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Did the salary cap push the NFL to the brink of a canceled season?

Rick Horrow explains the salary cap’s effect on America’s major professional sports

 


“It wasn’t free agency that changed the NFL; it was the salary cap.” The words of high-profile sport agent Leigh Steinberg help explain why negotiations between players and owners in all four of America’s major professional sports are taking on so much importance in 2011. As outlined by America’s leading sport business expert Rick Horrow in the upcoming Beyond the Scoreboard: An Insider’s Guide to the Business of Sport (Human Kinetics, 2011), the collective bargaining agreements (CBA) of football, baseball, basketball, and hockey are due to expire over the next two years. Most leagues argue that setting a salary cap, like the one used by the National Football League, provides competitive balance, ensures profitability at the team level, and promotes widespread sharing by players of the sport’s total revenues.

“As agents try to get their players the most money possible, executives are asked to turn limited dollars into championships,” says Horrow, who serves as a sport business analyst for Fox Sports, Bloomberg TV, Bloomberg Businessweek, and the BBC. “Teams are asking more and more of their athlete workforce—more playing time for less money and fewer perks. This issue is at the heart of the negotiations, placing the onus on agents and executives, just as much as it’s placed on players and owners, to find common ground since, at the end of the day, responsible management means more money for everyone.”

Horrow points out that while the National Hockey League has so far stayed relatively quiet about its yet-to-come CBA talks, team owners in the National Basketball Association, where the current CBA is set to expire in just a few weeks at the conclusion of the 2010-2011 season, are reportedly planning to drop the players’ salaries immensely during negotiations with the NBPA. They are also looking to shorten the maximum length of a contract to four or five years, with only the first two years guaranteed. Making the third and fourth years guaranteed only if a player reaches certain performance-based incentives would make the labor scenario in the NBA look much more like that in the National Football League.

There is also support for the Major League Baseball model, where the clubs with the highest payrolls have a higher likelihood of success on the field.

“The New York Yankees had a $208 million payroll in 2009, by far the highest in baseball,” explains Horrow. “Was it sheer coincidence the franchise won its 27th World Series title that year?” But in baseball, without a salary cap, salaries seem particularly out of whack at a time when national unemployment hovers around 10 percent. Even the most inexperienced rookies in the majors are guaranteed a $400,000 minimum salary, the same salary paid to President Barack Obama. Yet MLB, facing the same down economy as everyone else, has slowly started to rationalize its pay structure, which looks to be the crux of upcoming baseball labor talks.

It’s in the NFL where CBA talks have sport industry executives, as Horrow puts it, “doubling up on their blood pressure medication.” Since a new deal wasn’t consummated by Commissioner Roger Goodell and NFLPA head DeMaurice Smith by March 2010, the 2010 season operated without a salary cap. And in early March 2011, the league’s current agreement with its players expired, leaving in question whether or not the 2011 season will even take place.

Beyond the Scoreboard, coauthored by Horrow Sports Ventures vice president Karla Swatek, tackles the salary cap and many other hot-button topics head on, giving readers insider access to the boardrooms, negotiating tables, and executive suites of sport’s most influential powerbrokers. For more information,

For more information, see Beyond the Scoreboard.




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Beyond the Scoreboard
Rick Horrow, America’s leading expert in sport business, and coauthor Karla Swatek give fans an inside look at the multibillion-dollar world of professional sport.
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Rick Horrow, America’s leading expert in sport business, and coauthor Karla Swatek give fans an inside look at the multibillion-dollar world of professional sport.
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