BLOG POST

When Did Sports Salaries Explode? Part 2

By Danny Radical

Next up on our tale of when sports salaries exploded is the biggest thing on Sunday since Church- football. The National Football League has seen a steady rise in revenue, team values, and television deals that may be unrivaled in any professional sport to date- especially considering short the season is. But player salaries? Not so much.


The origins of the exploding football team value came back in the 1960's and the merger of the American Football League and National Football Conference. That allowed the league to jump from 12 teams to 26, increase the number of games played, and created a contest known as the Super Bowl which has grown into a national tradition. The last Super Bowl of the 1960's- Super Bowl 3- drew roughly 60 million viewers out of a population of 203 million people-(29% of Americans!) creating a trend that has actually increased today as more and more watch the "big game."

And the NFL has such a tight grip on the term Super Bowl that if you try to use it to promote and event or a television sale and they find out? They will sue you out of house and home!

temp-post-image

Pepsi paid a ton for this ad. And this model!


But have players really felt a benefit from this long and consistent growth in franchise values?


As of 2013, the NFL has the lowest average salary in pro sports. Lower than the NHL. Which sounds fishy, until you ask this question:


Why are there so few old men in the NFL?


Think about the playing age of the average player. How many guys do you watch turn into old men in the NFL? Not many. Now think about how baseball free agency works- you need to establish yourself in the sport before you can taste free agency. 5 years, roughly.


Then consider the football player. Most finish college because the NFL needs "man" strength, not "boy" strength. So players and up starting their first training camp around the age of 22. The NFL has an intricate draft system which only rewards the first round or so financially. So you're looking at 27-28 for your first payday. The age majority of players? 23. As of 2013, there were more 23 year olds in the NFL than any other age. Ages 22-27 made up 1277 out of 1822 players in the NFL. Ages 20-28? 1454 out of 1822. More than 75% of the league. And 28 is the age where you startmaking money, in case you forgot. So roughly 25% of the NFL is in that money making age range.

temp-post-image

This guy is a rarity in many ways.


Players leave teams in the NFL via free agency. However, this is not exactly part of the NFL culture. Why? First off, there was the Roselle Rule- a rule that said if a team signed a free agent, they would lose compensation equal to what they signed. So if you sign a veteran player for a lucrative contract, you lose multiple draft picks. In a league always full of injuries and in need of young players. Basically, you hamstring yourself if you look for a free agent. And although this rule doesn't exist today, the mentality does because teams have spending limits.

In addition, to limit free agency, football presently has a franchise player tag. This "tag" means that a team with a controlling interest in a player can "franchise" them, which puts the team in a few positions, all to their advantage. They can either declare a player completely off of the market for a certain price (average of top 5 players at their position), make a players available but if they sign elsewhere the original team gets compensation, or they can reduce the price and then if another team makes an offer they have a right to match or refuse. So a team can guarantee keeping their favorite player no matter what.

temp-post-image

Lastly, football has a double edged sword- giant sized rosters and a total team limit as to what they can spend. This started with a salary cap in 1994 of just $34.6 million. So if one player today gets, say, a franchise contract at Quarterback (clearly that player isn't playing for the Jets), they are guaranteed almost $21.3 million. That does NOT sound limited. But the other 52 guys on the team have to split the other $157 million left under the cap, as there is an overall ceiling in order to "make sure that each team can be profitable." For those not familiar with economics, there's a saying that works here - from each according to his ability, to each according to their need- and it's not attributed to a guy you'd associate with American Football.

The NFL even props up these guys!

So say a team has a franchise quarterback and a star receiver? That's $32 million out of $178, leaving $142 million for 51 guys, or $3m per. And what if they have a star defender and a good lineman? Now we're talking $122 million for 49 guys. You can see how fast this decreases.

This all sort of goes against the thesis here that every sport has exploding salaries. Because if we look at OJ Simpson's 1969 contract, which called for just north of $200,000 a year and extrapolated for just inflation, the Juice would make $1.5 million today. Well, not him, as the current domestic violence environment wouldn't work out so well for him.

temp-post-image

OJ slashing past helpless defenders


So when did the "big money" era of the NFL come into existence? That started roughly in 1989, when the New York Jets Freeman McNeil sued against the NFL's "Plan B" free agency saying it was in effect the reserve clause in a different sport, which was illegal (for an understanding of the reserve clause, check out part one of this series).

All the NFL players had to do to make this happen is decertify their union. If you were around for the 1980's you may recall scab NFL football, so decertifying the union was a dangerous bet for the players. But by breaking up the union, players were allowed to sue teams. And of course the union recertified because owners were tired to negotiating with individual players.

Understand in 1990 Troy Aikman was the highest paid player on the Dallas Cowboys. He made $865,000. The rest of his team combined with Aikman, a Hall of Famer, to come in at $15.8 million- four times what Jose Canseco made that year by himself.

McNeil's case led to a new collective bargaining agreement, where players finally got free agency. And a salary cap. However, some players started making money. Some.

temp-post-image

FreeAgent McNeil! Ouch.


By the year 2000? Drew Bledsoe was making $8.5 million to play for the New England Patriots. And by merely 2007, Dwight Feeney- a defensive tackle from the Indianapolis Colts, was leading the league making $31.8 million that year. Where'd that money come from?


The salary cap. Didn't I just say that the cap was a limiting tool? Well, it is. And it's also a dual headed example of socialism in the NFL. The current incarnation of the cap makes the game of football a partnership between the team owners and team players. The goal is to keep that revenue number growing ever upward. In return for helping such, the players get a percentage (roughly 48%) of that growing pie. So if gate revenues go up, more money goes to the cap. If television revenues go up, more money goes into the cap. And if playoff commercial rates go up, more money goes into the cap. As the cap goes up, salaries go up.


Despite Trumps best efforts at convincing you otherwise, the NFL salary cap will increase next year by about 6%- the league is CLEARLY NOT losing money.

temp-post-image

Make America Watch the Cap Go Up Again!


Why did the cap blow up so much in the 1990's and 2000's? Television revenue became more and more lucrative as television ratings went up. Tickets became more and more expensive with the introduction of personal seat licenses. States paid for teams arenas under threat of relocation. The internet allowed for broadcasting rights. Cable packages allowed you to follow your favorite team from anywhere, or just watch only the scoring plays. Football players endorsing products so often that you know what they look like despite having their heads and faces mostly covered in game.

temp-post-image

Nothing Beats a Great Pair of Leggs!

Then you have the game transforming from a Sunday day off thing into Thursday night football, Saturday day football, European based football games, football in Mexico City, football in Canada, and any other way to make the game more national and international to help bump up those coffers. I expect the NFL to be the first league to play a game in outer space at this point.

There was also a rival football league that briefly popped up in the 1980's- the USFL. The USFL was short lived, but it left two financial legacies for the NFL to see. The first one was million dollar players, such as Herschel Walker of the New Jersey Generals. The other legacy? The salary cap!

temp-post-image

Walker at 48. Jeez.


As mentioned before, we're going to see commonalities of these trends happen in every sport- the 1990's and the mass televising of sport will change the pay structures in every sport. Maybe none more dramatic than in the NBA.