Finding Salary Cap Savings if the Cap Drops in 2021

Almost every day more and more people are picking up on the idea that the salary cap next year could really be hurt if there are no fans at games. While Ive written about this before I wanted to put a few more numbers on it to see where teams spend money and where they can find ways to make that money up if the cap drops significantly in 2021.

While we don’t typically do this online, usually I break the salary cap down into two categories- discretionary and fixed. The fixed number is what a team should expect every year to spend on slotted draft salaries, UDFAs, non-veteran free agents, practice squad players and so on. Regardless of what happens with Covid those fixed costs are just that- fixed. The way the CBA is written those numbers will not go down even if the cap goes down and in fact they will rise. Here is the year by year breakdown of those costs since 2015 using the end of the year rosters as a guide.

YearRoster Cap SpendDead MoneyTotal

This is a pretty steady increase year over year of about $2 million in fixed roster costs. How about the discretionary part of cap spending?  This is related to free agent signings, extensions, option pickups, non-exclusive tenders and so on.

YearRoster SpendDead MoneyTotal

On the average this is also a pretty steady increase of about $8-$8.5 million a year in cap costs spent on veterans. When we talk about a reduction in spending this is the bucket where it has to come from as teams can decide if they want to spend the market rate on a veteran or move to the cheap rookie pool listed above.

The average cost on the cap for a veteran crept up to $4.64 million in 2019 and if you include dead money from others its about $5.4 million per veteran with the numbers increasing by about 5.5% per year. In contrast the rookie “fixed” costs is only $900,000 per player (not including practice squad players).

Here is the percentage breakdowns on cap spending per class of player.

YearCap on RookiesCap on Vets

This is quite the split when you consider that the roster is about 65% fixed cost players versus just 35% discretionary cost veterans.

While the numbers are a pretty consistent 22% that number will rise due to CBA changes that should add close to $3 million in fixed costs this year to the teams. So expect about 23% this year and what should be 24% if next year was a normal season, which means as we look ahead we should be able to project in the ballpark of $50 million in fixed costs in 2021 regardless of the Covid 19 impact on the cap. In a normal year we would probably project a discretionary budget of about $165 million. Those numbers will work out to a salary cap of about $216 million (spending is mainly right up to the cap each year with cap space mainly coming from carryover from prior years).  That can give us a baseline of just how much our discretionary budget will change based on how much the cap goes down from that $216 million requirement.

2021 CapShortage% Discretionary BudgetCost Per Player

These are pretty significant impacts on the players in the event that teams lose huge amounts of cap room. While some of a teams discretionary costs can certainly be manipulated (following templates of the Eagles, Saints, etc…) anything over that $20 million mark would be quite a feat. So where is it going to come from?  Obviously a number of sources. Here are the main ways to acquire a player and the average cost on the cap in the year of signing.

CategoryYear 1 CapCap Per Player

 Veteran free agents who have been released (SFAs) are generally cheap and about the same cost as a fixed cost player so that category is probably safe. Extensions may grind to a halt. While some of that cost is partially a fixed cost (prorated bonus money and salary on a rookie contract) a good chunk of it is not and teams can probably save at least 50% of it by simply not extending players the way they normally would. While that may compromise teams in the future as they risk losing players to free agency it will be a way to navigate a large loss of cap room in 2021. Expect free agent costs to also fall and perhaps teams will target one less UFA than normal until that price drops close to the SFA level.

Still teams cant avoid these roles entirely which in reality means that a number of players who would be safe in a normal year are going to either be asked to take pay cuts or released outright. Dropping from a $5M cap charge to say $1 million in dead money and either a $1M SFA or rookie is going to be a way that teams make up money. Essentially it will lead to a shuffling of rosters where one teams cut becomes a cheap acquisition for another team and the agents wont really have much leverage due to problems for the year.

If the disaster scenarios happen teams are going to have to combine all these avenues of changing the standard ways they acquire players with roster cuts and contract restructures just to maybe find a way to function and even then Im not sure if they can make up that kind of shortfall without league help in some way.

Ive long stated and stand by it that if the NFL and NFLPA don’t outline how this will impact the cap this begins this year. The average carryover in a given season is around $12 million and if teas start slicing and dicing their rosters this summer they may be able to bump that to between $17 and $20 million which would also help ease the burden next year.