Honest question regarding the salary cap & team finances

[Afigueroa22]

How do the finances of an NFL team operate? Do teams have a portion of their revenue go into a reserve that is used for the cap exclusively or is it just a pool of money for all team operations? For the sake of the argument, if a team had a very poor revenue stream and did not generate enough money to fund all football operations and cover the cap, do owners just dip into their own pocket? People keep mentioning that Stephen wants to be cheap and make more money, does that mean if they do not spend X amount they just profit from the money left over? Just curious.

 

[HungryLion]

I don’t know specifics. But the NFL shares revenue to a certain degree.

Considering how popular the NFL is. Even the worst teams are raking money in by the boat load.

 

[Afigueroa22]

I don’t know specifics. But the NFL shares revenue to a certain degree.

Considering how popular the NFL is. Even the worst teams are raking money in by the boat load.

I understand that, with the TV contracts and all. Wonder if the bigger market teams get a bigger share of it?

 

[Little Jr]

How do the finances of an NFL team operate? Do teams have a portion of their revenue go into a reserve that is used for the cap exclusively or is it just a pool of money for all team operations? For the sake of the argument, if a team had a very poor revenue stream and did not generate enough money to fund all football operations and cover the cap, do owners just dip into their own pocket? People keep mentioning that Stephen wants to be cheap and make more money, does that mean if they do not spend X amount they just profit from the money left over? Just curious.

https://www.___GET_REAL_URL___/s/ww...mparison-salary-cap/gu0xok7mphu01x3vu875oeaq6

 

[xwalker]

How do the finances of an NFL team operate? Do teams have a portion of their revenue go into a reserve that is used for the cap exclusively or is it just a pool of money for all team operations? For the sake of the argument, if a team had a very poor revenue stream and did not generate enough money to fund all football operations and cover the cap, do owners just dip into their own pocket? People keep mentioning that Stephen wants to be cheap and make more money, does that mean if they do not spend X amount they just profit from the money left over? Just curious.

There are some reserve requirements for contracts with bonuses that "might" get paid.

There are likely requirement to have some number of weeks worth of payroll but not a full season.

@Nightman has looked into it.

The NFL has loaned money to teams in the past. I think the Jags have had to borrow money from the league at one point.

Owners could likely get a bank or private equity loan using the team as collateral.

Jerry used loans to buy the Cowboys. I've often heard that Jerry used 10M of his own money and borrowed the remainder of the 140M purchase price.

 

[Nightman]

There are some reserve requirements for contracts with bonuses that "might" get paid.

There are likely requirement to have some number of weeks worth of payroll but not a full season.

@Nightman has looked into it.

The NFL has loaned money to teams in the past. I think the Jags have had to borrow money from the league at one point.

Owners could likely get a bank or private equity loan using the team as collateral.

Jerry used loans to buy the Cowboys. I've often heard that Jerry used 10M of his own money and borrowed the remainder of the 140M purchase price.

Right on

Teams are only allowed to have so much debt..... the League will step in before hand

The TV money and revenues sharing is enough to make payroll for most teams for the season

Then local money and suites and parking and concession cover the expenses

Teams do have to put cash into an escrow account when they guarantee it to a player... so if Dak gets 30m guaranteed they either have to write him a check or put it into escrow......that is why most guarantees are staggered these days

Long story short it is practically impossible to miss payroll.... there is too much revenue and too many people watching the bottom line

 

[Direwolf63]

Rumors are that the Raiders couldn't go after Le'veon Bell because after they re-worked Antonio Browns contract and signed their new tackle to a massive deal and subsequently put money into an escrow account for these transactions, Davis didn't have the cash to put into escrow for Bell.

Not sure if true but Davis doesn't have the cash flow of most teams and not even close to what Jerry collects. Hence the move to Vegas.

 

[Nightman]

Rumors are that the Raiders couldn't go after Le'veon Bell because after they re-worked Antonio Browns contract and signed their new tackle to a massive deal and subsequently put money into an escrow account for these transactions, Davis didn't have the cash to put into escrow for Bell.

Not sure if true but Davis doesn't have the cash flow of most teams and not even close to what Jerry collects. Hence the move to Vegas.

He is cash poor and cap rich

He has 40m in cap space but no cash to guarantee too many big deals before the move

They should be able to sell cap space for cash

 

[Little Jr]

Right on

Teams are only allowed to have so much debt..... the League will step in before hand

The TV money and revenues sharing is enough to make payroll for most teams for the season

Then local money and suites and parking and concession cover the expenses

Teams do have to put cash into an escrow account when they guarantee it to a player... so if Dak gets 30m guaranteed they either have to write him a check or put it into escrow......that is why most guarantees are staggered these days

Long story short it is practically impossible to miss payroll.... there is too much revenue and too many people watching the bottom line

If a team gives out a 30m signing bonus, dont they typically get that all in a lump sum, typically?

