Spend enough time on the offseason trail and this line will come up often: The NFL is the best reality television out there. That was undoubtedly true in March this year. The pace was frantic, and taking a lunch break from your phone likely meant missing out on news of a blockbuster trade. During a 16-day stretch through the start of free agency, four marquee NFL quarterbacks, three elite receivers and a top-shelf pass-rusher were dealt to new teams.
We also saw some new contracts, and quarterback pay has followed the NBA’s supermax model. Aaron Rodgers broke the $50 million per year threshold on a new deal just 10 days before Cleveland gave $230 million in full guarantees to Deshaun Watson. Teams buying into the one-player-away mantra are spending big trying to find that player. And the timing — a few months after a bunch of traded players got together in Los Angeles to win a Super Bowl — isn’t lost on many.
“It probably has a little bit to do with the Rams,” Baltimore Ravens coach John Harbaugh said. “People [are] realizing maybe you can win the Super Bowl without draft picks. … I guess it has something to do with that.”
The wild offseason has led to a broader discussion surrounding the merits of the NFL salary cap, which must confuse the average fan by now. Some teams swear by the cap rules, while others bend or manipulate them in the name of contention.
It’s well documented that the Rams absorbed high-salary players via trade, worrying about tomorrow’s outlook, well, tomorrow. And every year teams like the New Orleans Saints shed dozens of millions in cap space over a few weeks with a series of contract restructures. Yet the Kansas City Chiefs and Green Bay Packers, two teams strapped for cap space to start free agency, were just forced to trade away elite receivers in Tyreek Hill and Davante Adams because they couldn’t pay them — or didn’t want to pay them. They faced a combined cap deficit of nearly $50 million in the days leading up to free agency and responded logistically, letting the cap make tough decisions for them.
Either way, the lower salary caps over the past two years (due to effects of the COVID-19 pandemic) prompted some NFL teams to play even more credit card football, charging cap dollars to future years and hoping for the best.
“The cap has been hard with the COVID,” Bills general manager Brandon Beane said. “People are still working through various tricks, whether it’s restructures, voids — whatever you’re going to do to manage it going backward for a year. We’re still trying to work our way out of it.”
All of this begs a few questions: What really is the salary cap? And does it really prevent teams from doing what they want, when they want it? Let’s try to answer some of that with 10 front-office secrets about the cap and how teams manage it.
The salary cap is and isn’t real, depending on whom you ask
At the annual owners meetings two weeks ago, I asked several front-office executives on background if they believed the salary cap was real. At least two flat out said no. They considered it an accounting tool of sorts, or a guide to determine which players can or cannot be replaced, but not a major deterrent to any big-picture plans.
One AFC exec even called the salary cap “malleable” or pliable, something that can be shaped to accommodate a desired outcome. Want to add one more star player? Prorate more signing bonus money with other contracts or add voidable years to new deals. (Voidable years are essentially dummy years, moving a portion of a player’s salary-cap hit into years beyond the actual contract. For example, if a player’s deal ends in 2023 but has one voidable year, that allocated money falls on the team’s 2024 cap and doesn’t actually affect the player’s pay).
But as one NFL GM pointed out, “The bill is always due eventually. So the salary cap should make difficult choices rather clear-cut.”
In other words, the cash and the cap always equal out, as former NFL executive Joe Banner recently pointed out for The 33rd Team.
QB cash kings will test NFL owners in a big way
Every cap discussion should be viewed through the prism of how much cash an owner will spend. When a big-money contract gets finalized, a large portion of that money is owed to the league in escrow. It’s called the funding rule, which NFL Players Association president J.C. Tretter called “an archaic league rule” in an open letter advocating for guaranteed contracts for players.
With Hill, it’s possible Kansas City could have fit a new deal for the electric receiver under the salary cap but simply didn’t want to write a check for his $72 million in guarantees on the deal. Miami owner Stephen Ross obviously will. And Cleveland Browns owner Jimmy Haslam had no problem ensuring Watson’s fully guaranteed contract.
