Author: Simon Bernstein, Executive Editor, Cardozo Arts & Entertainment Law Journal
On Monday, March 12th, Commissioner of the National Football League, Roger Goodell, penalized the Washington Redskins and the Dallas Cowboys for “contract practices . . . during the 2010 league year [that] created an unacceptable risk to future competitive balance.” This charge traces back to 2008, when the owners, in a move that eventually led to the 18-week lockout, opted out of the collective bargaining agreement. As a result the 2010–11 NFL season did not feature a salary cap.
The NFL, like the NBA and NHL operates under a salary cap, with the goal of promoting competitive balance in the League. By limiting the amount that each club may spend on salaries, the richer teams and poorer teams compete on an even playing field.
Which brings us to the 2010–11 NFL season. Dan Snyder and Jerry Jones, owners of the Washington Redskins and Dallas Cowboys, respectively, took advantage of the uncapped year, by front-loading player contracts. A front-loaded contract is one that pays substantially higher salaries in the early years of the contract and substantially lower salaries in the later years of the contract (cited as an example by the NFL is Cowboys’ wide receiver Miles Austin, who received a base salary of $17 million in the uncapped year and $8.54 million in the following, capped year). This worked well for both the players and the owners. The players got more money upfront and the owners freed up cap space for their teams in future seasons by agreeing to spend wildly in the uncapped year in exchange for the players accepting reduced salaries in the subsequent, capped year.
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The views expressed here are exclusively of the author and do not represent agreement or endorsement by the Cardozo Arts & Entertainment Law Journal, Benjamin N. Cardozo School of Law, or Yeshiva University.