The NFL and NFLPA have agreed to raise the salary cap floor, previously set at $175 million, to $180 million. This rumor had been circulating for about a week and our salary cap estimates on the site already took this raise into account. The salary cap in 2020 was $198.2 million and this would be the steepest drop in NFL history if it happened.
As for what triggered the raise who knows. Its such a minor bump that perhaps it was done simply to bring some added clarity to the salary cap situations for some teams. It may have simply been the NFL showing more willingness to borrow from the future or the NFLPA conceding a little on benefits.
The NFL is looking to move to 17 games this year which requires them to negotiate a new media contract if they want to have 17 games. That could be a standalone deal or extending one of their current deals I believe the way that works is if a new deal is negotiated they will recalculate the salary cap for any new money that comes into circulation from the TV contracts. If the league doesnt think that they will have a deal in place before they set the cap, maybe this is just taking into account a minimum expectation for a rise in rights fees which may or may not be in place before March 17. Considering how minor of a bump this is to come so late in the game maybe this is the reason for it.
Teams do need some clarity on the salary cap before they can proceed with certain moves with player contracts so any guidance helps. Usually teams have clarity in December so this is very different.
I have read a lot of speculation on this impacting budgets but at this point owners should know the impact Covid had and will have advised accordingly. The bigger issue is how do GMs fit it all into the salary cap.
Not only do they need to know this years cap but likely have some guidance on next years cap as well. If they know that the cap next year would jump back to $220 million this becomes a much easier situation to navigate. If next year is expected to be $190 million than all teams are doing is pushing problems from 2021 into 2022. Once the league informs people of payback schedules for the revenue losses and the TV deals are finalized will we likely have a normal league year.
With the 2020 regular season having come to a close for the Houston Texans (as well any 2020 game for Houston finished), all eyes now move towards the 2021 offseason. The organization is looking to hire a new General Manager and Head Coach. The new regime will be tasked with rebuilding the roster, along with repairing the team salary cap. Copious amounts of damage left behind from the short lived Bill O’Brien GM era. The team has two savings factors for any incoming front office: Deshaun Watson and quality book end offensive tackles.
For this article we will use $176 million as the league salary cap for the numbers. Unfortunately, the league will not announce the league cap until the middle of March. This generally occurs a few days prior to the start of the new league year. The 2021 league year begins at 4pm EST on March 17, 2021. The annual team adjustment is unknown at this point, expect that information to be leaked by media in the coming weeks.
2021 Cap Space
The team has recently completed the signing of future’s contracts, leaving the team with 54 number of player contracts for 2021 on the books; expectations are more future contracts are coming this week. With the 54 contracts, the team currently has approximately $202.98 million (Top 51 rule) in cap commitments for 2021. The team will roll over approximately $9.6 million of remaining 2020 cap dollars over to 2021. Absent the annual adjustment, the Texans will have approximately ($17.73) million, yes negative, in cap space to begin the offseason. While the team is currently projected over the salary cap, the need to be cap compliant is not due until March 17. There are available roster moves to get the team within compliance.
The new regime will examine the roster top to bottom for potential savings or adjustment. With any new regime, this means almost every player is available for some sort of transaction, the new front office will be not “married” to any player. At this point the only untouchable players are Deshaun Watson (QB), Laremy Tunsil (OT) and Tytus Howard (OT). As with any new General Managers it is difficult to project potential roster management without a clear history to reference.
The Texans finished the 2020 league year as the top team in cash spending on the roster, spending just over $250 million. This is a rare place for Houston as the team is generally in the bottom third of cash spending year over year. The heavy cash spending in 2020 could lead to a pull back of spending in 2021 to assist in balancing out the salary cap.
The 2021 league year will need to be a year of low cost veteran contracts and cost controlled rookies or 1/2 year experience players on minimum deals. The team has limited draft capital, and will likely sign a large undrafted class in hopes of landing 1 or 2 prospects.
Pending Free Agents
The Texans have a large group of pending free agents, however only a few players are heavy contributors for playing time. Below is the list of free agents and an opinion on how the team may proceed.
