In writing about the business of football, it’s sometimes hard to ignore the business of other sports, especially now with NBA free agency front and center. It is a time where I tell NFL players to avert their eyes, as NFL compensation—even for the best of the best—pales in comparisons to NBA deals. Let’s examine.
It’s not (only) the money, it’s the security
Yes, when LeBron James, Chris Paul, Paul George or other top NBA players sign for contracts with annual averages approaching (or matching, in Paul’s case) $40 million a year, that number is certainly eye-popping. Most elite NFL quarterbacks average more than $10 million a year below that. What is even more astounding, however, is seeing NBA players such as Zach Levine—yes, Zach Levine—sign for $80 million over four years. (Levine was not even a free agent, he was a restricted free agent.)
It is not, however, the overall contract values that make NBA contracts far superior to NFL contracts. Some lucky NFL players—primarily veteran quarterbacks and unrestricted free agents signing in March—do sign contracts with total values in excess $80, $90, even $100 million. The difference, rather, is the security, strength and reality of those numbers.
NFL contract security for players is most often limited to the year of signing, if that. Players with some leverage may wrangle two years of security before ceding control to the team. And the elite few may have three years of secured earnings before nonguaranteed, team-controlled contract years. But NFL contract structure is universal: Once past the early low-risk (for the team) year or years of the contract, players assume all the contract risk. For illustration, look no further than the waiver wire in February and early March when teams flush away literally hundreds of millions of stated contract value. And while teams may have leftover cap accounting issues, there are rarely financial consequences to severing a contract.
Not so in the NBA. When a contract is for, say, $80 million over five years, it is truly $80 million over five years; not an NFL-style “$30-40 million in the first two and then we’ll see about the rest.” In the NBA, the team can always sever ties with the player, but the player must be paid in full. That security for the player is a game-changer in the allocation of risk on these contracts.
The contrast can be summed up with this difference: In the NFL, having more contract years favors the team; in the NBA, having more contract years favors the player.
Star player restrictions
Both leagues operate within a salary cap system, and both leagues have an even further restriction on their best players.
The NBA has maximum salaries, limiting the amount that even superstars can receive. And although no one will feel sorry for LeBron James now making $38.5 million a year, his value to any franchise is many times greater than that. The NBA system also incentivizes players with huge financial advantages to stay with their incumbent teams, yet star players still choose to leave—and leave tens of millions on the table—for better opportunities to win.
The NFL has an even stronger weapon than maximum salaries: the franchise tag, which allows teams to remove their best free agent player from the marketplace by giving themselves exclusive negotiating rights. NBA owners must have strong envy of the franchise tag, in addition to many other parts of the NFL player compensation system.
This year’s NBA team cap allocation is $101.8 million. With 15 players on a team, that represents average compensation of $6.67 million per player.
This year’s NFL team cap allocation is $177.2 million. With roughly 63 players on a team (53 active and 10 practice squad), that represents average compensation of $2.8 million per player.
Taking a deeper dive, the difference in player compensation is even starker when accounting for the amount of extraneous cap charges NFL teams carry compared to NBA teams. When NFL teams exit contracts with years remaining—as they do repeatedly—there are always leftover cap charges from signing bonus proration, renegotiations and other maneuvers to create short-term cap room. This is not cash remaining; it has already been paid. Rather, these are cap accounting charges taking up available space that could be spent on active players.
As an example: Between last year and this year, Tony Romo still accounts for close to $20 million on the Dallas Cowboys’ cap while working for CBS. And cap space allocated to Romo could have otherwise been allocated to active Cowboy players, but it is simply taking up that space. With so many charges like Romo’s to NFL team caps, it is inaccurate to calculate per-player compensation by simply dividing team cap room by number of players.
The NBA, with no cap proration on signing bonuses (it is unnecessary with money largely fully guaranteed), presents a much stronger cash-cap correlation.
I do not raise these disparities with an agenda to disparage NFL player agents or union leadership. Rather, as hopefully a leading voice in the business of sports, I try to take readers/viewers/listeners behind the curtain of the inner workings of player compensation, accessing my experience on both sides of the table (agent and team).
When raising these issues, I hear many reactions. Even in the past week, I received messages from a former player (Robert Smith) saying I was being unfair and a current player (Russell Okung) saying I inspired a Tweetstorm from him (an impressive one, at that).
When hearing from those defending the NFL contract system, there are some standard defenses and rationalizations. Here are a few, with my thoughts debunking these notions:
1. You can’t guarantee NFL contracts because football is a violent game with a much higher injury rate than other sports.
That is a powerful argument and one that I used for 10 years… as team management! It is up to player representation to push back with the inverse argument: Wouldn’t the fact that NFL players have vastly higher injury rates mean that players are MORE deserving of guaranteed contracts than athletes playing less violent sports with greater longevity? The argument can easily be shifted, although players have not been able to finesse that to this point.
