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.
|Team||Players||Sunk Salaries||Sunk Prorated||Dead Money||Total Sunk||Adjusted Cap||% Sunk|
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.
Jason is the founder of OTC and has been studying NFL contracts and the salary cap for over 15 years. Jason has co-authored two books about the NFL, Crunching Numbers and the Drafting Stage, which are widely circulated in the industry and hosts the OTC Podcast. Jason’s work has been featured in various publications including the Sporting News, Sports Illustrated, NFL Network and more. OTC is widely considered the leading authority on contract matters in the NFL.