Will Fuller (WR) – Fuller was well on his way to a career season before receiving a 6 game suspension from the league for performance enhancing drugs. Fuller played the 2020 season on the 5th year option of his rookie contract. Heading into a down cap year coupled with a strong wide receiver draft class, and given Fuller’s injury history; makes for a difficult projection on Fuller. The team likely would make an offer of two years at $11-13m APY and let Fuller explore the market. This value is down from initial projections of Fuller topping $14+ million APY.
Tyrell Adams (ILB) – Adams stepped in as the starting linebacker when Bernard McKinney was placed on season ending injured reserve. Adams has been adequate in his performance, despite his career high in snap counts. Adams played on a minimum level contract. Suspect Adams will need to accept a similar contract for 2021.
Roderick Johnson (OT) – The league is short on offensive linemen, but in a cost controlled cap year this will work against Johnson. Houston should bring back Johnson on a one year contract to compete with Charlie Heck as the OT3. This will be difficult for Houston with Johnson’s solid two game audition at the end of the season. Very likely he is signed elsewhere to compete for a starting job.
Let Walk (UFA)
Vernon Hargreaves (CB)
Gareon Conley (CB) – Unless new front office has change of heart.
Carlos Watkins (DL)
Jon Weeks (LS) – retirement?
Brennan Scarlett (Edge)
Phillip Gaines (CB)
Brent Qvale (OG)
Michael Thomas (S)
Dylan Cole (ILB)
A.J. McCarron (QB)
Kyle Emanuel (LB)
Restricted Free Agents
ROFR (right of first refusal) tentatively worth $2,133,000.
P.J. Hall (DT) – Attempt to resign at minimum level contract.
A.J. Moore (S) – ROFR tender to evaluate his continued development.
Pharaoh Brown (TE) – Attempt to resign at minimum level contract.
Buddy Howell (RB) – No resign.
Dontrell Hilliard (RB) – No resign.
Cornell Armstrong (CB/ST) – Resign at minimum level contract.
Exclusive Rights Free Agents
ERFA’s are prohibited from negotiating with other teams until March 17, 2021. The team will need to sign/tender the player by this date. Expect the team to tender all ERFA’s.
Geno Stone (S)
Proven Performance Escalator
Justin Reid (S) and Jordan Akins (TE) received a salary increase for playing time under the proven performance escalator; Reid received the Level 2 increase and Akins received the Level 1 increase. The Texans do not have any other 2018 draft picks eligible for the PPE.
If the above player re-signings and salary adjustments are completed the team will have (x) contracts on the 2021 cap with ($x) available in cap space. Now we turn our attention to ways the team can shed cap and cash for the 2021 league year. Cap savings listed after gross savings, not net after Top 51 replacement.
Potential Releases (amounts do not reflect net savings under Top 51 rule)
Benardrick McKinney (ILB) – McKinney still has plenty of talent, this release would be characterized as cap casualty. The team extended Zach Cunningham in 2020, making it difficult to keep McKinney on the roster at his current rate. The team could explore resigning McKinney at a lower rate. Release saves $7.0 million in cap and $7.75 million in cash.
David Johnson (RB) – Johnson has $2.1 million in salary guarantees for 2021. With a release the team would gain a cap credit in 2022 on that money if Johnson earns cash from another team in the 2021 league year. Release saves $6.9 million in cap and cash.
Zach Fulton (OG) – Fulton had another down year in performance in 2020 after taking a pay cut in the 2020 offseason. Release saves $3.0 million in cap and cash.
Duke Johnson (RB) – The team never utilized Johnson correctly after sending a 3rd round pick to Cleveland in 2019. Release saves $5.15 million in cap and cash.
Brandon Dunn (DL) – This contract was another Bill O’Brien special, over valuing Dunn at $4 million APY in February 2020. Dunn’s performance has not lived up to the contract. Release saves$3.25 million in cap & $3.75 million in cash.
The team could also look at veterans Senio Kelemete (OG) and Darren Fells (TE) for potential release. However both contracts have minimal savings when compared to replacement cost.
