The new CBA and the law of unintended consequences
Last year, in their haste to ensure that the 2011 NFL season would kick off on time, the league and the NFL Players Association pushed through a new Collective Bargaining Agreement (CBA). Awash in a haze of jubilation over the prospect of a full 10 years of labor peace — and their excitement over the long-awaited rookie wage scale — few fans or analysts stopped to question whether this deal would be good for the long-term health of the league.
The new CBA was engineered to address some of the most glaring problems the league had encountered. Most notably, pay for early 1st-round picks had risen to unsustainable heights. Rookies like Detroit Lions quarterback Matthew Stafford were the highest-paid players in the league before they had played a single down. This was leading to situations in which players were holding out for the best possible compensation packages, with the result that top prospects were missing OTAs and even training camp.
Under the provisions of the rookie wage scale, salaries of incoming draft picks are pre-slotted, eliminating almost all need for negotiation between agents and teams. No longer will general managers be paralyzed with indecision, waiting for other teams to make the first move so they have a reference point for their own deals. No more do teams get bogged down in discussions that drag on interminably. As a result, the 2012 draft class has been signed at a record pace. All 1st-round picks should be present for OTAs and training camp this year.
This is good for the league, the players, and the fans.
As with most things human, however, the law of unintended consequences tends to rear its ugly head, and I fear it will be no different with the new CBA. The rookie wage scale has solved one problem at the expense of possibly creating another.
It is common knowledge that players make most of their money not in their rookie deals but in their second and third contracts. While the rookie wage scale has reduced the risk teams assume in the first round, in reality, they have simply kicked the problem down the road. The teams will obtain young talent at below market price, but when the time comes to sign these players to their second contracts, there will be some very tough decisions to be made.
This problem will be compounded by the so-called “90-percent rule,” which forbids teams to spend less than 90 percent of the salary cap allotment every season. The rule was implemented to address the problem of certain teams scrimping season after season — undercutting the salary cap by up to $30 million or $40 million. Unfortunately, the league may simply have succeeded in swatting at a fly with a jackhammer.
Sure, everyone agrees that it is bad for the product on the field when teams are cheap year after year. On the other hand, what about those times when teams are not trying to be stingy but rather are trying to prepare themselves for the future? After all, it’s in their second and third contracts, not their rookie deals, that players make the most money. There are situations in which a team might make a legitimate strategic decision to stay below the cap for a season or two.
For example, a team like the Minnesota Vikings might find itself in rebuilding mode and want to stockpile cash so they can re-sign a crop of promising young players. What if they draft a quarterback as a developmental prospect in the 2nd or 3rd round, only to find that by the end of his deal (which probably cost less than $1 million a season), he has blossomed into a true franchise quarterback? With a salary cap of roughly $125 million, the 90-percent rule mandates that teams spend $112.5 million every year, leaving a window of only $12.5 million with which to manage payroll fluctuations. The annual salary for a franchise quarterback could easily exceed that $12.5 million mark all by itself. Will the team now be forced to cut him?
It is easy to see how the 90-percent rule could conceivably make it it disadvantageous for teams to practice a draft-and-develop philosophy.
Ultimately, the NFL and NFLPA gave the fans what they wanted in 2011 — a full season of professional football. However, I think in their rush to hammer out a deal, they glossed over some of the potential negative ramifications of the new CBA. The full effect of these unintended consequences won’t be felt for a few seasons, but I fear we will have to live with them for nine more seasons until the current CBA expires.
I hope I am wrong.
Any questions or comments, please email me at [email protected].