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NFL Free Agency and the Uncapped Year

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When NFL free agency was in it’s infancy, the institution of a free market system in the NFL completely changed the way the business side of the game worked.  A lot like the business of social media serves to prove today, no one disagreed that free agency was a valuable tool to anyone who could learn how to work the system, it’s just that no one really knew what they were doing.

Some teams figured it out sooner than others.  The Packers signed DE Reggie White to a 4 year-$17 million contract in 1993, which would have been the equivalent of $25 million when adjusted for inflation in 2008.  For reasons involving league revenues, NFL salaries have inflated far faster than the value of a standard traded good in the US.  When the salary cap debuted in 1994, the maximum spent per team could not exceed $34.6 million.  In 2009, the salary cap was officially listed at $128 million per team, but due to violations in the prior year regarding salary floors, it was effectively closer to $134 million per team.  League salaries have increased nearly 300% over the salary cap era.  Inflation in the dollar accounts for only a 50% increase over the timeframe.

In today’s NFL cap dollars, White’s deal is worth an equivalent of $16.5 million per year, or 4 years-$66 million.  This is not dissimilar to the value of Albert Haynesworth’s contract with the Washington Redskins (7 years-$100 million), except there’s an even greater percentage of Haynesworth’s money that’s effectively fictitious.

The point of this analysis is to show that a team like the Eagles might have been able to value White’s contribution to the team in terms of wins, and then reached the very logical conclusion that there’s no way an NFL defensive player is worth that much money.  The exact same arguments have been brought against the Redskins brass this year, particularly in the wake of a 4-12 season.  It’s coincidence that “highest paid” type deals have remained so proportional in value to the beginning of free agency.  Now consider: White was a first team AP all-pro 6 straight years from 1986 to 1991.  In 1992, he was a second team all-pro in a contract year, and he finished behind Minnesota’s Chris Doleman and teammate Clyde Simmons in the AP voting.  It wouldn’t have been indefensible to see White’s age and factor that into a value analysis.  Haynesworth signed with Washington at age 28.  White signed with GB at age 32.

And you know what, when Reggie White went to Green Bay, he never had consecutive 10+ sack seasons until the very end of his tenure there.  That record contract he signed: he was extended before he won the super bowl with the Packers.  Of course, Clyde Simmons ended up posting a 5 sack season in 1993, and then leaving Philadelphia.  Reggie White is one of the most valuable players in NFL history–probably one of the five most valuable–and this analysis isn’t to say he’s not.  It’s to show that Green Bay may have in-fact overpaid for White on the open market.  This doesn’t make his loss any easier for Philly fans to swallow, as the Eagles won 8 and 7 games the two years following his departure.  Titans fans aren’t relishing their 8-8 finish this year after getting rid of Haynesworth, but the same argument holds: it’s possible that the Redskins overpaid, even after factoring in market conditions.

The simile here is about uncharted waters.  When free agency was in it’s infancy, lineman started collecting contracts once thought preposterous for players of that position.  Agents were laughed at for suggesting that a player who doesn’t touch the football should earn seven figures in a single season.  Fifteen years later, Steve Hutchinson, an offensive guard, signed for a half million dollars over seven years.  Hutchinson is now reaching the backloaded end of that contract with the Vikings, and they’re more dependent now on his production than at any point before.

Hutchinson got lucky.  His contract expired following the 2005 season, which happened to be perfectly timed with all this contract madness.  Because it gets at the heart of what I’m really writing about tonight: this CBA and the uncapped year.

The whole idea with CBA agreements is that two sides representing the entirety of the NFL labor market come to a compromise that allows both to reap the benefits equally (or if not equally, at least fairly) of a product that is a cash cow in the US.  The issue in 2006 was that there was no safeguards or soft landings in the extension the sides agreed to in 2002.  The NFL financial landscape was relatively static from 1993 to 2002, but following this point, revenues shot through the roof creating a dynamic market situation where large market teams and small market teams were no longer on a level playing field: only litigation (such as revenue sharing) could maintain the competitive balance of the NFL.  And up until that point, parity was as much a part of football as referees or fines.

Parity, though, had to be the first thing to go.  Officially, the NFL had kept it’s salary cap after agreeing to a labor deal that was positively received at the time, but the practical idea of a salary cap was violated by the actual agreement.  Ask the Commish’s Al Lackner puts it thusly:

In 2005, it was set at $85.5 Million. Last year it was originally set to be approximately $94.5 Million. However, an extension to the CBA brought with it a new formula, which saw an expansion to approximately $102 Million. The cap in 2007 was $109 Million. In 2008 it was $116.7 Million. In 2009 it will be approximately $127 Million , which is up from the $123 originally projected.

The game was awash in cash from 2003-2005.  The cap had been written to move with league revenues, but it wasn’t out of proportion until after this agreement.  From $34.6 million in 1994 to $85.5 million in 2005 is a significant jump, an average of $4.5 million a year, or basically one additional highly paid player per team, per year.  Since 2006?  An average of $8.5 million per year.  The rate of increase in the salary has doubled since 2006.  Trust me when I say that team payrolls have not increased by an average of nearly 10 million dollars per year.  Why do you think small market teams like Jacksonville, Kansas City, and Buffalo are paying players like David Garrard, Matt Cassel, and old Terrell Owens, respectively, $6-9 million a year?  If you’re thinking about the kind of cost-benefit analysis that Green Bay and Washington did on premier defensive players in the first and last years of the salary cap era, you’re missing the point.

After the 2005 season, the salary cap failed to be a salary cap.  Yes, teams like Carolina, Denver, and Washington had some of their veteran releases dictated by creating salary cap room to function with, but the vast majority of teams (read: everyone else) have either been functioning independent of the cap, or trying to be in compliance with the salary floor.