J.J. Watt (DE) – The elephant in the room. The new front office will have a critical decision on their hands with one of the faces of the franchise. Watt is due $17.5 million in 2021 with no guarantees remaining. Watt will likely be looking for a contract extension regardless of which team he is on in 2021. 2020 will be Watt’s second full season of work in 5 years, and is 31 years of age. Dealing Watt for a draft pick would likely bring back a mid/late 2nd round pick. If the team plans to retain Watt, then an extension is needed to lower Watt’s $17.5 million cap charge for 2021. Trade saves $17.5 million in cap and cash.
Potential Extensions & Restructures
The team does not have any potential contract extension players beyond Justin Reid and Jordan Akins. The new general manager will likely expect both players to finish out their rookie contracts as the team builds their plans for 2022.
Brandin Cooks (WR) – As part of the 2020 trade for Cooks, Houston inherited the remaining years of Cooks’ contract. Cooks has zero dead money in his contract (currently), and is under contract through 2023. Houston could convert $9.0 million of his $12.0 million base salary to a signing bonus, creating $6.0 million in cap saving for 2020. However this move would increase Cooks’ 2022 and 2023 cap charges by $3.0 million each year respectively. The move would also create $6.0 million in dead money for 2022. This move likely would ensure Cooks is on the roster for 2021 and 2022.
Whitney Mercilus (Edge) – Mercilus signed a large extension with Houston at the end of the 2019 season. The contract included an early vesting schedule for his 2021 salary, which is now fully guaranteed worth $10.5 million. Absent a retirement by Mercilus, the team would have to keep Mercilus on the roster for the 2021 season. Any kind of trade would need to include draft assets with it. Mercilus would quickly say no to any salary adjustment. This is an unfortunate contract left behind from the Bill O’Brien era, that the new front office will have to manage until 2022.
Nick Martin (C) – The Martin extension in 2018 was another over value by O’Brien. Martin is currently the 5th highest paid center in the league, based on APY. Martin grades out in the top 10 on pass blocking with PFF, however is near the bottom in run blocking. Martin does not have any guaranteed money remaining in his contract. The team could approach him about a salary adjustment, but when the team does that they need to be prepared to release the player if they quickly say no. A release of Martin just creates another hole on the roster that the team will need to fill with a free agent. Martin has been the center for all of Watson’s career. Release saves $6.25 million in cap and $7.5 million in cash.
What Does it All Mean?
If the above transactions are completed the team could realize a net cap savings of $29.74 million, placing the team near $12 million under the cap. This does not include any potential transaction with Nick Martin.
Cap Created (mil)
Cap Saved (mil)
Houston Texans Potential Cap Savings
The the organization will need to manage the 2021 league year with low cost contracts via veteran minimums and rookie/low experience players as they rebuild the salary cap and roster for 2022. Absent the players listed above the core of the roster is well defined. Certain contracts are what they are, and will have to continue to utilize those players as best as can be done until they become moveable. This pertains to Whitney Mercilus, Randall Cobb, and Eric Murray.
With the 2021 salary cap expected to come in much lower than initially contemplated due to lost revenues attributable to the COVID-19 pandemic, a handful of NFL teams appear to be in serious trouble for next season. Among those teams, the New Orleans Saints serve as the poster child for organizations residing in salary cap hell. The Saints currently have approximately $276 million on the books for the 2021 season, prior to any salaries allocated for free agency, the draft, practice squad, injury contingencies, etc. Meanwhile, the league and the NFLPA have negotiated a salary cap floor of $175 million for 2021, with the hope being that 2020 revenues will come in better than expected, pushing the cap higher. A reasonable optimist would project an NFL cap number in the $185 – $190 million range. Even in an optimistic scenario, the Saints sit north of $85 million over the projected salary cap. So, how will the Saints slash this unprecedented amount off of their cap for next season? Let’s take a look at how they can do it.
The main tools at the Saints’ disposal are 1) player cuts, 2) contract restructurings, 3) extensions that lower the 2021 cap hit, and 4) trades. The Saints will likely need to utilize all four tactics in order to stay within the confines of the 2021 cap. Note that for this article, we’ll focus only on moves that significantly impact the salary cap, as opposed to diving too far in the weeds. With a goal of slashing approximately $90 million off the Saints’ 2021 cap number, let’s get to work.