 

[Nightman]

If a team gives out a 30m signing bonus, dont they typically get that all in a lump sum, typically?

Usually they will get it all at once but it varies from player to player...... sometimes they stagger half of it until next March but they still call it a signing bonus for cap reasons

 

[Little Jr]

Usually they will get it all at once but it varies from player to player...... sometimes they stagger half of it until next March but they still call it a signing bonus for cap reasons

Ok, that's what i thought. When you said they stagger guarantees I thought something had changed and they stagger it through the life of the contract.

 

[RJ_MacReady]

 

[conner01]

He is cash poor and cap rich

He has 40m in cap space but no cash to guarantee too many big deals before the move

They should be able to sell cap space for cash

That’s the biggest thing some miss
The cap and teams finance are totally different
Most very rich people are asset rich and cash poor
When Jerry bought the cowboys he had the wealth to pay cash, but didn’t have the cash
He would have had to sell assets

 

[Nightman]

Ok, that's what i thought. When you said they stagger guarantees I thought something had changed and they stagger it through the life of the contract.

Here is a good look at LBell's contract details and structure:

Signing bonus: Bell gets $8 million right out of the gates, an amount to be paid in three installments. He’ll get $4 million within 15 days of March 31, 2019, $1 million within 15 days of April 15, 2019, and $3 million within 15 days of January 1, 2020.

Roster bonuses: Bell receives a $4 million 2019 roster bonus, with $3 million of it due within 15 days of April 15, 2019 and the remaining $1 million due within 15 days of October 15, 2019. The payment is fully guaranteed. He also receives a $4.5 million 2020 roster bonus, $2 million of which must be paid within 15 days of March 31, 2020 and the remaining $2.5 million of which must be paid within 15 days of October 15, 2020. The 2020 roster bonus becomes fully guaranteed on the fifth day after the contract is signed, which makes it as a practical matter fully guaranteed at signing.

https://profootballtalk.nbcsports.com/2019/03/17/the-full-details-of-the-leveon-bell-contract/

 

[Afigueroa22]

Here is a good look at LBell's contract details and structure:

Signing bonus: Bell gets $8 million right out of the gates, an amount to be paid in three installments. He’ll get $4 million within 15 days of March 31, 2019, $1 million within 15 days of April 15, 2019, and $3 million within 15 days of January 1, 2020.

Roster bonuses: Bell receives a $4 million 2019 roster bonus, with $3 million of it due within 15 days of April 15, 2019 and the remaining $1 million due within 15 days of October 15, 2019. The payment is fully guaranteed. He also receives a $4.5 million 2020 roster bonus, $2 million of which must be paid within 15 days of March 31, 2020 and the remaining $2.5 million of which must be paid within 15 days of October 15, 2020. The 2020 roster bonus becomes fully guaranteed on the fifth day after the contract is signed, which makes it as a practical matter fully guaranteed at signing.

https://profootballtalk.nbcsports.com/2019/03/17/the-full-details-of-the-leveon-bell-contract/

Didn't know that, thanks.

 

[DanA]

All teams have the same salary cap which is calculated based on NFL revenue from the previous year. That means it typically increase every year, currently sits at about 188m for 2019.

Teams are however able to carry over cap space which convoluted the numbers a bit. So in a rebuild year a team might spend 120m of a theoretical 150m cap space and carry that forward so that then in a Super Bowl chasing year that could increase that out to 180m when the cap is still 150m.

That’s why the Patriots results are so amazing. In a salary cap era that shouldn’t really be possible.

 

[Bohuntr97]

All teams have the same salary cap which is calculated based on NFL revenue from the previous year. That means it typically increase every year, currently sits at about 188m for 2019.

Teams are however able to carry over cap space which convoluted the numbers a bit. So in a rebuild year a team might spend 120m of a theoretical 150m cap space and carry that forward so that then in a Super Bowl chasing year that could increase that out to 180m when the cap is still 150m.

That’s why the Patriots results are so amazing. In a salary cap era that shouldn’t really be possible.

Agreed. The pats though have HOF QB and a coaching staff that can get by without overpaid superstars on both sides. They pay a few and let the rest walk.

 

[John813]

Rumors are that the Raiders couldn't go after Le'veon Bell because after they re-worked Antonio Browns contract and signed their new tackle to a massive deal and subsequently put money into an escrow account for these transactions, Davis didn't have the cash to put into escrow for Bell.

Not sure if true but Davis doesn't have the cash flow of most teams and not even close to what Jerry collects. Hence the move to Vegas.

Those rumors appeared(first time for me) with the Mack/Cooper trades.

Mark Davis isn't an owner who is swimming in millions or billions. His net worth is purely off the Raiders franchise, but it's not like he actually has 500mil in his bank account.

Mack wanted, and eventually got a 34mil signing bonus. Rumors started up after the trade that one Davis didn't like Segal(Mack's agent) for the amount they wanted and that he really couldn't pay that signing bonus.
Mack took home 41 million last year before taxes.