So we pick up off the last post that laid the foundation for establishing the yearly Player Cost Amount through a summation of percentages of League Media, NFL Ventures/Postseason, Local, and any new business project revenues. Joint Contribution Amounts to fund player programs for retired NFL Veterans, medical research and charitable ventures are then subtracted from that revenue sum and a subsequent Stadium Credit is applied, and therefore deducted to reach the final Player Cost Amount.
Stadium Credit is defined specifically in the CBA as follows;
For each League-approved stadium project beginning on or after the effective date of this Agreement, there shall be a credit of fifty percent (50%) of the private cost (whether incurred by a Club, Club Affiliate, or the League) to construct or renovate the stadium, or seventy-five percent (75%) of such cost for stadium construction or renovation in California, which cost shall include financing costs, amortized over a maximum of 15 years using an agreed-upon rate based on the NFL’s long-term borrowing cost to fund or support stadium construction, beginning in the League Year before such new stadium opens. The aggregate credit for all such approved projects for each League Year shall be part of the Stadium Credit.
In a sense the Stadium Credit was devised by NFL owners to do just that, give them some credit for their personal investment into the building or renovating of venues or stadiums that will be of ultimate revenue benefit to everyone (players included). It’s a bit like the old Bill Murray quote from “Caddyshack” – “Hey, Lama, hey, how about a little something, you know, for the effort, you know.” But I digress.
The Stadium Credit is also constructed to include 70% of revenues excluded from All Revenues (AR) through Personal Seat Licenses, Premium Seat Revenues, and naming rights. One last addition of 50% of any capital expense used to enhance the “fan experience”… All that said, it can’t be more than 1.5% of projected AR or the AR for that League Year.
Subtract the Stadium Credit from the Player Cost Amount that was filled in the “3 Revenue Buckets” and you get the final Player Cost Amount. Oh, and remember, it can’t dip below the floor of 47% set by the NFLPA without automatically raising to…yep, 47%.
I’ve left out some techno legalese mumbo-jumbo, but by and large you have to;
- Find all the levels of incoming revenue through the various categories listed above
- Subtract out the owners’ efforts for putting forth funds for retired players
- Shave off some of their personal expenses of funding new/renovating stadium projects
- Make sure it fits in between the ceiling & floor sandwich (as it relates to All Revenues) negotiated by the lawyers of the League & Union
And just to ensure additional fairness, and to guarantee the players aren’t getting screwed out of any pennies on the dollar for a given League Year, the Player Cost Amount (as a percentage), along with the prior years’ percentages MUST be equal to 47% of AR on average. If for some unknown reason it dips below the 47% floor, the following League Year Salary Cap will be credited for the amount that would have gotten Player Costs in the previous League Year to the 47% threshold.
*I left out a few minor details, but those can be picked up in the Doctoral courses offered by The Football Educator at a later date.
Next up, defining Player Benefits so they can be subtracted from Player Costs to eventually get close (but not before implementing a few more “must have” revenue rules) to the Salary Cap.
“There’s always journey to every destination.”