QB Drew Brees
The Saints will likely have a change at quarterback, with future Hall of Famer Drew Brees expected to retire at the end of the 2020 season. We’ll start there for our first transaction. Brees currently has a $36.15 million cap number for 2021, comprised of a $25 million P5 salary (P5 meaning base) and $11.15 million in prorated bonus. While the resulting dead money from Brees’ contract will be vast, we will need to save what we can off the 2021 cap. Brees also has two voidable years attached to his contract, so solely for cap purposes, his contract runs through 2023. If the Saints were to cut Brees in 2021 in connection with his retirement, the team would incur $22.65 million in dead money, while saving $13.5 million. For the purposes of this article, we’ll presume the Saints will go ahead with this move and save a much needed $13.5 million from their 2021 cap.
The Saints do have another tool to be used at their disposal, albeit one with complications – a post-June 1 cut. If designated as a post-June 1 cut, then from June 2 and forward, the $22.65 million in dead money would be spread out over multiple years, with the Saints incurring $11.15 million in dead money on the 2021 cap, with the remaining $11.5 million in dead money (attributable to the bonus dollars for his 2022 and 2023 seasons) hitting the 2022 cap. The key issue here is that in order for the Saints to make Brees a post-June 1 cut, the team will have to carry his full $36.15 million cap number up through June 1. Given that the team has to be under the 2021 salary cap at the start of the league year in March, this becomes an extremely difficult proposition for the Saints to pull off. Not impossible, but very complex. So for our purposes here, we’ll designate Brees a pre-June 1 cut.
LB Kwon Alexander
The Saints traded for linebacker Kwon Alexander mid-way through the 2020 season, nabbing him from the San Francisco 49ers for another player and a conditional pick. As a result of the trade, Alexander’s remaining bonus payments accelerated to the 49ers’ cap, making Alexander easy to cut by the Saints since no dead money remains. Alexander has a $13.4 million cap charge in 2021, pursuant to which the Saints can cut Alexander and save…$13.4 million off their cap. Let’s not overthink this here. That’s another $13.4 million saved.
CB Janoris Jenkins
We next move to cornerback Janoris Jenkins, who has been a solid starter for the Saints over the past few seasons. Unfortunately for Jenkins, he has a whopping $14.2 million cap hit for 2021, with $7 million to be saved if the Saints release him. While far from ideal to be saddled with $7.2 million in dead money for 2021, the team needs the $7 million in savings.
WR Emmanuel Sanders
Wide receiver Emmanuel Sanders joined the Saints in free agency prior to the 2020 season, with the team hoping to solidify the its number two receiver spot. The signing made sense on paper, but the result has been mixed. Sanders currently has a $10 million cap number for 2021, which makes him another strong candidate to be released for savings. As a pre-June 1 cut, the Saints take a $6 million cap hit while saving $4 million. That’s not a substantial amount to save, but it’s necessary given the team’s situation. The Saints will save $4 million off their 2021 cap by cutting Sanders, and let’s go ahead and make this move.
DL Malcom Brown
Veteran interior defensive lineman Malcom Brown has been a solid member of the team’s rotation. Unfortunately, the team needs to save cap space where it can, and Brown is expendable due to his contract. Brown has a $6.5 million cap number for 2021, with $5 million of that amount to be saved by the Saints if they cut him, resulting in only $1.5 million of dead money. Not much more to explain here, but unfortunately Brown needs to go. The Saints save $5 million off their 2021 cap by cutting Brown.
G Nick Easton
Veteran guard Nick Easton has been with the Saints since 2019, starting several games for the team. He’s been a steady performer, but he’s also got a $7 million cap number for 2021. The bad news for Easton is that the Saints save $6 million by cutting him. Not much to think about here – Easton will have to go, and there’s $6 million trimmed off the cap.
The players mentioned above will not be the team’s only cuts. But for purposes of this exercise, they are identified as the team’s primary cuts in order to reach the goal of slashing nearly $90 million. Through the player cuts mentioned above, the team saves $48.9 million off their 2021 cap. This gets us over half way to the goal, but more work remains.
