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.

Cap Space Gained By Team

Players Who Have Opted Out

Opt Outs By Position

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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.

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.

A few weeks ago I wrote about the potential for a salary cap disaster in 2021 due to the Covid crises with the main take that the NFL and NFLPA need to start negotiating now to get a better handle on the situation to prevent a rash of releases this summer and again next February. Per NFL.com’s team it sounds as if they are doing just that.

Multiple sources say the NFL and NFLPA both acknowledge that important negotiations are coming quickly to determine how to handle yearly salary caps for 2020 and beyond, considering there are likely to be steep revenue losses with limited or no fans in the stands. 

Overall the article pretty much confirms what I speculated on weeks ago- there are rules in place that could cause a massive cap pullback next year, that the league is looking at a massive loss in revenues this year, and that its not really feasible to go into the season without a plan in place.

The article outlines a few ideas being batted around. One is to smooth the cap by borrowing against future years. We discussed that before and it makes some sense. Im not sure Id agree that a new TV deal will cause a massive spike all at once (the NFL has generally avoided massive spikes in the salary cap since their disastrous 2006 CBA extension), but the cap does always go up so its fair to smooth things out that way. Remember back at the start of the prior CBA the salary cap was flat for 3 years before it began to increase. Teams dealt with that accordingly and there was minimal guidance for that situation.

Another option is eliminating performance based pay. PBP is basically a pool of money that is given to players for playtime that goes well beyond their salary level.  I don’t see how the money there is significant enough to make a dent in the potential losses so I will assume that they meant as part of the “smoothing out” the PA will opt to eliminate the PBP for a few seasons.

The second idea was surprising and that was a “salary giveback” this season. That would seem very difficult to accomplish in part because of how different the NFL’s contract system is.  The way it was written made it sound like we would be talking about reducing P5s for the year. The problem is that some players have incredibly high P5s and other have low ones and in many cases those are for high earning players. In essence you could have two players earning $10 million a year giving up grossly different amounts. None of that would seem very fair nor something that could be negotiated in just a few weeks.

The NFL and NFLPA came to an agreement years ago on rookie contracts when there was a clear mistake in the rookie pool formula because someone probably didn’t sit down and do the math (cap nerds like myself picked up on it quite quickly) that the salary cap could rise and salaries effectively go down if the cap didn’t rise enough to keep up with minimum salary growth. Essentially there was an agreement to create a credit bank to borrow from the future to keep the present at the least consistent.

That’s all spelled out in the current CBA but it does give a bit of guidance as to a way in which the sides can agree to a salary cap freeze. The way I think this could work is that the NFL would “lock” the salary cap so to speak at $198.2 million for 2021 and allow for standard minimum wage growth (around $4 million) with a boost of a few million more. and allow only for a specific growth schedule each year that remains in the CBA. Here is an example where raises are limited to $8M, $11M, $14M, $18M, $23M, and so on… until the bank is “bought back” by the NFL cap. Here is an example where the cap takes a big dip but would be expected to grow by around $20M a year starting in 2023.

A schedule like this allows the NFL to spread out the cap pain and never really have a massive spike which I would think is important to the NFL. There are a large number of ways to do this but something like this makes some sense and can be based upon whatever the NFL and NFLPA accept as a revenue growth expectation.

I’d also think the other possibility, perhaps in conjunction with something like above, is that the NFL asks the union for a credit of sorts on salaries paid in 2020 counting toward the thresholds for 2021 on. The cap is an accounting number. Loss of revenue is a real number. Losing $73M now to only gain it back in 5 or 6 years may not be acceptable under any circumstance. By applying a portion of salary paid this year (perhaps 50% of whatever the excess team by team or league as a whole is from the 2016 to 2020 bucket) to the cash minimums from 2021 to 2023 gives the sides a way to allow teams to pick and choose how much they allow the revenue loss to impact them.  Doing something like that might save some jobs this season if teams are inclined to cut spending simply because they don’t have to spend this year.

We have officially hit June 1, 2020 which means the salary cap rules for releasing players are about to change. Starting June 2 any player whose multiyear contract is terminated or traded will only count the prorated portion of this years signing bonus on the salary cap with all remaining bonus prorations moving into 2021. Four teams have already made use of this change using the post June 1 designation during the offseason and will finally realize the salary cap benefit of the change tomorrow after months of carrying the players full salaries on the cap despite their release.

