2016 True Cap Space

How much salary cap space does each team possess for the 2016 league year?  Significantly more than is typically reported.  I explain and calculate the True Cap Space available to each team below the break:

With the 2016 regular season now complete and the remaining teams facing postseason elimination in the coming weeks, fans will come across a variety of resources and articles – including websites such as this one – that specify the amount of cap space that each possesses for the 2016 offseason. The purpose of specifying team cap space is to provide fans with a proxy that indicates the degree to which each team possesses the CBA-allocated resources to acquire new talent. While teams can structure contracts in such a way as to acquire talent despite a minimal amount of cap space (at least in the short term), it remains intuitive that teams with more cap space have more of an opportunity to acquire talent via free agency and trades than teams with less cap space.

However, an important characteristic of salary cap space is that it is measured as a snapshot in time, on the basis of the current contractual status of the players on (and off of) a given roster. A team can typically increase its cap space by restructuring a contract or releasing a player. Because most contracts in the NFL at any given time are not guaranteed for that specific season, it is this last type of transaction that occurs with great frequency as free agency approaches. As a result, fans will also come across many articles identifying the amount of cap space that a team can save by releasing certain players.

Given these facts, it seems odd that salary cap space is universally reported and discussed in accordance with the following convention: Team X currently “possesses” Y Amount of Cap Space but can “save” Z Amount of Cap Space by releasing Player A (whose contract is not guaranteed). If the team was never obligated to use the cap space on the player, then the team is not actually “saving” cap space that was previously committed. The team is merely declining its team option on the player, and is not “saving” cap space any more than when it chooses not to sign any free agent or trade for any player on any other team.

As a result, most teams actually possess significantly more cap space at the beginning of any given offseason than will be reported according to the standard convention. But it just turns out that most teams will spend most of that cap space on their own players by simply choosing to not release those players. For example, the standard convention would identify Drew Brees as counting $30 million against the salary cap, but would point out that the Saints could “save” $20 million in salary cap space by releasing Brees. The correct way to describe this situation – emphasizing the true salary cap commitment and the decision which must be made – is to say that Brees is scheduled to count $10 million against the salary cap but that the Saints have the option to use an additional $20 million of salary cap space to retain Brees if they choose to not release him.

This example also highlights that the only amounts that are truly committed to a given team’s salary cap are 2016 signing bonus proration amounts and dead money amounts. All other amounts can be manipulated. Base salaries and roster bonuses can be avoided by releasing the player. Guaranteed salaries can be avoided by trading the player. Future signing bonus proration amounts can be deferred by releasing or trading the player after June 1st. 2016 signing bonus proration amounts and dead money amounts, however, are completely “stuck” to the 2016 salary cap and therefore represent sunk costs.

I refer to the difference between a team’s Adjusted Salary Cap and its sum of 2016 signing bonus proration amounts and dead money amounts as its “Realizable Cap Space.” This is the total amount of cap space theoretically at the team’s disposal. This assumes, in part, that every player can be released as a Post-June-1st termination. While this is not logistically feasible, it is possible in theory and reflects the transactional optionality that exists.

The table below shows the 2016 Realizable Cap Space for each team. The “Adjusted Cap” column assumes that all residual 2015 salary cap space will be carried forward to 2016; this won’t exactly happen once unearned LTBE incentives and earned NLTBE incentives are netted out.

There is a pretty large disparity between the teams at the top of the list and the teams at the bottom of the list. For struggling teams such as Dallas, Baltimore and New Orleans, possessing the least amount of Realizable Cap Space is not encouraging. On the other hand, successful teams such as New England and Carolina may be content to use most of their Realizable Cap Space on their current players by not releasing the ones under contract.

While Realizable Cap Space depicts the amount of cap space possibly at each team’s disposal, there are a couple of additional constraints that should be considered in evaluating opportunities to acquire talent. First, almost all teams have on their roster some players with guarantees salaries. Such players are rarely released, and trading them would typically require attaching draft pick compensation to entice the receiving team to agree to acquire the contract. As a result, this Realizable Cap Space is not exactly freely available for talent acquisition. Second, each team will fill its roster with 53 players, and each such player will count at least $450,000 against the salary cap in 2016 (the rookie minimum salary). The sum of these minimum salaries form a sort of salary cap floor that must be used and therefore should not be thought of as money freely available for talent acquisition.

In the table below, I subtract from each team’s Realizable Cap Space (i) the sum of the guaranteed salaries of players on its roster and (ii) the product of the $450,000 rookie minimum salary and the number of roster spots not currently occupied by players with guaranteed salaries. I refer to the result as “True Cap Space.”

True Cap Space for many teams will diminish quickly after the Super Bowl, as the guarantee vesting dates for a number of players take place within the first week of the 2016 League Year. A large chunk of the remaining True Cap Space (as well as Realizable Cap Space) will be used up during the early stages of free agency, and most of the remaining True Cap Space will disappear when rosters are finalized following the preseason and veterans accordingly see their salaries become guaranteed for the 2016 season. While it is not possible for Realizable Cap Space to increase, True Cap Space can increase if a player with a guaranteed salary is traded.

Bryce Johnston is the creator of Commitment Index and the co-creator of Expected Contract Value. Bryce earned his Juris Doctor, magna cum laude, from Georgetown University Law Center in May 2014, and currently works as a corporate associate in the New York City office of an AmLaw 50 law firm. Before becoming a contributor to overthecap.com, Bryce operated eaglescap.com for 10 NFL offseasons, appearing multiple times on 610 WIP Sports Radio in Philadelphia as an NFL salary cap expert. Bryce can be contacted via e-mail at bryce.l.johnston@gmail.com or via Twitter @NFLCapAnalytics.