Teams frequently restructure contracts, which frees up immediate cap room, but at the expense of incurring larger cap charges over the coming seasons. In a sense, think of it as using a credit card – you defer payment now, but the bill will eventually be due later. The Saints will need to utilize this approach as they work to come in line with the 2021 salary cap. Unfortunately, a large reason that they are in this financial mess to begin with is due to restructuring veteran contracts, including repeatedly re-doing Drew Brees’ contract. In any event, the Saints don’t have much choice here given how much money needs to be shaved. As for which players make strong restructure candidates, you need three main components – 1) players with a high P5 salary for the season in question (so 2021 in this case), 2) players who the team strongly expects to be around for years to come, and 3) sufficient duration of contract remaining, or to be added, in order to absorb the future increase in cap charges. Conversely, players who you expect to cut within the next year or two are terrible restructure candidates, because the pain you will endure when cutting them will be ruinous to your cap. With that said, let’s take a look at four players who the Saints could elect to restructure.
DE Cameron Jordan
While Drew Brees has been the franchise cornerstone on offense, it’s defensive end Cameron Jordan who has played the same role for the defense. Jordan has been with the Saints for ten seasons, and he remains a fixture for the next few years at a minimum. Looking at Jordan’s contract status, he has a 2021 cap number of $18.9 million, and his contract runs through 2024 (including voidable years). Jordan makes the ideal restructure candidate, given his stature with the team, his high P5 salary and his contractual status running for four more years. Taking a closer look at Jordan’s contract, he has a P5 salary of $11.9 million in 2021, together with a signing bonus allocation of $5 million, a roster bonus of $1.9 million and a workout bonus of $100,000, thus adding up to a cap charge of $18.9 million. Focusing on the P5 salary, let’s lower this by paying Jordan the NFL minimum salary for 2021, while converting the rest of the salary to an additional signing bonus. The expected 2021 minimum NFL salary for veterans will be in the $1.1 million range, so let’s lower his 2021 P5 salary to $1.1 million, while paying Jordan out an additional $10.8 million as a signing bonus. With Jordan’s contract running through 2024, the new $10.8 million signing bonus gets split over 4 years for cap purposes, providing an additional $2.7 million cap charge via signing bonus over the aforementioned four year period. This will reduce Jordan’s 2021 cap number to $10.8 million, resulting from his new P5 salary of $1.1 million, $2.7 million attributable to the new signing bonus, plus $7 million in previous bonuses (initial signing bonus, roster bonus and workout bonus). Importantly for our exercise, the Saints will save $8.1 million off their 2021 cap, while $2.7 million will also be added to their cap in each of the 2022, 2023 and 2024 seasons.
WR Michael Thomas
Prior to the 2021 season, any notion that top wide receiver Michael Thomas would wear a uniform other than that of the Saints would have been ridiculed. While there has been some tumult between the player and the team in 2020, the smart money here is that Thomas will remain a fixture for the Saints – he’s just too important to the team to trade away. As the Saints still need to unlock more savings, Thomas makes for another great restructure candidate. Looking at Thomas’ contract, he has a 2021 cap charge of $18.8 million, with a $12.6 million P5 salary, $6 million in prorated bonus and $200,000 for a workout bonus. His contract runs through 2024 as well, so we have plenty of room to lower his 2021 cap number. Let’s take the same approach with Thomas as we did with Jordan, reducing his P5 salary to the NFL veteran’s minimum and converting the remainder to a signing bonus to be spread over four years. Doing the math, we convert $11.5 million of salary to signing bonus, resulting in a $2.875 cap charge over each of the remaining four years. As a result, Thomas’ cap charge for 2021 reduces to $10.175 million ($1.1 million P5 salary, $6.2 million in existing bonuses and $2.875 million for the new signing bonus), providing a savings of $8.625 million for the 2021 season. Of course $2.875 million in additional cap charges also hit the 2022, 2023 and 2024 seasons, but we are concerned with 2021 here, and we did our job by saving the team $8.625 million in cap charges for the 2021 season.
