FanPost

The salary cap and its future

 

Ahh the salary cap. Its the cockblock of free agency. The third wheel on an otherwise wondeful date. The extra ice in your whiskey that makes it less awesome.


But its a necessary evil. Without it, we'd be reduced to baseball. Which allows teams like the Yankees to buy talent up the wazoo. Teams like the Redskins don't realize there is a cap, and make huge mistakes. Our Steelers do not.

 

But we have been making a flurry of re-signings lately, and its important to consider how the cap has progressed to this point, and where it will go from here. Here's a breakdown.

 

First off, its important to understand how the cap is calculated. Basically when the CBA is made, the revenue is split in some way. Revenue has been defined differently over the years. In addition the owners used to take a chunk before dividing revenue. This no longer happens. However, in exchange, the percentage of revenue split has been altered substantially.

 

The CBA that was in effect in the early 00s was such that the owners took a large piece of the pie off the top. Then split revenue 64/36 in favor of the players.

This apparently didn't appeal to the owners as they saw the revenues increasing dramatically. After promptly extending the CBA in 2006, the players had to settle for less money. The players got 57-58 percent from 07-09.

This was mostly due to a big jump in revenues from Direct TV and also ESPN coming into the fold. Those deals are set to become even bigger. More on this later.

This year we see the cap number went DOWN from last year. Many people are scratching their heads, because the cap has gradually increased over time with revenue. Typically the average was about 5 million MORE (about 7%) per year to the cap. A few years with big TV deals spiked this up on a couple of occasions. Notably 05-06 and 08-09 which had a 15 and 12 million dollar increase respectively.

Why did it go down? The new CBA eliminated the old 'take some off the top' trick in favor of a generous splt to the owners. The new CBA is now 48/52 to the players.

With a 16 point swing in effect, we saw the cap drop about 9 million dollars this year.

 

So that takes us to today, and it explains the drop. But now where do we go from here? Clearly the Steelers have shown they're not afraid of the cap. The recent mega deal for Lamarr Woodley, and a nice contract for Ike Taylor, and recent deals for Harrison and Polamalu show this to be clear. The Steelers push the cap to its limits, despite being the annual silent player in free agency.

I did some interesting calculations regarding the cap. I can bore you with it if you like in the comments but I'll spare you the math.


In the standard years prior to this CBA the cap usually went up roughly 7% per year. However there have been 3 years that really defied that. The 97-98 year, 2005-2006, and 07-08. These reflect big changes such as TV deals. In particular in recent history you can mark DirecTV and ESPN in 2004/2005, and almost all the networks signed up again for 98.

The result is that even though the owners are taking a bigger percentage, money is just rolling in by the truckload and this has helped to keep the salary cap at an even keel pace of about 7%.

I went and retroactively applied the new CBA deal over previous years. And guess what, you still would have gotten a 7% raise every year. The overall total was about 3% lower however.

So its safe to say we can plan on about 7% salary cap raises over the next decade (the duration of the CBA). However, like in those 3 aforementioned years, there could be big jumps coming over the horizon. A big one noted is ESPN in 2013 which will launch the cap up around 15 million, much like the jumps in 06 and 08. Compound this with the typical 7% increases and we should have a cap floating around 160 million in 2014. This number will likely go higher because DirecTV and most news networks are lining up for deals again mid decade. In addition, NBC is probably (IMO) going to drop SNFL and it will go to the highest bidder (my guess being ESPN also). All these stars align in 2014.


As a result the Steelers can safely backload some contracts, which is what they've done with Woodley. Hopefully they can stay under the ceiling for the next two seasons. After that they can come out and pay their dues. We still won't have much money to play with, because deals for Timmons and Woodley and Taylor will be getting pricey in those backended years. But we WILL have the capacity to pay them. And thats the important thing.

So folks, don't worry about resigning Troy or Timmons next year. And dont sweat guys like Mendenhall and Wallace coming down the line. We should have more than enough room to fanangle our own guys. Just don't expect any big name signings off the market.

 

 

RECAP:

  • The cap will go up by about 7% a year without any major changes. The CBA is good for 10 years.

  • The cap is likely to shoot way up in 2014 due to a lot of TV deals ending.

  • The Steelers are, as usual, going to be up against the cap, but should be able to manage.

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