As the NFL prepares for its 2020 season amid the COVID-19 pandemic, the league is already bracing for a mind-blowing revenue hit this year. Fortunately, the league is already preparing for it with a potentially creative solution.
NFL plans to use flat cap for 2021 salary cap
If the NFL regular season begins in September, which remains the expectation, the league will allow very few fans to attend games early on. While dramatically cutting stadium attendance will help keep people safe through social distancing, it will cost the league financially.
As the NFL’s optimism for fans attending games this year declines, the chances of the league losing billions of dollars in revenue increases. While there is now fear NFL teams could each lose $40-plus million in revenue this season due to the ongoing crisis, the league might have found a way to avoid a disastrous situation for the 2021 salary cap.
“The thought process now, is that the NFL and NFLPA will somehow be able to get the cap to be flat next year,” Ian Rapoport said, via The Rich Eisen Show. “There’s going to be some lost revenue, could be as much as $40 or $50 million per team, then you have the new tv deals. There are ways where they can sorta make up the money and finagle it, so the cap is flat.”
Discussions are already ongoing between the NFL and the NFL Players Association. While an agreement on the cap structure is necessary before the 2020 season begins, both parties reportedly think it will happen.
What is a flat salary cap?
The NFL has enjoyed record-setting revenue after each season for several years now and it is set at $198.2 million this season. It marks the sixth consecutive year the cap increased by $10-plus million, according to CBS Sports. However, with the looming economic hit that will hurt the league this season, a flat cap could help players and teams avoid a disastrous situation.
The 2021 salary cap was expected to skyrocket next season before the pandemic following a newly signed collective bargaining agreement. Now with reduced attendance and a projected drop in consumer spending, it would likely fall significantly.
However, instead of shaving off $30 million off the 2021 salary cap, the NFL would spread it out across several years of the CBA. The league would be able to do this thanks to labor peace and even more streams of revenue that are on the way.
Specific to this season, teams will tarp off the lower rows of their stadium and use those spaces to sell advertising space. It would generate millions of dollars, helping lessen the blow from a pandemic-related financial hit due to a drop in gate revenue.
Beyond the 2020 season, the NFL is already negotiating new deals with television networks for broadcasting rights to games. Between future contracts with NBC, ESPN, FOX and CBS, the NFL could pull in billions of dollars each year in revenue. Pair that with the NFL’s pacts with Amazon and other potential streaming services, it all leads to more money for the league.
In the end, the NFL should easily make it through any potential revenue hit this season. While navigating the salary cap might be a bit tougher for teams next season, the future remains bright and profitable.