Friday afternoon brought an especially weird headline from Bloomberg Business:
NFL Wants Players to Pay for Los Angeles Stadium
Say what, now? I know that the dueling Carson and Inglewood stadium proposals have a whole bunch of financial questions remaining, but really, asking NFL players to chip in? And why on earth would they want to?
The accompanying Bloomberg story isn’t exactly the clearest, but there are some nuggets of information buried in it. The financing vehicle is something called “stadium credits,” a provision of the league’s collective bargaining agreement that allows the league to exclude half of all private stadium costs — and 75% in the case of stadiums in California — from salary cap calculations. There are additional provisions for excluding naming rights revenues, PSL revenues, etc., though there’s also a cap on how much the league can deduct at any given time, equal to 1.5% of total league revenues.
That 1.5% cap is really all you need to understand, because it’s long since maxed out. In short, when NFL players signed the current CBA back in 2011, they agreed to set the salary cap at 1.5% less than they had previously, with the money set aside for stadium costs. (Newballpark.org had a good explanation of this at the time.) That’s money that goes back to the league overall, of course, not the specific teams building stadiums — but it’s what the NFL uses to generate funds for its G-4 program, which lets owners keep money they would normally share with the league and instead spend it on stadium costs.
The end result of all this money-shuffling, then, is that the players give up money to the league in the form of lower salaries, and the league then lets teams draw on it to pay for new stadium costs. It’s not additional money we didn’t know about — both of the L.A. stadiums have been counting on G-4 money all along — but it does clarify that when we hear talk about the NFL’s “contribution” to new stadiums, it’s less out of the goodness of their hearts than because they’ve ensured they can pass the tab along to the players.
Except that the Stadium Credit fund is now exhausted, so the league now has to go back to the players to ask for more concessions. (There’s also a clause in the CBA saying that L.A. stadiums can be excluded from the credit, but that’s at the league’s sole discretion, so it’s not clear why it’s even in there — unless maybe someone at the league offices back in 2011 was thinking of denying G-4 money to L.A. stadiums in order to leave more for other projects.) Why the players would even be considering this is an excellent question — sure, a new stadium could bring in new revenues and thus raise salaries, but that’s not going to help players any if they just have to turn around and give it back to the NFL — but union official don’t seem to be asking it, not publicly, anyway:
“When we signed the deal in 2011, we considered our role in growing the game and we review every investment opportunity and proposal carefully,” union spokesman George Atallah said.
In the grand scheme of things for L.A. stadium proposals, this doesn’t matter all that much, as the league has already promised G-4 money, so other team owners will just have to eat the cost of that if they can’t pass it along to players. Still, it’s a fascinating look at how the sausages get made, and a reminder that one of the main skills necessary for becoming rich enough to own an NFL team is figuring out how to make sure someone else always picks up the check.