The Rams saga will Todd Gurley more or less comes to a close at least from a cap perspective as his massive $17.25 million cap charge will reduce to $11.75 million, a savings of $5.5 million. The Rams have an estimated $600,000 in cap room so this will at least give them the room to sign their rookies. They will likely need to make some minor changes to some other contracts as the season draws closer to function. Gurley will count for $8.4 million against the 2021 salary cap but the Rams should get a credit of $2.5 million in 2021 for Gurley’s earnings with the Falcons which will offset some of the money he is owed by the Rams.

The Jets will pick up $11 million in cap room with the release of Trumaine Johnson becoming official. Johnson had counted at $15 million on the Jets cap and will now count for $4 million this season and $8 million next year. The move should bump the Jets to around $25 million in cap room for 2020 which certainly gives them the space for an extension for Jamal Adams or to sign a player like Jadeveon Clowney. It would also give them the flexibility to take on an in-season trade if the season goes well from the start. Johnson is still a free agent.

The Falcons will pick up $10.75 million after the release of Desmond Trufant. Trufant was taking up $15.15 million in cap space and will now count for $4.4 million this season and will count for $5.8 million in cap space in 2021. The Falcons were in desperate need of cap room as we estimated them at only $1 million in cap room. This gives them the cap space needed to sign their rookie class and likely function during the year.  Trufant is a member of the Lions.

The Bears dropped Trey Burton despite a $4 million salary guarantee on a $6.8 million salary but a glut of tight ends made him expendable. Burton had counted at $8.55 million but the team will only pick up $2.8 million in cap space since his dead money, even with the June 1, is $5.75 million. The Bears will have a $1.75 million cap charge next season for Burton but should receive a $910,000 credit if Burton makes the Colts this season. The Bears will now have around $11 million in cap room in 2020 which should be enough for them to function during the season.

There should also be two other teams that gain cap room in the coming days, perhaps as early as June 2. The Panthers and Cowboys both had players announce retirements in the offseason but neither was made official with the league. My assumption at the time was that they wanted to use the June 1 but to use that for a retirement requires actually carrying the player until June 2. In interviews I believe the Cowboys admitted that this was the plan as well.

Travis Frederick currently counts for $11.975 million on the Cowboys salary cap and would have counted for $11.04 million in dead money had they officially retired him back in March. By waiting the Cowboys only need to account for $4.975 million in dead money this year, opening up $7 million in cap room to bring them to around $12 million for the season. So waiting was clearly the right move for them as they needed some extra cap space. Frederick’s charge next year will be $6.065 million.  

Luke Kuechly announced his retirement back in January and has been charged at $15.51 million against the Panthers cap. His dead money would have been $11.84 million had his retirement immediately been processed but instead he will count for $4.71 million in 2020 and $7.13 million in 2021. The $10.8 million in savings will give the cap strapped Panthers the room they need this year moving them from around to $3.3 million in cap room to $13.5 million in cap room in 2020.

One of the biggest questions that always come up when taking salary cap questions deals with a team’s salary cap position in 2021. This is not always the easiest question to answer since rosters are fluid and most of the 2020 rookie class has not even yet signed a new contract to be included in any estimates. So I thought this might be a good time to go over what I try to look at when determining a team’s position with the cap and then use those criteria to come up with an average ranking.

Factor 1: Projected 2021 Cap Space

I tried to make as many adjustments as possible to this to make it as accurate as possible. So what I did first was calculate teams true cap space in 2020 to determine the cap carryover since that plays a big role in a team’s future cap position. To do that I processed the June 1 cuts, processed the rumored retirements, and added in all of our draft pick projections and replaced a $610K salary for each of those moves. I then subtracted $3.9M from each team to account for in-season spending which is around the minimum I would expect teams to need to move from offseason to in-season accounting. For 2021 I used our effective cap space column, added the calculated carryover and then processed the retirements from above and added in our cap estimates for all of the 2020 draft picks who are not yet signed.

The teams that dominate this category are the Colts, Jaguars, Chargers and Patriots while the Falcons, Eagles, and Saints are in trouble.

Factor 2: Max 2021 Cap Space Based on Cuts

For this I added another adjustment to the criteria above by just cutting every non-QB on the roster that would save at least $500,000 in net cap room. 2020 draft picks were excluded from cuts if they qualified. While obviously nobody is cutting everyone they can I always consider this a good way to see how much the roster is filled with sunk costs. The teams that can create the most room are the Bills and Browns while the Lions and Falcons are much more limited. When adding these to our effective cap space our top cap teams are the Colts, Chargers, Browns, and Bills while the low end teams are still the Eagles, Falcons, and Saints.