LT Terron Armstead
For the last few years, the Saints have boasted one of the top offensive lines in the game, with left tackle Terron Armstead playing a leading role in the unit’s success. The Saints will need to keep Armstead to protect their likely post-Brees successor at QB in 2021, so we’ll get to work in restructuring his salary as well. Armstead has a cap charge of $16.2875 million for 2021, comprised of a P5 salary of $10.15 million, with a multitude of other bonuses totaling $6.1375 million. Armstead’s contract runs through 2023 due to two voidable years tacked onto the end of his deal. We’re going to use those years to help us alleviate some of his 2021 cap charge. So taking his $10.15 million P5 salary, and for simplicity’s sake, reducing him to a new P5 salary of $1.15 million for 2021, we convert $9 million of his P5 to a signing bonus. This results in $3 million in additional cap charges for each year from 2021 through 2023, while resulting in an ultimate savings of $6 million for the Saints’ 2021 cap. Armstead’s new 2021 cap charge becomes $10.2875 ($1.15 million P5 salary, $6.1375 million in existing bonuses and $3 million for the new signing bonus).
LG Andrus Peat
The Saints view left guard Andrus Peat as a building block, as evidenced by the team locking him up through 2024 with a rich extension. Peat’s cap number for 2021 is $11.6 million, with a $9 million base salary and $2.6 from a prorated signing bonus. In other words, he’s an excellent restructure candidate as well. Let’s convert all but $1.1 million of his 2021 P5 salary into a signing bonus, which spreads the new $7.9 signing bonus in equal charges over four years on the cap. As a result, Peat’s new 2021 cap number is $5.675 million, consisting of his $1.1 million P5 salary, existing $2.6 million signing bonus proration and $1.975 million new signing bonus proration. The Saints save $5.925 million off their 2021 cap as a result.
We’re done restructuring contracts, with some immediate relief granted to the Saints in exchange for longer-term cap pain. But again, the Saints don’t have much choice here. The team saves a collective $28.65 million off their 2021 cap with these restructures. We are almost done assisting the Saints with the heavy lifting in their 2021 cap endeavors, but we need to make a few more moves.
The Saints believe that their long term successor at QB currently resides on their roster. Taysom Hill has filled in admirably as the team’s starter while Brees recovers from injury, even if Hill hasn’t quite silenced the doubters outside of the Saints’ organization. Assuming the team wants to commit to Hill for the longer term, then it makes sense to sign him to an extension, while also lowering his 2021 cap number. As it currently stands, Hill has a $16.159 million cap number for 2021, comprised of a $10.72 million P5 salary plus $5.439 million in bonuses. While Hill has shown some promise at quarterback, he still hasn’t quite shown that he’s a safe bet as a franchise signal caller. As such, let’s give him a modest extension, somewhere in the range of $2 years, $50 million, which ties Hill to the Saints through the 2023 season. As for the contract itself, let’s go with a $10 million signing bonus, with two years at $20 million each, with the 2022 P5 salary fully guaranteed. Given the timing of the extension, leaving three years on Hill’s deal, the bonus is spread on the cap over three years at $3.33 million each year. Next, the Saints can earn more relief for 2021 by converting Hill’s 2021 P5 salary into a signing bonus, excluding the minimum salary amount. After doing so, Hill has a $1.1 million P5 salary for 2021, together with an additional signing bonus of $9.62 million, which hits the cap over three years at approximately $3.21 million per season. After the smoke clears here, Hill’s new 2021 salary cap number is $13.079 million, which consists of his $1.1 million P5 salary, $5.439 in current bonuses, plus $6.54 million attributable to the two new signing bonuses. The Saints ultimately save $3.08 million off the 2021 cap, while also gaining some years with Hill under contract.
Along with some difficult player cuts and salary restructures, the Saints will need to make some tough decisions among players that they want to keep. As such, what will be proposed here may ruffle some feathers, but slashing $90 million off a team’s cap does not leave for easy choices.
