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Boardroom Feature: Recapping the NFL's Offseason & Its Financial Future



By Eddie Gonzalez

Seemingly out of nowhere, the NFL season is underway. Without a preseason or fans in most stadiums, the league’s 101st season will likely be its most unique ever. Still, the NFL trudges on undeterred, buoyed by broadcast money and COVID-19 protocols that have resulted in just one positive test for a player since August 30th and a 0.017 percent positive testing rate leaguewide. But with revenues that could fall up to $4 billion, the ramifications of the pandemic on the NFL could alter the league for years to come. 

The effects have already been felt this year, even as superstars signed massive new contacts and extensions this summer, setting some expectations before the Texans and Chiefs kicked off last Thursday. In one August week, San Francisco 49ers tight end George Kittle, Buffalo Bills left tackle Dion Dawkins and Green Bay Packers defensive tackle Kenny Clark secured deals worth a combined $205 million in total, signaling a boon leaguewide. The day before the season kicked off, the Rams signed Jalen Ramsey to the richest cornerback deal ever, giving the All-Pro a five-year extension worth $105 million. And, of course, the quarterback market was also set this summer, as Patrick Mahomes signed a historic $503 million contract extension. 

Perhaps more importantly, fellow Pro Bowl QB Deshaun Watson signed a four-year, $160 million extension, setting the non-Mahomes market and creating a fascinating standoff between  Dak Prescott and the Dallas Cowboys. Prescott has more tenure than Watson, and last year threw for more yards, touchdowns, and fewer interceptions, albeit with one extra game. In what may have been the surest sign of pandemic-based market confusion around the league, even for the league’s most valuable franchise, Prescott became just the eighth QB ever to be franchised tagged by their team, and only the third to actually play under the tag without securing a long-term deal instead. The pandemic hit just before the March 12th franchise tag deadline, and teams sprung into action amid the uncertainty, with 15 players receiving the tag, and only two signing long term deals as a result. Compare that to 2019, where just five players were franchise tagged, and four worked out new deals with their teams before taking the field on opening day. 

While the NFL’s nearly 11-figure broadcast rights revenue ensures the league’s financial security, they still will face complications this season and beyond. Some wrangling between the league and the NFLPA further covered the bottom line, as the league will maintain its $198.2 million salary cap this season. This stands even with all but five teams playing without fans to start the season, and at least one - the Washington Football Team - committed to playing without fans all season long. The league had pushed for an $8 million cut to the cap, only to be rebuffed by the NFLPA. The Players’ Association also fought against the league’s wishes to set the salary cap floor for the 2021 season at $165 million, a massive dip from the previously projected 2021 cap figure of $210 million, eventually settling on a floor of $175 million. While superstars like Kittle, Mahomes and Watson raked in cash for future seasons, league-wide the average guaranteed money per contract is down from $4.56 to $3.40 million, according to ESPN Stats & Information. Still, with the security of the most lucrative television rights in American sports, guaranteed money from March to August was up slightly year-over-year, from $3.33 to $3.64 billion, according to ESPN. 

For this season at least, the league continues to operate at a bit of a surplus, dishing out money to their top stars, even as players and teams quietly prepare for a rocky future. Even if fans return to the stands at some point, next year’s free agency crop figures to lose, at least in the interim. Prescott will be joined by veteran QBs Cam Newton and Philip Rivers, along with superstar offensive linemen David Bakhtiari, Ronnie Stanley, and many more in a talented free agency crop. With the salary cap influx, there’s no telling who will have the cash to even spend on these franchise cornerstones, including their current teams, setting the stage for what could be the most momentous and league altering, even if discounted, free agency frenzy in league history. 

But the stars will likely still get paid, just as they did this offseason even amid concerns that there wouldn’t even be a 2020 season. The players that stand to lose the most are the middle class, the players looking to cash in on growth and more potential. Those players will likely be relegated to short term, “prove it”-type deals, needing to show their immediate success projects long term yet again before securing a bigger payday once fans and their $4 billion annual revenue return to the stands and the salary cap stabilizes. 

Team building in the NFL is largely built on the back of salary cap gymnastics, a trapeze act that is won with sudden and shrewd restructuring of guaranteed money, adjusting cap hits, and making room for requisite spending as necessary. In some ways, the salary cap is imaginary, though salary can not exceed the stated number, money can be moved in ways that allow teams to fit this year, and deal with the rest later. So, if the Cowboys want to re-sign Prescott, and they’ve publicly stated over and over that they want to, the hefty paydays they gave to Amari Cooper and Ezekiel Elliot in the last two years won’t actually serve as deterrents. 

Not knowing the imaginary cap number they can’t exceed next year, though, will. The Cowboys and the other 31 teams won’t have a clue where that number resides until next year, and like all other businesses in the country, it will remain gigantic dive into the unknown until some semblance of normalcy returns to the world. Until then, NFL teams will continue to teeter between planning for the future with massive paydays for superstars they can’t afford to live without, and trying to push those decisions off until they know what they can even pay. 

The $175 million cap floor next season is a start, but every dollar counts, and just $1 million in cap space can be the difference between a Pro Bowler and a replacement-level player. In the game of inches, that could leave you with a burgeoning star at the most important position on the field, or searching in the scrap heap trying to make do with whatever is left. Only time will tell.