But many are watching the new wave of quarterbacks closely, not only for what their contracts will look like on paper but also for how much money will be due in short order — and in some cases, for who will be fronting the bill.
Cincinnati’s Joe Burrow will undoubtedly be a candidate for a mega-extension after his third NFL season. The quarterback market could be well above $250 million by then. Bengals owner Mike Brown is considered among the most conservative owners in the NFL. Will he want to write a check for a large portion of that deal up front to the league? Perhaps, but it’s a question some people in the league are asking.
The Cardinals, Ravens and Chargers face similar situations with Kyler Murray, Lamar Jackson and Justin Herbert, respectively. If they balk on these up-front payments, this year’s QB upheaval will have been a mere appetizer.
1:20
Mike Tannenbaum says waiting to sign a new contract with the Ravens was a stroke of genius by Lamar Jackson.
The cap does limit how many stars you can have on a roster
The structure of the salary cap — which sits at $208.2 million for each team this year, up from $182 million during the pandemic-ravaged 2020 — allows for only so many bloated contracts, no matter how you spin it. New Las Vegas Raiders coach Josh McDaniels knew this was a consideration when his team traded for Adams, who has a new deal worth $67 million over the next three years.
“You can pay a certain number of people, but you can’t pay everybody at the same level,” McDaniels said. “People try to do what they think is in their best interest. There will be more tough decisions ahead for everybody.”
That’s why the Raiders strategically kept Adams’ first-year cap hit relatively low at $8.2 million, leaving quarterback Derek Carr as the only Raider with a cap hit of larger than $10 million in 2022 (excluding linebacker Cory Littleton, who’s designated as a post-June 1 release).
The veteran contract squeeze is real. It’s a good problem to have because that means your team drafted well and rewarded ascension. But the Minnesota Vikings, for example, felt the crunch this year with five players holding a cap hit of more than $11 million, and that’s after at least two restructures.
Minnesota was $15-plus million over the cap in the days before the new league year. The Vikings had a conservative March, resting somewhere between contention and a mini-rebuild, signing four defensive starters but all at first-year cap hits of less than $4 million. They also entertained a Danielle Hunter trade to get his $18 million roster bonus off the books. (They eventually restructured that number.) The Vikings ultimately got under the cap by extending quarterback Kirk Cousins, restructuring wide receiver Adam Thielen‘s contract and releasing defensive tackle Michael Pierce.
Something I heard from at least one person in Minnesota’s organization during March was, “We have no money.” Of course, the Vikings have money. But this is a way of acknowledging what should be the natural course for a team pressed up against it: Go modest for a year for the get-right in the following season.
Restructuring a bunch of contracts can work … if star players stay productive
No team makes cap deficits disappear quite like the New Orleans Saints. Sitting on a deficit of $70-plus million a month ago, a series of aggressive contract restructures placed New Orleans on solid footing. That’s $110 million in cleared space two years in a row, to be exact, thanks to a detailed look at the Saints’ cap situation from ESPN’s Mike Triplett. Some people around the league are still trying to decide whether New Orleans is brilliant or irresponsible for this approach.
“They borrowed over $90 million from the future this year for a team that didn’t make the playoffs,” said one league exec, who added that some ownership structures might not be comfortable with this path.
In February, the Saints redid deals for offensive tackle Ryan Ramczyk and receiver Michael Thomas to save around $26 million. In mid-March, restructuring linebacker Demario Davis, safety Malcolm Jenkins (since retired), cornerback Bradley Roby and quarterback/tight end Taysom Hill saved another $30 million. And somewhere in between, defensive end Cam Jordan and defensive tackle David Onyemata accepted reworked deals for more savings.
