Naylor and Lalji: Answering the questions raised by the CFL's higher salary cap

The CFL and CFLPA announced on Wednesday that the league’s 2025 salary cap would be raised by $412,365 per team, giving every team $6,062,365 to spend instead of $5,650,000. The increase comes as a result of the league’s revenue-sharing formula with its players, as league overall income jumped in 2024 by roughly $18 million.

However, news of the increase caught everyone in the league by surprise and left a lot of confusion in its wake among teams, players and agents.

Dave Naylor and Farhan Lalji explain how we got here and what it means?

Q -- Why is this increase being announced three days after the start of the league’s free agent period and after most contracts for 2025 have already been negotiated?

A -- This was the number one question on the minds of general managers, coaches, players and agents on Monday and, as you might expect, there’s no simple answer. The league measures revenues based on a calendar year, ending Dec. 31st. As such the full accounting of the league is not done until past the midpart of January and it’s believed the league did not become aware of the amount of revenue growth until early last week. It was then up to the CFLPA to determine how they wanted the money spent, as options existed between adding to the salary cap, increasing playoff bonuses, training camp stipends and pension contributions.  The CFLPA and the league went back-and-forth over several options before the association announced Wednesday that the full amount would be applied to the cap. And the formula around that application could still be subject to a grievance.

Q – So what does this mean for players who have negotiated deals this week that are not fully signed and registered with the league?

A- Based on conversations with teams on Wednesday, they are operating under the belief that the players will honour the terms of deals agreed upon this week, which are to be made official when free agency officially opens on February 11th. As one GM said today, "It will test the integrity of everyone."

Q – But could a player walk away from his negotiation window deal if he wanted to try to find a better deal elsewhere?

A -- Yes, he could, as the vast majority of agreements within the window are handshakes that are not binding. A player wanting out of that agreement would be free to go to another team if, for instance, that team wanted to use some of the new money to increase its offer to him.

Q – But are teams expected to spend this new $412,000 increase on players or just keep to the old cap number which is still above the salary cap floor?

A -- It’s too early to tell. Yesterday, teams we spoke to said they were in a holding pattern, waiting for clarification on the situation from the league and instruction from their ownership on how to proceed. For now, it appears teams are operating under the salary budgets they set before this new money came into the picture. But this is a fluid situation and there’s nothing stopping any team from committing the new money to players.

Q – So how can the league avoid this kind of situation in the future?

A -- There is already strong thought of moving the league’s financial year-end to the fall so that the salary cap figure will be known shortly after the season and teams can make financial decisions that fall in line with that.