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The NFL Salary Floor and How It Might Keep the Chargers in San Diego

I was driving to work this morning and flipping between The Dan Patrick Show on AM1360 and The Scott and BR Show on AM1090. Usually, with a 15 minute commute, I can settle on one that is not in a commercial break or has a more interesting topic at the moment and that's that. This particular morning, with Dan talking about hacking Facebook accounts (digging deep into the Kenny Britt story), I ended up on Scott and BR.

Let's get one thing clear: I loathe The Scott and BR Show, but I understand why it exists and why people listen. It's just not for me. However, they occasionally get it right, and when Mike Florio from Pro Football Talk comes on it's usually a decent interview. This was the case this morning and, in discussing how CBA negotiations were going between the NFL owners and DeMaurice Smith (representing the players), Florio floated an idea out there that made a ton of sense and bodes well for fans of the Chargers staying in San Diego.

Just so that we're being fair, and I'm not blatantly stealing Scott and BR's spotlight, here's a link to the interview (MP3).

Now, onto the theory. One of the interesting points to come out of the talk about the CBA negotiations yesterday was the 90-95% salary floor. If you're unaware what a salary floor is, it is the lowest amount a team is allowed to spend on their players. This keeps owners from building a team of the cheapest players and pocketing the profit they make off the fans that would show up to watch anything. Baseball could use a salary floor (ahem), but that's besides the point. The salary floor and salary cap are there to create parity across the league and keep the playing field level, and it also creates the highest amount of high-paying jobs for NFL players.

In the past — between the last CBA was agreed upon and 2009 — the salary floor was 84% of the salary cap. I don't know what happened if a team operated below this, but I imagined they paid a hefty fine. With a fast-rising cap came a fast-rising floor. Let's take a look:

Year Salary Cap Salary Floor
2009 $123 million $103.32 million
2008 $116 million $97.44 million
2007 $109 million $91.56 million
2006 $102 million $85.68 million
2005 $85.5 million $71.82 million

Five years ago, if you owned an NFL team and could make $100 million a year you were sitting pretty. You could spend $90 million a year to field a competitive team and pocket $10 million in profits a year. That's a little over–simplified, but you get the point. What if that was the most your team was able to make? Hypothetically, what if the 2009 Arizona Cardinals made as much money as they possibly could — which would make sense, since they had a new stadium, a team filled with tons of stars, got a home playoff game against the Packers and made it to the Super Bowl — and they only made $100 million? They would have to repeat that season, impossibly, every year and would still lose money based off of how much they are forced to pay on their players.

If the rumors of the salary floor being 95% of the cap are true, and if a rise of roughly $7 million per year to the cap continues, that would make 2011's salary cap $137 million and it's floor $130 million. Teams that were just barely surviving by making $100 million per year before are a little screwed now. The teams that will really have a hard time staying afloat will be the teams that are not exactly in metropolitan areas. Green Bay has their methodology in place, and it's been working forever, but teams like the Buffalo Bills and the Jacksonville Jaguars do not. Actually, let's look at a list of the teams that took advantage of there not being a salary floor in 2010 and had a total salary of less than $100 million.

Team 2010 Salary
Kansas City Chiefs $79 million
Tampa Bay Buccaneers $79 million
Jacksonville Jaguars $81 million
Cincinnati Bengals $85 million
Arizona Cardinals $91 million
St. Louis Rams $92 million
Buffalo Bills $98 million

Outside of the Bills, those teams aren't just below what would've been the 2010 minimums or even what was the 2009 salary floor, they're all below the 2009 salary floor! Now there's a good chance those teams will have to find a way to add up to $51 million to their payroll while trying to not sign any bad contracts that could tie their hands in the future. They also have to try and make money as a franchise along the way. Seems a bit tough, huh?

By comparison, the Chargers 2009-2010 total payroll was $117.5 million and they appear to be operating at a profit. With the group in Los Angeles dead-set on bringing in an NFL franchise that they can buy a chunk of the ownership, it would make more sense that they could end up with a team that has an owner that is operating at a loss. The (reported) new salary floor would seemingly create a situation where the Jaguars would probably be looking to sell, and Ralph WIlson's family apparently has no interest in keeping ownership of the team once WIlson (who is in his 90s) passes away. It would only make sense for AEG to target them instead of the Chargers, with Alex Spanos declining their previous offer to buy out his share.

In a nutshell, the NFL is changing the rules so that the only small market team that will be able to exist will be the Green Bay Packers. The Jaguars and Bills, despite having rabid fanbases, will eventually be moved to larger, more metropolitan areas. Logistically, what makes the most sense is for AEG to buy a percentage of the Jags and move them to Los Angeles in a few years. I'd be willing to bet they could get a special exemption from the NFL for those few years so that they could stay below the salary floor while putting money towards the new stadium. At the same time, the Wilson family could begin the process of searching for a buyer that would be interested in buying the team entirely and moving it to Toronto.

From what we were told yesterday, it would appear that loans to build new stadiums will be opened up once again for NFL franchises. This is another great sign for the Chargers, as it's a third source of cash (the city and the Spanos family being the other ones) to throw at the downtown stadium idea. More than anything, though, the Charger fans in San Diego can thank the Spanoses (mostly Alex) for making this team much less attractive to AEG than it would be otherwise.