CB Marshon Lattimore
The Saints drafted exceptionally well in 2017, which re-opened their Super Bowl window over the last few seasons. The only downside to drafting exceptionally well in one season…the bill comes due for that draft group at the same time. Cornerback Marshon Lattimore has been outstanding for the team, arguably serving as the team’s best player in the secondary over the past few years. As a former first round pick, Lattimore has a fifth year option in 2021, which the Saints picked up in a no brainer move after the 2019 season. The fifth year option is for $10.244 million in P5 salary, with no bonuses attached. As such, the cap charge matches the P5 salary, with no cap penalties to be incurred by the Saints for trading or cutting the player. While the Saints could make it work to keep Lattimore for 2021 and beyond, the reality is that it will take a very lucrative extension (think $18 million per year or more) to keep Lattimore in the fold over the long term. With stud right tackle Ryan Ramczyk also needing an extension, not to mention the team needing to fill a whole host of other needs (addressing holes from roster attrition via free agency and otherwise, the 2021 draft class, practice squad and contingencies, etc.), the Saints can’t keep everyone. The team may, however, be able to get a first round pick or equivalent compensation for Lattimore, which will help usher in the next era while also providing important cap relief and a cost controlled player for four plus years. Under this proposed plan, the Saints trade Lattimore away for a first round pick and save $10.244 million off their 2021 cap in the process.
We took on the task of reducing the Saints’ salary cap charges by approximately $90 million for 2021, and here’s where we landed as a result of the cuts, restructurings, extension and the trade referenced above:
Extension Lowering 2021 Cap Hit
So there you have it, more than $90 million has been slashed off the team’s 2021 salary cap. It’s actually amazing how $90 million can disappear off a team’s salary cap, albeit with a lot of moves. And just as a reminder, this is far from an exhaustive list of moves the team will need to make, but the transactions above will lead the Saints most of the way towards 2021 cap compliance. The team will inevitably need to make several tough decisions, some of which will be unpopular with Who Dat Nation. But the result of continuously punting cap decisions into the future will finally come due in 2021. The good news for Saints fans – after making the moves above, the team will still remain formidable. But there’s no question that the 2020 season will be the team’s best shot at a Super Bowl ring, at least for the next few years.
With the 2020 regular season getting close to wrapping up and more and more questions coming about the 2021 salary cap situations for teams I wanted to look at the sunk costs facing each team. This isn’t a measure of how much maximum space can be created by cuts, restructures or trades just a look at what teams absolutely can’t get rid of next season under any circumstance.
So how did I measure sunk costs on a team? First I looked at every contract on the books for 2021 and identified the prorated portion of the contract in 2021. Prorated costs are those that exist from bonuses that were already paid and can’t be changed (other than in rare circumstances of retirement or suspension) now matter what you want to do with a player contract.
The next thing I did was look at the salaries of all players drafted in 2019 and 2020 and considered their base salary as a sunk cost. Why is this sunk? Well you cant renegotiate a draft pick until they have at least three years in the NFL so these salaries cant change either (yes some of the players could be cut but they would just be replaced by an almost identical salary).
The third thing was to look at every player earning under $1.075M next year and consider that sunk since that is about as low as you can go. For every other player I considered $1 million a sunk cost since that is about as low as you can go on a restructure. In reality the sunk cost is higher than what I have estimated here because in that restructure a portion of the salary converts to a prorated bonus but if we started calculating that we have to get into cut vs restructure debates and so on. So we should take this as a minimum level of sunk costs. Finally we looked at the teams dead money on the books for next year which is clearly lost cap room.
Here is what I came up with for each team with the estimated unadjusted salary cap of $176M.
The top 5 should come as no surprise. The Steelers and Packers don’t do guarantees and use larger bonuses than most teams in the NFL because of that. The Steelers constantly restructure contracts as well which is why they have such a tough position with the cap next year. The Saints and Eagles kicking the can contract approach is well known while the Falcons use two tiered bonuses more than anyone else and also get into the restructures as well.
Also not surprising is the Bucs with the most flexibility. They don’t use prorated bonuses so they have no true sunk costs other than rookie bonuses. The Colts have used a similar approach and have the 2nd most flexibility. Team three is the Dolphins who have really utilized their salary cap purge better than anyone ever has. Thus far they have embraced a different approach which gives them a ton of flexibility for a time when they want to create a ton of cap room.
