Mark Knudson’s Three Strikes Blog: COVID-19 will have differing financial impacts on Broncos, Rockies and Buffs

Strike One: Has Von Miller played his last down for the Denver Broncos? Perhaps. Just as importantly, is John Elway nearing the end of his tenure as the team’s General Manager? Money talks…and money can also walk.

As soon as the news of Miller’s season ending ankle injury began to circulate, so did the speculation that his contract status – he has a $22.225 million mutual option for 2021 in the final year of his current deal – might make him a salary cap casualty prior to next season. If Denver releases the 32-year-old former Super Bowl MVP before next season, it will cost them just $4.225 mil against the cap, saving them $18 mil. They might need that money. Badly.

As hard as it is to imagine, saying goodbye to Miller is a very real possibility.

The situation is exacerbated by the long term financial impact of COVID-19. With 2020 revenues obviously down due to the impact of the pandemic, the NFL’s 2021 salary cap is expected to also go down, perhaps significantly. And this at the same time when the Broncos have young stars like Justin Simmons looking for phat long term contracts.

And despite what most fans think, they aren’t printing money at Dove Valley.

Regardless, they will be paying it out.

Keep this in mind as well: After the 2021 season, Elway’s current contract with the Broncos is done. Sources say that his deal contains a “conclusion clause” which would result in a nice payday – the sources say up to $30 million – if he finishes out this contract. So, the end of the 2021 season could make for nice time to walk away, right?

Further muddling the situation is the Broncos ownership mess, which is very likely going to result in a new owner coming in around that same time (and no, it won’t be Brittany Bowlen. No chance.) The new owner would probably want his own front office and GM, right?

Denver has a young core of skill position guys moving forward, but with or without Miller, there are still serious depth issues on defense and along the offensive line that need to be addressed. If 2021 sees a significant dip in the salary cap, it’s hard to imagine how they could fix any of that and still fit Von onto the roster…unless he’d accept a drastically reduced salary (at least for one year.) And if you’re the Broncos new management, are you giving big deferred money to a guy in his early 30’s? Unlikely.

So yes, it’s kind of a perfect storm of money issues that’s approaching Dove Valley. COVID hasn’t caused all these issues…but the virus most certainly has brought financial strains to the forefront, even for the Broncos.

Strike Two: Remember last winter when all the national media was obsessing about the Colorado Rockies trading Nolan Arenado? Seems like a long time ago, doesn’t it? Fact of the matter is that as of right now, it would be nearly impossible for Colorado to trade its superstar third basemen, even if they wanted to. Which there are no indications they do.

This is not just about Arenado having a down season. It’s also a matter of finances. Arenado’s mega contract isn’t tradeable during a time when MLB Owners are all trying to avoid massive financial losses. Nolan is scheduled to make $35 mil in 2021. Try naming a single team that’s ready to take on that contract now? The Dodgers? Just signed Mookie Betts to a mega 12-year, $365 million deal, they don’t need a third baseman, and they have a bevy of young talent like Cody Bellinger and Cory Seager waiting to be paid big bucks in short order. The Yankees? They’re set at third base with young star Gio Urshela, whom they’ll also have to pay a high price to keep in the near future. The Cubs? They were in salary dump mode before the pandemic.

Nope, Nolan isn’t going anywhere soon.

What about later – like at the end of the 2021 season?

That’s now become a stronger maybe.

Depending on how the Rockies are able to navigate the financial effects of COVID-19 on this season AND next, money – or lack of it – plus a lack of enough positive results on the field could possibly lead Rockies management to consider a complete tear down and a total rebuild of the current roster, key “core” and all, after next season.

If it goes down that way, it won’t be Nolan departing alone, and it won’t be because of a squabble with the front office. If Arenado leaves after the 2021 season, opting out of his current deal or via trade, he’ll likely be taking Charlie Blackmon, Trevor Story, Ian Desmond, Daniel Murphy (if he’s not gone sooner) and Jon Gray with him out the door. While Arenado can opt out (which he would be foolish to do under the current financial conditions) the rest of those contracts are all up at the same time…the end of the 2021 season.

The Rockies are not among the deep pocketed as MLB franchises go to begin with. Their local broadcast revenues are no where close to matching what’s brought in by many of their chief competitors. The lack of fans at home games this season hits this franchise a lot harder than it does in LA, where TV pays for everything. National broadcast revenues are going up and each team will benefit. Will that be enough for the Rockies to sustain their current payroll?

If the current core group of players, which certainly includes the three All-Stars Arenado, Blackmon and Story, does not produce a play-off win or three this year (not looking good) or next, it might very well be time to break up the band.

Strike Three: For the moment, put aside all the rhetoric from players, parents and lawyers who are crying that “the kids deserve to play” college football this fall. In reality, there are programs like the University of Colorado Buffaloes that are actually far better off NOT playing this season – at least OFF the field.

Consider this: new Head Coach Karl Dorrell would have entered the season at and extreme disadvantage, having taken the job in Boulder in mid-February – not getting to meet all his players face to face, not having spring football nor any regular practice time, and not getting a normal recruiting cycle. Had the Pac 12 not postponed the season, things would have likely been pretty ugly ON the field at Folsom this fall. Now at least Dorrell and his staff will have time to get comfortable with the roster, the current CU players will be a year more mature, and another recruiting class will be on campus in the fall of 2021. Gives Dorrell and his team a fighting chance.

Of course, what would have happened ON the field this fall is no longer the main concern. The money involved with college football – or lack of it – is front and center.

After losing in the neighborhood of a million dollars they would have made from sharing in March Madness revenues last spring, the CU athletic department will reportedly lose somewhere between $60 – $100 million this year because the Pac 12 is not playing football this fall.

But here’s where we have to give the beleaguered conference some credit for forward thinking. Instead of across the board massive cutbacks (there have been some of course, like Stanford cutting 11 non-revenue varsity sports) the Pac 12 has gone into the lending business.

The league arranged for what’s termed a “central loan program” where they take out a huge, billion (with a B) dollar group loan that is accessible for every conference member. Each school can borrow as much as $83 million to cover expected losses for the year. That certainly softens the blow.

A loan IS a loan, and CU would have up to 10 years to repay the approximately $93 million they’d have to pay back if they borrowed the full amount. Even at the comparatively low rate of 3.75%, that’s still more than $9 mil a year. The school and the conference are certainly betting on Pac 12 sports returning with a flourish once the country has a handle on how to deal with the virus.

If the consistent clamoring to “let the kids play” is any indication, when college football does return to the western part of the country, the fans will be more than ready to get back involved with their hearts…and their wallets.

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