Update for salary cap?

The salary-cap system that exists today in the NFL, NBA, and NHL, in which team payrolls are capped at a percentage of league revenue, was invented by Stern in 1982, when he was executive vice president of the NBA.

But now there is talk from Stern about a whole new system.

“As we begin [negotiations], there may be just a completely different way of doing it that doesn’t involve any percentage or salary cap,” Stern said. “I don’t know. We’ll have to see. There may be a system the players suggest to us that brings our teams to profitability that isn’t…a system we are familiar with.”

And in the NFL, the salary cap system that began in 1993 is not working for owners anymore, said Pash, who is leading negotiations for the owners. “It may have been perfectly sound in 1993, when it was entered into, but it has not evolved in a way that reflects the operations of the National Football League in 2009,” Pash said. Among other things, Pash said that system does not take into account owners increased costs, including more privately financed stadiums and debt service.

But on the players side, no one seems convinced that there is a need to throw out the salary-cap system for a new system that they believe would further restrict players’ earnings.

Speaking before the Sports Lawyers Association in Chicago earlier this year, MLBPA executive director Donald Fehr—who has led the baseball players’ successful fight for 25 years against a salary cap—questioned why team owners, who sold the salary cap in the first place, were now saying the system was not working.

“One of the benefits of the salary-cap system that has been in effect in the other sports has been the suggestion that it automatically adjusts for economic conditions,” Fehr said. “Players do better when the games do better…everyone sees a decline when revenues decline, and therefore, we don’t have to continually rebargain everything.”

“It doesn’t surprise me—although I think it is inconsistent with the basic philosophy as expressed for the cap—that when revenues go down, management wants to revisit the cap…because it doesn’t do what they said,” Fehr said.

Management-side sources say the traditional cap is not working anymore because it was based on an old cost structure, and that cost structure has significantly changed in the last few years.

Stern, who recently revealed that fewer than half of the 30 NBA clubs are profitable, said the current cap in the NBA doesn’t take care of the problem of a decline in revenue, in part because the cap is set after the revenue has declined, Stern said. “I mean if it takes care of it, presumably there wouldn’t be any losses.”

No ‘pattern bargaining’

Unless deals are cut before the leagues reach their deadlines, the CBAs will expire near the end of each quarter in 2011. The NFL’s deal is up in March, the NBA is next in June, the NHL is third in line in September, and Major League Baseball is last in December.