2. NFL players only play 16 games; NBA players play 82.
This assumes NFL players just show up on game weekends. NFL players practice and play for roughly eight months a year, similar to other sports—like the NBA—with far more games. And, as noted above, NFL players play a much more intense and violent game. Do people think NFL players need to play 80 games, or somewhere close to that, to earn similar security on their contracts? Number of games, in this context, is irrelevant.
3. NFL roster sizes are four times as large as NBA rosters; of course NBA players should make a lot more!
This argument—even advanced by union leadership—does have merit, but ignores the fact that NFL teams have vastly more revenue to pay their players than NBA teams. In 2017, before NFL teams earned one cent of local revenue, they could count on a league distribution check of $244 million, some $77 million more than the 2017 player salary cap. And despite the star appeal of the NBA and the carping about the NFL, concussions and anthem protests, NFL media contracts and popularity dwarf that of the NBA and all other sports leagues. And if we are to do a crude “number of players” analysis, there are many sports leagues in this country with fewer players per team than the NFL, including the NHL, Major League Soccer, Arena Football, etc. With far fewer players than NFL rosters, should these players make more than NFL players? Revenues matter.
How to change: Players’/agents’ roles
Reactions from players, fans and media to this inequity bring out the usual tropes about players needing to take shorter contracts—albeit with less overall money—or bracing for a strike at the end of the CBA in three years. Well, as I often say: Good luck with that.
Player contract negotiations, as with any negotiations, are a function of leverage. In probably 98 percent of NFL contract negotiations, the team has more leverage than the player. While there are outliers like Kirk Cousins—a productive quarterback who (finally) made it to the open market and signed a three-year, $84 million, fully-guaranteed deal with the Vikings—most negotiations are with either lesser players or players still under contract, giving the team more options than the player. And without options, the player has little bargaining power.
Contract guarantees are a result of these individual negotiations. While Cousins pushed the envelope on fully guaranteed deals, its impact was muted by the length of the deal (just three years). Three-year guarantees had already been achieved, albeit as part of longer contracts. Indeed, the next major quarterback contract consummated after Cousins, that of Matt Ryan, was back to the typical contract for an elite quarterback, with full guarantees for three years followed by essentially team options after that. Now all eyes turn to Aaron Rodgers; can he carry the ball to the next frontier for players, with guarantees into his fourth or fifth year? Perhaps, but having sat in the Packers’ negotiating seat for 9 years, I say the team can still negotiate confidently knowing Rodgers is under contract for two more years with potential franchise tags after that. Were Rodgers to wait past this year, he would have more leverage, but my sense is they will strike a deal. And yes, Rodgers will set a new standard for NFL compensation, with an average near, at or above $30 million per year. But how secure will the deal be in three or four years? That will be the key marker of the deal for precedent purposes.
How to change: Union role
While player agents handle individual player negotiations, the NFL Players Association handles collective player compensation. And this is where the union can make a difference in more meaningful ways than previously accomplished.
As per the present CBA, NFL teams do have spending minimums, but as I have detailed before, the percentage requirement (89%) is too low and the monitoring time is too long (every four years). Teams are not spending to the cap; they are carrying over tens of millions of unused cap room and too often letting it go unused again. And spending minimums are based on the actual cap ($177.2 million this year), not the adjusted cap including carryover amounts, which for seven teams is over $190 million this year. The NFLPA can make a true difference in player compensation and, yes, guarantees, by negotiating a much higher team spending minimum (say 95-97%) and an annual, or at least every two years, inspection.
With more stringent minimum spending requirements, the practical effect would be for teams to have more guaranteed contracts, even if they are not guaranteed. In other words, they would have to spend on the team in ways they do not at present. Teams could still shed hundreds of millions of contract value in February and early March as they do, but instead of them not replacing that spending or spending it on cheaper players, they would have to pay other players that money as part of this collective guarantee.
One final point is important in any discussion regarding the league and the union: CBA negotiations don’t have to wait until the deadline of an expiring deal. They can happen at any time, at any moment, between now and the expiration of the CBA. And with contracts for both Roger Goodell and DeMaurice Smith now extended past 2021, there is no reason for delay (other than the NFL knowing it has a good deal and not wanting to change it). This is where a lack of trust among leadership may be detrimental; if Goodell and Smith had a trusting relationship—which they clearly do not—negotiations toward a new agreement could be ongoing and productive in the past, present and future. Instead, we have threats of lockouts, strikes and Armageddon in three years (all of which will probably not happen).
As with everything, time will tell where NFL player compensation goes in coming years. My foreboding sense for players, however, is that there will be little change without (1) agents of highly leveraged players squeezing teams on full guarantees past three years; and (2) the union holding firm on much stricter minimum spending requirements. Yes, these are big asks but there was a time when NBA players didn’t have guaranteed contracts like they do now either.
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