The truth behind the Denver Broncos Salary Cap "Scandal"

Their ammunition? A weak connection to a late 90's accounting snafu that led the NFL to find the Broncos guilty of Salary Cap infractions and deferred payments to John Elway and Terrell Davis. The punishment? A 950K fine and the loss of a 3rd round draft pick in 2002 and 2005.

So what really happened?

The Denver Broncos were on the hook for approximately 100 million of the 401 million dollar cost for the construction of Sports Authority Field (at that time the new stadium or Invesco Field). This was a financial struggle for the team at the time so individuals on the back end of the financial operations made agreements with "Broncos players" (John Elway and Terrell Davis) to defer payments on their contracts to the future and in return promised to pay interest on the deferred amounts. Another player was promised that they wouldn't be waived prior to a certain date.

According to the league, both agreements triggered salary cap accounting issues. In regards to the player who was promised that he wouldn't be waived prior to a certain date, "That commitment had the effect of converting the player's roster bonus into a guarantee, which affected the timing of the salary cap treatment of a portion of the bonus. The NFL's Executive VP of labor relations at the time Harold Henderson confirmed that "the individual's responsible for the violations are no longer with the team" and that the Broncos "have been cooperative throughout the investigation."

Henderson also stated that "The investigation resulted in the discovery of undisclosed agreements between the club and Broncos players during the same period [1996-1998] pursuant to which various players agreed to defer certain compensation in exchange for a commitment to pay interest on the deferred amounts...These agreements were plainly designed to help the club cope with seasonal cash flow problems exacerbated by the Broncos' need to fund front-end expenditures associated with development of the new stadium in Denver."

Pat Bowlen released a statement when the punishments were handed down to a similar effect:

"The non-disclosures brought to my attention by the National Football League took place in the mid-1990s. We cooperated with the NFL throughout their examination of the situation. While I regret that the circumstances took place, it is important to note that there was no competitive advantage gained by our organization, nor was there any involvement or responsibility by anyone who is currently with the Broncos in any capacity. We accept our penalty, will pay our fine as directed and from this point on put the issue behind us. Our entire organization is working toward a great season in 2004."

In other words, these were isolated infractions created by bean-counters in accounting. The team was not able to create more cap space illegally, the team was not able to sign star players because of the actions. Other than receiving immediate relief on cashflow issues directly related to the financing of the new stadium, nothing was gained---certainly not a competitive advantage gained via videotaping another team's signals or practices....nor was there a blatant breach of any NFL rule having to do with the competitive nature of the game like we see in "DeflateGate."

In fact, our very own Kyle Montgomery said it best when he wrote about this subject years ago:

So were the Broncos cheaters? No. Did they break league rules regarding player payment? Yes, members of the organization did, unbeknownst to Pat Bowlen and Mike Shanahan. And then those employees got canned. Connecting Spygate to the Broncos cap issues is as ridiculous as it comes.

Major props to Kyle and Bronco Talk for dealing with this subject years ago

Quotes were taken from this Washington Post story linked to by Bronco Talk:

http://www.washingtonpost.com/wp-dyn/articles/A28969-2004Sep17.html

Now go away haters, wallow in your own team's deflated ego;)