What’s most flooring about the whole process, pardon the pun, is that in 2009, the NFL’s salary floor was a preposterous 87% of the cap value.  In other words, the league salary floor was $112 million in 2009.  In 2007, the SALARY CAP was $109 million.  Being an owner of a small market franchise in the NFL is one of the toughest jobs in sports.

The cap came into being as a ploy by the owners to limit salaries in the new free labor market system in the NFL.  Now, it’s a major drain on the bottom line for the bottom third of owners in the NFL.  Large market owners are okay with this because it forces small market teams to spend their shared revenue and then some, but the small market franchises would be more valuable in the absence of a cap/floor.  And then if there was going to be a repealing of the floor, it would be a good chance for the large market owners to try to get out of shared revenues.

And so we arrive at the uncapped year in such a dynamic market.  The union doesn’t want to give back any of the gains it made in 2006.  The small market owners need the cap to function like it did in the past, or they need it gone entirely.  And the large market owners, who pretty much win as long as there is still football, just want things to be sustainable for the future.  The party who really have no stake in the golden goose at this point, the small market owners, are a distinct minority between two much larger parties who are trying to come to a compromise that probably doesn’t exist.

Whether they will agree to something in time to save 2011 football is a case for another day.  Let’s look into the crystal ball and see who might benefit in this highly dynamic free agency year.  The league legislated any number of protective measures to prevent salaries from exploding to irreplaceable levels at 2010.  Preventive measures against 4th and 5th year pros, measures against the most successful teams from 2009, and of course, the removal of the salary floor.  Will it work?

I think it will work.  Nothing can prevent desperate teams from giving out dumb contracts to undeserved players, but in terms of players that are comfortably above the league average, I see about 15 names available in free agency.  About 5 players on that list are expected to receive the franchise tag and remain with their current teams for another year.  Among the players actually expected to hit the market, we’re talking about DE Julius Peppers, TE Ben Watson, WR Kevin Walter, RB Darren Sproles, QB Chad Pennington, and DE Kyle Vanden Bosch.  Peppers was going to be the highest paid player in this class regardless, but he probably won’t see Haynesworth money.  Watson, Walter, and Sproles should all sign lucrative deals somewhere, but none are going to be too far above the $6-$8 million per year range.  Pennington isn’t going to get a deal longer than 2-3 years and the chance to compete for a job.  VandenBosch’s value is down from it’s peak two years ago, as is Packers DE Aaron Kampman.

On my “79 scale”, (79 is a fringe starter, while league average ranges from 82-85) I have no player in this free agent class rated above 92, and only five players at a 90 or above, with no less than two of those players expected to wear the franchise tag or otherwise not hit the market.  Last year I had 10 players with a 90 rating, with four getting the franchise tag.

Let’s review last year’s list.  Of the 6 players who changed teams with a rating of 87 or higher by my system, only one (Leonard Weaver) made the pro bowl with his new team.  Two, Derrick Ward and Chris Canty, did not make any noticeable impact with their new teams.  The other three (Haynesworth, TJ Houshmandzadeh, and Jim Leonhard) all had an impact with their new teams, but none were even as much as a pro bowl alternate.  The best free agent signing of last offseason was probably Bart Scott to the New York Jets, or maybe Jason Brown with the Rams.

Haynesworth might still end up being a great signing for the Redskins, but for right now, he’s a good case defense for why the uncapped year isn’t about to significantly alter the NFL’s salary structure in one season.  Peppers is getting his money, and a bunch of other unrestricted free agents will cash in with large market teams, but that’s not the uncapped year working.  That’s just NFL free agency.

What about old faces in new places?  The Jets signed a pair of Ravens last offseason, and then installed Rex Ryan’s pressure-heavy schemes in New York.  They led the NFL in total defense.  Maybe players with an “in” can capitalize on the uncapped year?

Let’s see.  Mike Shanahan is in Washington now, and he brought Jim Haslett as his DC.  Dick Jauron is coaching the secondary in Philadelphia.  Mike Martz is the offensive coordinator in Chicago.  Jim Zorn is coaching the quarterbacks in Baltimore.  Maybe they’ll take some players with them.

This is good news for Ben Hamilton, former Denver Broncos guard, and Casey Rabach, former Redskins center.  They will be taken care of this year.  Barry Sims might be able to get a job with the Bears now, as may Brandon Manumaleuna.  And if Marc Bulger gets cut, there’s a backup job available in Chicago.

It’s obvious though that there will not be any bidding over the players who have scheme “ins” with a new franchise.  The one thing that is really clear about free agency this year is that there are no bargains.  But beyond that, there’s about ten players worth getting into a bidding war over.  Total.  80% of the players eligible for free agency are past the valuable portion of their careers, and the remaining 20% is looking at a bidding pool that is reduced by 75% this year.  Money isn’t going to fly all over the place, and teams aren’t going to forget about the draft because they can buy mature talent.

It’s still true that the labor situation and markets are very dynamic at this time, but the craziness has already ensued.  It’s possible that the market will continue to correct this year, but teams were going nuts in free agency from 2006-2008.  The beneficiaries were not Darren Sproles and Kyle Vanden Bosch.  The beneficiaries of the dynamic market were Steve Hutchinson, LeCharles Bentley, Edgerrin James, Nate Clements, Asante Samuel, Darren Howard, Adam Archuleta, Nate Burleson, Adalius Thomas, Daniel Graham, and Michael Turner.

Yes, the uncapped year means less restrictions on team budgets, but any team that feels an increased sense of freedom in 2010 has missed the boat–by four years.

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