Factor 3: Max 2021 Cap Space Based on Restructures

Another avenue to creating cap room is to “kick the can” with player contracts and convert salary into prorated signing bonuses. This is a way  to buy now and pay later so to speak.  As a rough estimate here I calculated the max cap savings that could be found if a player converted all his base salary and roster bonuses into a signing bonus and prorated it over the term of his contract. While teams can, and often do, use voidable contract years I didn’t max them out unless a player had void years already in his contract. This was then added to the cap space from factor 1.

The Eagles by far have the most ability to create cap space using this technique in part because they already have void years in some of their deals but its also based on structure. Dallas and New Orleans are 2 and 3. The teams that cant create much room this way are the Chargers, Steelers, and Patriots.

With this as a signal the top cap teams are the Colts, Jaguars, Redskins, and Dolphins with the bottom being the Steelers, Saints, Chiefs, and Falcons.

Factor4: Potential 2021 Free Agents

One of the other important things to consider is how much is going to be required to keep players on your team. For this I am not going to do any kind of projected salaries and instead just did a basic ranking system of UFAs. If you play at least 75% of the snaps last year you score a 3, over 50% is a 2, and over 30% a 1. There are players under that who also score contracts but since we are in the offseason with rosters so large I didn’t give those players a score as generally those under 30% are the ones that take longer to find a new home and a good portion of these players will be cut. I then assigned a multiplier based on position (QB for example was a 3x, WR 2x, RB just a 1) and a reduction on age (0.7X if over 30). I didn’t include RFAs in this or any tenders in the above factors either. I then summed up the scores to just give a general ranking of the free agent classes. This overestimates the value of some players (Jameis Winston for instance will be a backup this year as will Jacoby Brissett) but for a rough guide this is reasonable enough.

The teams with the most to keep in free agency are the Cowboys, Colts, and Jaguars while the Giants, Eagles, and Browns don’t really have any considerations there. While I am not ranking the impact on cap room directly here its safe to say that the teams with a higher number will likely use up more on their own players either this summer or next offseason than teams with few considerations.

So here is how I would rank the teams in regard to salary cap health (call it the cap health index) followed by a few thoughts on the teams.

Tier 1: Browns, Patriots, Bengals, Colts, Redskins, Dolphins, Jaguars, Chargers

These are the teams, with the exception of the Browns, that will likely stand out all of 2020 as having a big chance at free agency in 2020. Ultimately I think with this group the Colts have the most desirable position even if they didn’t rank the highest. Their cap room under any scenario is pretty much absurd and their free agent score is artificially inflated by that Brissett inclusion and that is what drove them down. The Patriots are probably going to wind up with the 2^nd most amount of cap room while the Browns are going to be the most flexible team in the NFL if they have to start making big changes with the ability to both cut and restructure. That one caught be a little off guard, but they have been trying to do better with their cap in recent years. The Jaguars and Redskins were teams I didn’t think much about before this but Jacksonville is purging their roster while the Redskins are still finding their way around. No guarantee these teams will be active in free agency next year but basically no extension or signing should trouble them if the cap is normal next year.  

Tier 2: Titans, Seahawks, Ravens, Cardinals, Bills, Buccaneers, Jets, Broncos

These are the teams that likely have the most potential to get into the top tier in the run up to free agency unless they front load the salary cap hits in an extension. Basically this group has moderate cap room but won’t have many players to sign and are all in a position to gut their rosters if needed. For some of the teams like the Jets, Cardinals, Broncos, Titans, Bucs, and Bills I think this makes sense. For the Seahawks and Ravens you wonder if maybe they should have taken some added chances this year. Regardless of my opinion they are all in very good shape and if the teams with an unproven young QB(Arizona, Buffalo, New York, and Denver) break out this year there will be massive expectations in the offseason.

Tier 3: 49ers, Giants, Panthers, Vikings, Texans, Packers, Lions, Rams

This is a more haphazard group as it consists of a few teams that will likely have their cap positon overstated in 2021 and a few that will have it understated. For the most part this group of teams have one primary avenue to added cap space- either restructures or cuts but not nearly as much flexibility with both as the teams in the tier above. The 49ers, Lions and Rams can benefit the most with the restructure strategy while the Vikings, Packers, Giants, Panthers, and Texans could slice away to gain room. This is also the group where one big extension could drop them a tier and have a ripple effect on the cap. Of these teams the 49ers have the most overall flexibility and are probably in the best shape.  

