clause would take effect.

Damn, maybe I should've been a lawyer. I certainly owe one enough!

Yeah, that was my point, but I think you explained it better. I theorized that 61% is intended to protect against a drop in revenue because the salary cap would not go down if that happens.

Without that situation, I am not sure that the "benefit costs" would ever get close to the 61%. For example, although theoretically, the teams could spend 59.6%, they reality is that they spend much less (closer to 50%). I do not see anyway that the benefit costs would ever get to 11%...

[Guiness]

So where are we now, overall? Have we come close to answering the original question, or over the 3 pages of this thread, have we muddied the waters even more?

[sharpe1027]

So where are we now, overall? Have we come close to answering the original question, or over the 3 pages of this thread, have we muddied the waters even more?

My take is that Murphy's statement could be correct. The player costs could rise faster than the revenue because benefit costs are not used in the salary cap number. However, the total player costs couldn't have risen more than the hard cap of 61%, but that hard cap would only be hit if there was a very huge increase in benefit costs.