1. A team’s ability to outspend other teams in the absence of a cap.
2. The restrictions that go into effect to ensure competitive balance in the event of an uncapped year.
These restrictions limit the ability of playoff teams, specifically the final eight playoff teams, to pursue and sign free agents in the offseason.
The first factor, a team’s ability to outspend its rivals, is largely determined by how much profit the franchise generates given its market value. Below is a table from Forbes that ranks values of teams in 2009.
The important stuff to look at here are market (current) value and operating income (profit). Debt/value ratio is also very important, but it is largely internalized within operating income. Effectively, teams with more operating income and market value, and lower debt/value ratio are poised to better deal with the potential of an uncapped year. Why? The greater your market value, the more funds you have to work with when you reduce your debt. Additionally, operating income essentially represents profit, so the more profit you have, the more you can spend on players without incurring debt.
Looking at this chart, one might think that the New York Giants pose a greater threat to the Eagles in an uncapped year than the Cowboys. After all, the Cowboys have $9.2 million in operating income compared to the Giants' $26.1 million.
But keep in mind these figures were calculated at the beginning of December, when the Cowboys had just finished constructing their new stadium. With a full season of tickets sold - and the Giants currently mired in a 55% debt/value ratio because they do not own their current stadium and have just constructed a new one - Dallas gains a big advantage in operating income advantage for 2010 and beyond.
But there is another key factor behind a team’s ability to spend that this table does not reveal: the wealth and desire to spend of the owners. Below is a list of the top 10 wealthiest NFL owners. The reason I only list the top 10 here is because after this group, the differences are fairly negligible:
Net Worth ($)
New England Patriots
Clearly, Paul Allen could outspend the rest of the top 10 owners combined if he wanted to. But there’s a big intangible here: how much each owner wants to spend. In other words, Jerry Jones may only have a pittance of Allen’s fortune, but he’s probably willing to spend more on the Cowboys’ payroll than Allen would.
Combining these two charts gives a decent idea of which teams are the high rollers and which are the thrift-seekers heading into the potential cataclysm of the 2010 offseason. In the AFC, the Patriots and Colts appear to be able to defend their perennial division supremacy, while the Ravens and Texans have the resources to spend.
Shockingly, the Raiders appear to be a disaster.
In the NFC, the Redskins, Cowboys, Eagles and Buccaneers hold the biggest guns, while the Lions and the Vikings are the most financially restricted.
It’s no coincidence that three of the NFC’s top four potential big spenders come from the NFC East. The division has four megamarket monsters. All of this potentially puts the Birds in a tight position despite their wise spending. They have the second-highest operating income in the division while having the smallest market value.
But wait a second. If the Cowboys have so much financial firepower, why should we be happy to see them in the playoffs, where they make more money from additional merchandising revenues and NFL flat fees? The reason is because of the restrictions in place that affect teams in the event of an uncapped year, outlined by NFL.com analyst Pat Kirwan in this column.
First, there are restrictions imposed on playoff teams like Dallas and Philadelphia in terms of how much they can spend on free agents and their negotiating access with free agents in general. There’s a lot of technical minutiae, but the most stringent of these restrictions applies to the final eight teams in the playoffs, known as the “Final 8” rule.
As Kirwan notes: “The rule will restrict the final eight teams in the playoffs from signing free agents. The final four teams shall not be permitted to negotiate and sign any unrestricted free agent to a player contract except for players who acquired their status by being cut or were on the final four team when their contract expired. Playoff teams five through eight get a break to sign one player with a salary of $4,925,000 or more and any number of players with a first-year salary of no more than $3,275,000 and an annual increase of no more than 30 percent in the following years.”
That being said, these teams can sign unrestricted free agents in accordance with the quantity and salary of their own unrestricted agents who sign elsewhere.
But aside from the fact that playoff teams are limited in terms of their free-agent access, an uncapped year also restricts the total number of free agents as well. If there is an uncapped year in 2010, the NFL rules stipulate that to become an unrestricted free agent, players will have to have six years of NFL experience instead of the current requirement of four years.
Furthermore, instead of one franchise tag per team, each team will gain two transition tags as well. A transition tag is exactly the same as a franchise tag, except the salary paid to the tagged player is the average of the top 10 at his position instead of the top 5. Finally, the 30% rule kicks in an uncapped year, barring teams from giving players under contract in 2010 more than a 30% increase in salary. Hence, there are still checks on the ability of the wealthy teams to hoard players.
The bottom line for all of these restrictions is that it is unlikely that there is going to be a mass free-agent exodus to Dallas and D.C. Although you could pontificate for hours on what the sum of these restrictions, team finances and owner wealth mean for the league as a whole, let’s focus for now on how it could affect the composition of the NFC East.
The Redskins, with the most operating income, a billion dollar owner and a fourth-place team, have by far the most to gain in an uncapped year. They won’t get hit with any playoff-related free agent restrictions, and they have arguably the greatest spending power of any team. That’s not to say they are going to climb out of the division dungeon any time soon, just that they have the ability to spend.
The Giants, with the country’s largest television market (New York), stand to benefit from the $100 million cut in revenue sharing that was announced earlier this month. Still, they face one of the highest debt/value ratios of any NFL franchise, and that could limit their spending ability going forward - especially given the overall economic climate. The opening of their new stadium in 2010 will boost their revenues considerably down the line. However, since they won’t begin to chip away at the debt incurred from that massive investment until the 2010 season begins, it’s unlikely they will make a major rush in the offseason.
The Cowboys, the highest-valued NFL franchise piloted by spendhappy billionaire Jones, have the most to gain from an uncapped year in the NFC East behind the Redskins. While the organization’s investment in their new mega-stadium and their efforts during the season to secure long-term contracts with their current talent may suggest a more conservative approach to the unlikely territory of 2010, anything is possible with Jones.
That leaves the Eagles. Despite having the second-most operating income, they have already locked in a playoff spot for 2009, which means that will get hit with some type of free agent signing restrictions. However, given that the Eagles have the youngest roster in the NFC East (average age of 26.81 years old), highlighted by such young talents as DeSean Jackson, Jason Avant, Jeremy Maclin and LeSean McCoy, perhaps the Eagles could benefit from the extra two years required to be an unrestricted free agent. In fact, they are one of the teams best suited for a free-agent slowdown because of all of the promising young talent they are cultivating.
Overall, the speculation as to how the uncapped year will affect the NFL is just that. In all likelihood, the restrictions imposed on free agency, coupled with a shaky economy, will probably prevent the Redskins and Cowboys from spending like the Red Sox and Yankees.
Still, outperforming the NFL's two biggest cash cows without outspending them would make a 2010 division title that much sweeter for Eagles fans.
Ben Singer is a graduate of Brown University and an intern at Philly.com Sports. You can read his take on the "Contract year phenomenon" on footballoutsiders.com.