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The world will implode.

Or we’ll hardly notice a difference. Here’s the thing: two-thirds of the NFL’s revenues come from national sources (i.e. the broadcast deals, licensing, etc.). That compares to about one-fifth for Major League Baseball, where there are obviously large payroll disparities between the top and bottom teams.

Let’s assume that the NFL’s 32 teams bring in $7.5 billion in revenue (as Forbes contends), that means $5 billion, or $156 million per team, comes from shared sources. Even if the difference between top and bottom is as large as Forbes makes it out to be (the Lions and Vikings really only did $50m in net local revenue?), that’s still nothing, on a relative basis, compared to MLB.

On top of that, there is an enormous middle class: 29 teams within $50 million of each other, which, translated into payroll dollars, means about $25 million. That’s not so much larger than the current gap between the cap and the floor, meaning that aside from the Redskins, Patriots, and Cowboys, the spending gap really shouldn’t change that much.

There is, however, one significant thing that may change: the percentage of revenues spent on player salaries should actually go down, over time. Think about it; a team’s performance only impacts their local revenue, which is only 1/3 of the total pie. So if logic holds, in a truly free market for talent, the NFL would pay their players a far lower percentage than in MLB, where teams need to draw fans and sell their own local broadcast rights in order to survive. But right now, MLB is actually lower than any of the other major sports leagues, despite having the highest local revenue percentage, and being the only one that is uncapped.

So while there’s sure to be some outrage when the Cowboys and Redskins start bidding up every free agent they can find, the other seven divisions won’t see much of a change. Now if we can just bring everybody down from those ledges…

Feedback? Write a comment, or e-mail the author at shawn(AT)squawkingbaseball.com

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  1. on September 4th at 03:40 pm
    Pete Toms said:

    I suspect many fans don’t realize this but many (IIRC, about 1/2?) of NFL clubs don’t spend “to the cap”, so….I agree, the sky won’t fall if there is an uncapped 2010. No doubt a handful of the egomaniacs (Jerry Jones?) will go hog wild (particularly in the new digs) but overall….

  2. [...] say that there is no salary cap in 2010.  Shawn Hoffman of Squawking Baseball thinks that we will hardly notice a difference.  While the Redskins and Cowboys may go on a short spending spree, many teams may actually lower [...]

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