In the short term, these are wins for the Saints and the players. The team gets immediate relief, and the player gets most of his base salary guaranteed, in the form of a signing bonus that the team can prorate. But the intrigue deepens for 2023, when many of those same players will have massive cap hits, including Thomas at $28.3 million, Jordan at $25.6 million and Ramcyzk at $21.4 million. Couple those numbers with contractual spikes for other key players — $22 million for cornerback Marcus Lattimore, $16 million for running back Alvin Kamara and $15.6 million for quarterback Jameis Winston — and 2023 might have to be Saints cap guru Khai Harley’s masterpiece.
With Ramcyzk, who is signed long term, the Saints are counting on him maintaining a high level of play. That way, they don’t have to cut him and can essentially restructure his deal whenever they need. That has worked with Jordan, a high-level edge rusher who has accepted a restructure multiple times and hits free agency in 2023.
The flip side is Thomas’ situation. He’s a great player, but he has missed 26 games over the past two seasons due to injury, and his contract includes $25 million in dead money for 2023. Even if that’s sort of a sunk cost against the $28 million cap hit, those are big numbers to carry, and the team might have no choice but to eventually release or trade key players. Onyemata is another looming concern. He isn’t even set to be on the roster in 2023 — he’s a free agent after this year — yet carries a $10.6 dead-money hit for that season because the Saints placed voidable years into his deal.
The salary cap will soon balloon to a massive number, right? Yes and no
Some around the league are counting on sizable cap spikes in future years. Agents are selling dreams of a $300 million cap to take positional markets to ungodly stratospheres and channel the NBA model, which pays average players $20 million per season.
But that’s not a slam dunk just yet. An NFL exec said that the league meetings in Florida forecasted moderate increases over the next few years due to roughly $30 million in player benefits — 401K, severance, annuity, pension, etc. — that must be paid back to the players. Those benefits were withheld during the pandemic with the understanding that they would be reinstated in subsequent years. They are built into the cap formula and can affect the bottom line.
In the late-2010s, the cap increased by roughly 6% per year, a percentage that would raise the 2023 cap to around $220.7 million. Several prominent NFL agents believe that number is too low, instead forecasting closer to $230 million in 2023 and $250-plus million the next year, with an eventual turn to $300 million. New media rights deals alone will pay teams $300 million annually over the next decade. Some of that money must go to the players, right?
Capitalize on the rookie QB deal, but do it responsibly
Los Angeles entered March with a dream scenario: a star quarterback on the cheap and around $50 million in cap space to work with. Justin Herbert is scheduled to play on cap numbers of $7.2 and $8.5 million over the next two seasons, though a mega-extension will be in the works eventually.
So the Chargers went to work this offseason, extending receiver Mike Williams on a three-year, $60 million deal; signing lockdown corner J.C. Jackson to a five-year, $82.5 million deal; and trading for Khalil Mack, who is still the fourth-highest-paid edge rusher at 31 years old. Adding defensive tackle Sebastian Joseph-Day and tight end Gerald Everett will cost up to $36 million over the next three years. The Chargers’ cap space is down to $19 million after the series of moves, but that’s the cost of contention.
“It all comes down to value,” Chargers coach Brandon Staley said. “… Because of the cap and because of quarterback contracts, people see some positions now where they can on-board some of the special players. If they feel the price is right, they can go do it.”
These players are true “difference-makers,” Staley adds — hardly role players and thus worth the investment. But the coach also was quick to point out that Herbert’s rookie deal hasn’t prompted Los Angeles to act reckless.
1:33
Marcus Spears outlines why it won’t be an easy path to the playoffs for the Chiefs.
Jackson’s contract is a hefty investment, with $54 million due over the first three years, but if the Chargers were to release him in 2025, they would save $9 million in cap space. Williams’ deal pays $40 million over the first two years. The final year carries a $27 million cap hit vs. $7 million in dead money, so at that point, the team could extend or release him to lessen the hit. And in 2023, Mack’s $17.2 million salary and $5.5 million roster bonus could be restructured/prorated over two years to save space.
“Our future is still in front of us with the Chargers,” Staley said. “We didn’t mortgage a bunch of draft capital for two years. We still have a healthy cap, a healthy draft capital, 10 picks this year, even more next year. And that’s what we feel is important. You have to build a team for the long term and the short term.”
