We hear it all the time in various contexts: “The Pegulas are rich. They can afford it.” In the NFL’s salary-cap era, everything is supposed to be equal. All teams are limited to the same spending on players. All teams receive equal shares of revenue from TV contracts, which offsets those player costs. So with all the rules to ensure parity, can an owner’s wealth, or lack thereof, still affect a franchise?
As Tom Mitchell mentioned in this article, there are rumors that the Khalil Mack trade was prompted in part by Oakland Raiders owner Mark Davis being unable to afford the $34 million signing bonus necessary to secure a contract extension. While such a bonus is absorbed by five years worth of salary-cap money, it is an upfront payment in cash, made long before most of that offsetting revenue-sharing money will be received.
But there’s another rule in play. The NFL wasn’t always the juggernaut it is today. We all know the story about Ralph Wilson saving the Raiders franchise by loaning them money they needed to make payroll. This was the basis for a league rule that any money guaranteed to players must be set aside at the time the guarantee is made, to ensure such guarantees would be honored. While the league has become a multi-billion-dollar industry and rendered this concern obsolete, Article 26, Section 9 of the CBA remains in effect today. All guaranteed money, up to 75% of the contract’s total compensation, must immediately be placed in escrow, even when the money won’t be paid to the player for years. When the Minnesota Vikings signed Kirk Cousins last year, he was paid a rather inconsequential $3 million signing bonus. However, since the entire $84 million contract was guaranteed, the team had to set aside more than $60 million cash to pre-fund the future guarantees.
Even the wealthiest of billionaires can struggle to have an extra nine-figures of cash laying around. This money has to be in the form of cash, not in Escalades or oil or Grand Slam breakfasts, or in shares of the team itself—where a lot of owners’ wealth was created and remains tied up. So in short, the answer is yes—despite the parity of a salary cap—a team owner’s wealth, and specifically liquid wealth, can play a big factor in what a franchise can offer its players.