The Titans were a bit of a surprise for me. They have done a really good job at managing their cap in the last few years but I thought they had enough bigger deals to have more sunk costs but I guess not. The Jaguars on the other hand were not surprising as they have ripped apart their entire roster last year.
If you are a Texans or Chargers fan you should be pretty happy as they have more flexibility than most people probably thought especially the Texans who have been crucified for contract decisions in the last two years. The Chiefs flexibility should be worrisome to the rest of the NFL and the Jets flexibility was compromised by the bad Maccagnan contracts clogging up the dead money part of the ledger. They have a ton of cap room though so they don’t need the flexibility this year. The team that surprised me the most was the Vikings at 7. This is a team that has veered a bit off track in the last two years and I guess I didn’t realize just how much they veered off.
With the Covid opt outs and 2020 draft picks now accounted for I thought it was a good time to take a peek ahead to 2021 and see how team’s salary cap situations may look next year. The chart provides two cap spaces- one in the event of a $175 million salary cap in 2021 and the second in the event of a $190 million cap in 2021. The cap space estimate is based on current cap figures on the books in 2021, signings of enough minimum salary players to reach 51 players, and carryover based on current cap space for 2020 minus a $5 million placeholder for in-season costs. Note that this is not the salary cap health we talked about before (that will be a post after cutdowns) which takes into account possible cuts/restructures just with the roster as is.
2021 Salary Cap Space Estimates
Estimated Cap Space ($175M Cap Limit)
Estimated Cap Space ($190M Cap Limit)
Obviously many teams will have some work to do as the average cap space of $11.6M and $26.6M would be the lowest numbers in recent memory, but many teams do have some levers to pull if necessary for next year. That said there could be a situation where we see a lot of 1 year contracts next year and a great deal of market control coming from just a handful of teams next season.
With the opt out rules finalized here are the current numbers for cap space gained by team in 2020, the list of opt outs thorough August 3, and the positional breakdown. All cap space created can either be used immediately for signing free agents or carried over into 2021. As of yesterday 51 players have opted out of the 2020 season. The deadline is Thursday at 4PM and I would expect many more to be added to the list once they review the final rules.
In the latest proposals the NFL has asked the players to accept a $175 million salary cap in 2021 unless revenue drop is not as severe as anticipated. In return the balance of the shortage would hit the cap over the next three years plus the NFL has made various concessions on other items including opt outs.
How bad would a $175M cap impact the NFL teams? Here is a quick look at what every teams cap space would look like if they were able to carryover their current estimated cap room.
Est Cap Space @ $175M
At this point in time this would be the rosiest picture for teams. The above estimates dont include the cap charges for unsigned rookies and dont adjust the carryover numbers for the change from the top 51 to to the regular season accounting numbers. When you factor those in the number of teams over the cap should go from 8 to 13.
The average cap space next year would be in the ballpark of $15 million per team which are basically unheard of numbers in this day and age. The last few years the average cap room is between $30 and $40 million around free agency.
If they agree to this I would expect a number of mid level veterans to feel the brunt of this during this summer and next winter. Rookies, especially 1st round picks, may see their extension talks get pushed for a year. The other way teams will deal with this is likely to push money into the future via restructures with their secured veteran players who have high base salaries and use those 2022 and 2023 years as ways to “buy on credit” in 2021. Free agency would also be interesting as players and teams could opt for cheaper short term deals to bide time until the money gets higher in the future.
A drop like this is not surprising though I think the NFL should have the ability to deal with a flat cap or flat cap+ standard raise situation in 2021 and/or 2022 rather than this kind of drop. Any type of drop is going to really unfairly put the burden on a smaller group of veteran players. Superstars are going to be cut proof, rookies are all on set salaries and thus also cut proof, and minimum salary vets cant sign for any cheaper. Its that 10-15% of the NFL that doesnt fit into those three categories that are going to get hammered. Is that fair? I don’t think it is, but that may be what happens.