FanPost

What happens if the salary cap goes down?

The current NFL television contracts expire in 2021 and 2022, so the NFL is pretty safe until then. But there have been a number of recent stories about how ESPN could be in serious trouble as a result of being locked in to high rights fees for sports content even as it hemorrhages subscribers due to people dropping cable to watch shows online instead. If that trend continues, ESPN won't offer nearly as much money to broadcast NFL games in the next contract as they do in the current one.

But is that unique to ESPN? I haven't read articles claiming that the broadcast networks are facing the same pressures. But if showing football on cable becomes less profitable, why wouldn't showing it on broadcast television become less profitable for the same reasons? In an era where it has become common to have your favorite shows automatically taped so that you can watch them later, or even stream them on demand without you having to decide ahead of time what you want to save, for a show to run on this date at this time doesn't carry the same meaning that it did 20 years ago. Sports are the only thing that really demands to be watched live, with news at least demanding recency.

If showing football on television becomes less profitable, networks will bid less and the rights fees will go down. Today, the NFL gets paid about $5 billion per year, $15 per American for the rights to show NFL games on television. That $15 per person includes the people who aren't NFL fans, which is most of them. Even if the NFL could get all serious fans to shell out $100 per year per person (not per household!) for the chance to watch games on television, that wouldn't replace what they get now.

Television rights aren't the only NFL revenue source under threat. Technology has done a lot more to improve the experience of watching a game from home than of traveling to the stadium to watch it live. In another era, you could either watch a baseball game live or read the box scores in the newspaper the next day. The live experience has improved in a number of ways, but not by nearly so much as the transition from reading about a game in the newspaper to listening to it on the radio to watching it on television to watching your choice of which game you want to watch as well as being able to access highlights later.

I don't see any reason to believe that the advance of technology is going to end anytime soon. If enough fans who formerly attended games decide that they'd rather watch from home, that's a huge hit to ticket revenue. Or it could just as easily be that a younger generation of fans that was never accustomed to attending games doesn't pick up that habit.

Another threat is that of politicization. There really aren't very many organizations in America that have broad appeal all across the political spectrum. To a considerable degree, those on the right will watch different television shows from those on the left, consume different news sources, listen to different music, and a whole host of other things. This has become far more common in recent decades as we've gotten far more choices in media. It used to be that if a media source occasionally annoyed you with obvious disagreement with your political preferences, you couldn't really do that much about it. Today, you've got other options, and a lot of people decide to simply leave and go elsewhere.

That hasn't really hit the sports leagues thus far, but situations like that of Colin Kaepernick threaten to change that. For the NFL to be viewed on the left as being unduly harsh to Kaepernick's message could lead to some partisans on the left being disgusted with the NFL and abandoning it. To be viewed on the right as being unduly supportive could likewise lead to some partisans on the right abandoning the NFL. With different people viewing different media sources that share their personal political biases but all have a bias toward sensationalism, it's easier for both perceptions to take hold than neither.

That's not to say that Kaepernick is going to single-handedly destroy the NFL. He's a drop in the bucket in the grand scheme of things. But if that sort of activism becomes common--and a player aggressively pushing right-wing views is a problem for the NFL for the same reasons as Kaepernick's left-wing views--that could add up to a serious problem for the NFL. If 20% of your former fans are partisans who abandon the NFL because they're viewed as too political, that's a big problem for the NFL. Don't think that the owners are unaware of that threat.

So there are a lot of reasons why NFL revenue could decline. And if it does, so does the salary cap. I don't think it's a coincidence that the current NFL labor agreement expires shortly before the television contracts. The NFL wants to get an extension in place before the television contracts expire, so that if future television revenue goes down, that won't screw up labor negotiations.

So what would the players' union do if the salary cap tumbles from $180 million in 2020 to $140 million in 2025? Think they'll just accept that sort of unprecedented decline without a peep? Labor unrest could be another problem that further damages the NFL's popularity.

Now, I'm not predicting that this will all happen. There are other reasons to believe that NFL revenue will continue to rise, and the salary cap with it. But while I've seen a number of articles discussing threats to various league revenue sources, I haven't seen anyone piece it all together and ask what this would do to the league. So I just did.