The annual NFL spending bonanza is set to kick off Tuesday, and it is highlighting, once again, a major problem for the nation’s biggest sports league.
This week teams are allowed to start negotiating with the newest crop of unrestricted free agents. And with the league’s salary cap slated to increase to $167 million, there will be plenty of cash to toss around when signings start after the NFL’s 17-18 season officially begins on Thursday afternoon, even if it’s still months before actual football will kick off again.
The increase in the salary cap is tied to the explosion of league revenue over the last several years. Across the sports landscape, leagues are signing rich television contracts like never before. The advent of the DVR and on-demand Internet streaming has cut into the ratings for most traditional television programming, leaving live events as the only thing viewers still seem to feel they must watch in real time.
The NFL has cashed in on the newfound demand for live programming to the tune of several billions of dollars a year. CBS, FOX, and NBC combine to pay around $3 billion per year to broadcast NFL games. Disney’s ESPN kicks in another $2 billion, with DirecTV adding $1.5 billion for its Sunday Ticket package. Throw in around $450 million for the rights to the Thursday night games and television revenue comes out to over $7 billion a year without even considering international broadcast rights or any cash the NFL Network brings in.
The influx of money led to the NFL taking in $13 billion in total revenue last season, with the league projecting to bring in around $14 billion this coming season. The gaudy figures further cement the NFL’s position as the top professional sports league in the world, ranking well ahead of the nearly $10 billion in revenue No. 2 Major League Baseball generated last year.
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The NFL’s revenue is up 204% from 2001, when it clocked in at $4.28 billion, and is nearly 100% larger than its $7.57 billion revenue in 2008.
As revenue has skyrocketed, so have the players’ salaries, but not nearly at the same clip. This coming season’s $167 million salary cap, which is calculated based on last season’s revenue, is only 135% larger than in 2002, when the salary cap came in at $71.1 million. Take into account the 2008 numbers and things look even worse for the players. The ’09-’10 season’s salary cap was $123 million, meaning there has only been a 36% increase in the salary cap since then, or a compounded annual increase of just 3.9%.
Part of this discrepancy can be traced back to the 2011 labor dispute that resulted in a revenue split that is generally seen as a great deal for the owners and a terrible one for the players. Also consider that revenue isn’t profit, so there shouldn’t necessarily be a one-to-one ratio of increase for the salary cap. But the fact remains that owners are pocketing more of the money than they used to, which has ramifications for the way team rosters are built.
In addition to shorting the players of money, the aforementioned labor dispute also changed the rookie pay scale, cutting the amount they could sign for basically in half. While the agreement was theoretically supposed to protect veterans by allowing teams to allocate more cash to sign seasoned players to better contracts, it actually did the opposite. Teams now load up on young players because they don’t have to pay them much, relatively speaking. And rather than spend the leftover money on a bunch of veterans with middle-tier talent, the extra cash now gets spent on top-of-the-line players like Andrew Luck or Von Miller.
Some 70% of players are now 27-years-old or younger, which shows just how much teams are using cheap labor to fill out their rosters. Most of those young players aren’t making the big bucks that years of experience can bring. In fact, after 25, players start to drop out of the league at a precipitously high rate, either due to injury or lack of production. In order for players to earn a legitimately large contract, to say nothing of a mega contract, they need to avoid both of those obstacles, but the odds of doing so are stacked against them. Instead, once they drop out of the league, more cheap replacements come in. And the cash keeps moving up the line towards the high-end players, not down towards everyone else.
No other position has seen the benefit of this shift in spending practices like quarterback has. Today the average quarterback has a salary that is a slightly under $7 million a year. Just four years ago, the average quarterback made $3.8 million. Teams are so desperate for a good quarterback that they spend wildly on any free agent who simply might be a decent option. Last year, the Texans signed Brock Osweiler to a four-year contract worth $72 million, including $37 million in fully guaranteed money. Osweiler, who had all of a half season of actual playing time under his belt before his signing, performed horribly last season, getting benched mid-season to choruses of boos by his own fans. But given the chance, the Texans would probably roll the dice again this year on another player just as unproven if they weren’t already shackled to Osweiler.
This year’s Osweiler looks to be Mike Glennon, who played parts of two mediocre seasons at quarterback before performing solidly in the only two games he appeared in last season. Based off of those two games, and the desperation of teams starved of a competent quarterback, Glennon is likely going to sign for as much as $15 million a year.
On the defensive side, linebackers have also enjoyed a sizable bump in pay over the last few years. Today they earn an average of $2.65 million, which is $850,000 more than they did in 2013. Cornerbacks, too, have seen their pay jump more than $800,000, to $2.49 million from $1.69 million in 2013.
While salaries are going up across the board, running backs seem to be losing their value. Although fans may be under the impression that they’re among the most highly compensated due to their visibility and frequent use on the field, they average less per year than almost any other position. Running backs have a high rate of injury, making teams balky at signing them to big contracts. They earned $1.49 million on average last season, down from $1.55 million in 2013. Even kickers and punters earn more than them, bringing in an average of $1.67 million and $1.71 million per year, respectively
One person that can’t be called underpaid is NFL Commissioner Roger Goodell, who made $32 million in 2015. Although Goodell actually made less than he has in the past (he had earned more than $44 million in 2012) his salary was still significantly greater than the $24 million taken home by last year by Steelers quarterback Ben Roethlisberger, the league’s highest paid player.
