NFL revenues could take a serious hit in 2020 if fans aren’t allowed to attend games, and if that happens, it would have some dramatic financial ramifications around the league. The biggest consequence of having zero fans in attendance is that the salary cap for 2021 would likely go down, which would have huge implications for all 32 teams.
To prevent the cap from going down dramatically, the NFL is already starting the process of putting together a few financial contingency plans and one of those plans would apparently involve asking the players to take a pay cut. According to NFL.com, one proposal being tossed around is that players would take a pay cut for their base salary in 2020 to make up for the lost revenues that are expected to come in 2021.
The salary cap, which is $198.2 million for 2020, is calculated based on expected revenue, and if that expected revenue goes down for a year — like it could in 2020 — then the cap would go down with it the following year. The NFL’s ultimate goal is to save money now so that the salary cap can still go up in 2021, or at worst, stay the same.
According to the league’s website, negotiations haven’t even started on the potential cutbacks, so there’s been no reaction from the NFLPA yet. Of course, you have to think the players will be absolutely against this. The NFL is a year-by-year league, and there are a lot of players who will be on the field in 2020 who won’t make a roster in 2021. For fringe guys like that, there would be no reason to give up money now to help future revenues that they wouldn’t ever see.
Also, for players looking to cash-in big right now, this could complicate their negotiation. A potentially lower salary cap number could have a major impact on current contract negotiations, which is notable because several big extensions will likely be signed this offseason with guys like Dak Prescott, Deshaun Watson and Patrick Mahomes set to possibly get a deal done. For instance, if Mahomes got a deal with $40 million per year, that’s something that Chiefs could handle if the cap goes up in 2021.
However, if the cap went down to say, $170 million, due to the revenue drop that would come with no fans, all the sudden, Mahomes would be eating up 23.5% of their cap space, and the Chiefs would then have to sign their other 52 players with only 76.5% of their cap space available.
One other possibility the NFL is considering to make up for lost revenue is to borrow from future TV deals. With the TV contracts coming up following the 2021 season (ESPN) and 2022 season (CBS, NBC, Fox), the NFL could look to get those deals done early and then use the rights money to make sure the 2021 cap doesn’t go down. For instance, if the TV deal was going to cause the cap to go up by $15 million in 2022, the NFL could borrow against that and have the cap go up $7.5 million in 2021 and $7.5 million in 2022 to prevent it from going down.
Whatever is going to happen is likely going to happen soon. The NFL doesn’t want to get into the kind of labor strife that other leagues — like major league baseball — are currently dealing with, so the league is shooting to have a contingency plan in place and agreed to with the NFLPA by the time the regular season starts.