Tier 4: Cowboys, Falcons, Eagles, Bears, Raiders, Steelers, Chiefs, Saints

This is the group of teams that will mainly be looked at as being in trouble with the cap for a number of different reasons. These teams will have a difficult time moving up a tier and in some cases will need to make some difficult decisions to deal with the cap. The team that has the most potential from here is the Cowboys who have a lot of flexibility with restructures if they want to do that. They also can still re-sign their prime free agent next year (Dak Prescott) by July to increase their carryover and likely do a moderate cap number. The Saints stand out as the worst team overall with little flexibility. Kansas City will be interesting since they have free agents, a QB who will want an expensive contract and not much room up unless they start cutting. Neither the Eagles nor the Falcons are in a good spot but both should be ok due to the ability to restructure for cap relief and a lower group of impactful free agents in 2021.

As of right now the 2020 NFL offseason and regular season will be a bit different due to the fact that the CBA is expiring. If you follow me on Twitter you have probably seen a few comments here and there about the different rules but I thought it would make some sense to talk about some of them here.

1. There is no June 1 Cut

The question I’ve gotten the most in the last few weeks has been “Hey Jason where did the June 1 option go on the cap and calculator pages” and the answer is quite simple. As of now it doesn’t exist so rather than have people be confused about ways they can manipulate the cap we simply removed it from most of the pages on OTC. For those unfamiliar with the June 1, it was a date in the NFL calendar that was used to defer acceleration (dead money from future years) due to signing bonus prorations to the following league year. So when you cut a player all the cap dollars have to be taken in 2020. While this sounds bad to most fans its not that big of a deal. Only a handful of teams in recent years have had such a bad cap/contract situation where they have needed to use the June 1 so most times deferring money to the following year is just due to circumstance not need. If you wanted to put a number on this the average team should plan on keeping an additional $3-$3.5 million to account for cuts that normally would be treated as a June 1.

2. Teams have Both a Franchise and Transition Tag at their Disposal

In a normal year a team can designate just one player either a Franchise or a Transition player. In 2020 they can designate both. So for a team like the Cowboys with a set of major free agents this is a very useful tool as it gives them the ability to, at the very, least match any offer received for two players. In a normal year a team like Dallas would franchise Dak Prescott which would leave Amari Cooper and Byron Jones free to find employment. Now only one of those two will be 100% free. It’s important to note, though, that you can’t use two Franchise tags or two Transition tags, it’s a one and one situation.

3 Expect some Funky Sounding Contracts due to the 30% rule

To prevent teams from dumping huge amounts of cap into what may one day be uncapped seasons the league has a rule in place that does not allow raises of more than 30% of a player’s cap charge minus the signing bonus proration in 2020. So if a player has a cap charge of $6M in 2020 and $3M of that comes from a signing bonus it means he is only allowed a $900,000 raise in any season beyond 2020. Basically the rule is in place to prevent teams from using a signing bonus and from backloading contracts.

There are creative ways around this by using escalators, incentives, option bonuses, and other mechanisms so it just requires more time for team and agents (or self represented players) to finalize a deal. But we have already seen this going on in 2018 and 2019 and it led to a whole bunch of confusion in particular when Carson Wentz, who signed a deal in excess of $30M a year, had a contract that averaged millions less on paper to comply with the 30% rule but had a million and one ways to unlock the full contract value through escalators and incentives that had a 99.99999999999% chance of being earned.

Because so many don’t know about some of these rules and there is such a rush to report on a contract I can already envision all kinds of mis-information about option years, completion bonuses,  guaranteed salary, and annual contract values. Don’t get me wrong there is a lot of fluff in contracts that gets leaked out to make contracts sound better than they are but this year it’s a different story. If you are old enough to remember the old rookie contract system these contracts will all need to be written like those were. The difference is that back then people knew that Sam Bradford’s $20M contract (or whatever that number was) was really a $78M one. This is the same concept it’s just that people don’t know as much about it.

3A. These 30% Rules also Impact Renegotiations

What that means is that teams who usually convert millions of dollars to a signing bonus in February to create salary cap space in March won’t be allowed to do it that same way because they have to be 30% rule compliant and remember signing bonus prorations won’t count in the equation. This is why there was a flurry of renegotiated contracts in the last week of the 2019 season primarily by the smarter salary cap strapped teams (Falcons, Eagles, Lions, etc…) as it was easier to accomplish last year by some liberal use of what is and is not considered a likely to be earned salary escalator or de-escalator and putting in option bonuses that can be exercised and prorated in 2019.

Admittedly I’m not as up on how these incentives can be used now that the season is done but we are technically still in the 2019 league year so there may be some ways teams can use the same methods now (Im sure they cant use options to create cap space because they cant increase a cap charge for 19) but the few teams that did it at the end of the year were the smart ones.

4. Teams have to account for all incentives in 2020

Normally when it comes to incentives the way it works is if the incentive was reached the year before it counts on the cap and if it wasn’t then it doesn’t count. At the end of the year the league then determines who did and did not actually earn those incentives and adjusts the cap the following year. For 2020 all of this happens in real time so teams will need to carry the cap space to account for all possibilities.

As an example, since it was well publicized, Richard Sherman earned $4 million in incentives in 2019 from the 49ers. The 49ers were not charged for that on the salary cap because Sherman did not meet the criteria in 2018. Instead they will have their 2020 salary cap knocked down by $4 million. If that same situation occurred in 2020, the 49ers would be required to have $4 million in cap space to cover the incentive.

It will also work the other way too. This year Sherman should carry a $4 million LTBE incentive on his cap figure because of what he did last season. If he does not hit those same incentives the 49ers would then receive $4 million in cap room once it becomes apparent that he will not earn the incentive.

The latter situation really doesn’t help a team too much since it would be near the end of the season when these go unearned, but teams with a great deal of incentives in their contracts will likely need to prepare for the first scenario to avoid in-season problems. Preparing most likely means hoarding a few million extra in cap room.

5. Void Years May be a Problem

We all know that teams use void years in contracts to dump salary cap dollars for the future. It’s a big discussion point right now because of the pending free agency and huge void year prorations for Tom Brady and Drew Brees. Teams often use multiple void years to make cap hits work. That will be fine this year as well except for 1 year contracts.  This is a problem because the void occurs in what is technically still the 2020 league year (the 2020 league year runs until the first day of free agency in 2021). This is never an issue for teams because that void date is post June 1 of the prior year so the money follows the calendar year for all practical purposes.

Since there is no June 1 all the money from those voids should accelerate into 2020 when the void occurs. That means teams will need to carry the cap room to cover those cap charges essentially rendering the void useless. As an example Drew Brees has a 2021 void year charge of $5.4 million. Assume the Saints bring him back on a new one year contract for 2020. The way they have always done Brees’ recent deals would be to do something with a low salary, huge signing bonus, and two or three void years to dump that money. Assume between the existing void and any new ones that there is $20M in void year cap charges. Well once the deal voids the Saints need $20M in cap to cover it. So my opinion is that teams with Brees type players will actually have to negotiate two year contracts likely using the “Revis structure” from his time with the Patriots where you make the second year salary so high that you will be forced to cut the player thus making it a one year deal but protecting yourself from the void charges since in this case you actually release whenever football resumes. So if you see someone like Brees get a $40M a year deal with a big 2^nd year payment relative to the 1^st its really a one year deal written in a manner to protect both parties.

6. Expect a Second Salary Cap Adjustment

Usually the NFL salary cap is set around the combine in late February/early March. That number is then firm for the rest of the year. Normally the accountants then go over various items to determine where things may have been off and whatever that number is usually gets baked into the cap the following year. This time around I believe they have to issue the adjustment for this season and it should come in later April or early May. The last time this happened in 2010 every team got an additional $4 million or so in cap space to use. If that happened here it would be a help for teams that may have been relying on that June 1. Of course the adjustment could be negative too but Id think that is much more unlikely.

7. There may be no Cap Carryover for 2021

Technically the CBA ends in 2020 so the concept of carrying over space seems unlikely. The last CBA was somewhat different with regard to carryover rules so its not fair to lean on that for information but it was a “start over” in 2011.  So it’s possible that the NFL would agree to just keep things going as if there was no interruption in 2021 but there is also no guarantee. Rather than chance losing it the smart teams should be putting voids and buyback options into player contracts this year which should be a way to accelerate future prorated money into 2020 and thus use up the cap room. Likewise if you want to cut a player who is underperforming you can do it after the season is over and use up some of that cap room that you have and get the player off the books for 2021.