Compensatory picks are gold for teams up against the cap
Los Angeles Rams GM Les Snead calls this the “calculus formula.” He knows trading for players on high-priced contracts means he must let good players walk in free agency. But those good players often sign big deals with other teams, which helps Los Angeles in the complicated comp pick formula.
Last year, safety John Johnson III, defensive end Samson Ebukam, cornerback Troy Hill, defensive end Morgan Fox and tight end Everett all left for more money elsewhere. As a result, the Rams leads the league in 2022 comp picks with a third-round pick, a fourth-round pick and three sixth-rounders.
The Rams just let six more free agents walk (including edge rusher Von Miller) while signing just one big-money free agent, receiver Allen Robinson II. That variance should result in several mid-to-late-round picks next year (those projections won’t finalize until next March). Linebacker Bobby Wagner‘s five-year, $50 million deal doesn’t count against the comp pick formula because he was released by Seattle.
“We’ll pay a premium for [good players via trade] but make sure we make it up on the back end … for someone who will provide us a significant contribution,” Snead said. “To eliminate the concern, we’ve got to trust our ability to identify players, to partner with the coaches to see who helps us win and trust our coaches to help us develop those players … and the courage to play [young guys].”
All of this disincentivizes teams to sign a free agent worth, say, $4 million when spending that money affects the comp pick formula. It also saves money and cap space. Teams are so obsessed with this process that they’ll place a hard cap on what they’ll spend on a free agent. One NFL team, for example, wanted to sign a free-agent wide receiver this year but was unwilling to spend more than $1.77 million because it would adversely affect the comp pick formula. So it looked to the trade market instead.
The Baltimore Ravens mastered this hustle years ago, and the Rams use it now as a vehicle to offset the big-money trades.
“The strategy is, let’s try to pay our pillars, pay within and develop on our younger players and rely on them,” Snead said.
This leaves more room to absorb big money owed to players acquired via trade. That’s important for L.A. because quarterback Matthew Stafford and cornerback Jalen Ramsey hold a combined 36.2 million cap hit in 2022.
Rookie contracts help teams circumvent the cap, but top players are trying to change that
No matter how many players on high-priced contracts are on a roster, cheap labor via the draft can balance out a salary cap. For instance, A.J. Brown is widely considered a top-10 receiver. The former second-round pick (51st overall in 2019) played for the Tennessee Titans on cap hits of $1.0, $1.3 and $1.5 million from 2019 to ’21. Brown was 80th in 2021 receiver pay. Rookie-scale pay is increasing slightly, though. Washington offensive tackle Sam Cosmi — the 51st overall pick last year, the same slot as Brown — has cap hits of $1.2, $1.5 and $1.8 million over his first three years in the league. But for cap purposes, these numbers are still incredibly team friendly.
Buffalo’s Beane knows draft-pick capital is the best deal going. Two years ago, the Bills’ GM gave up a first-round pick and more to acquire wideout Stefon Diggs, but he considers that an exception for a special player, and the new wave of trades across the league might not sway him.
“We want to try to draft as many players we can that we think can make the roster because that’s cost control,” Beane said. “That’s a balance.”
Where the power can shift slightly lies with star players balking at the idea of playing more than three years of a rookie deal. Arizona quarterback Kyler Murray and San Francisco receiver Deebo Samuel (both 2019 picks in the top two rounds) have scrubbed their social media in alleged silent protests over desire for new deals.
“I think you’ll see more and more first-round picks wanting a deal after the third year despite having the fifth-year option in place,” one AFC exec said. “They want it earlier, so it will be interesting to see how many teams acquiesce to that.”
Last year, just two first-round picks received deals between their third and fourth NFL seasons: Buffalo QB Josh Allen and Las Vegas lineman Kolton Miller. Ravens quarterback Lamar Jackson could have pushed for a deal but has remained patient while representing himself without an agent. This year, the 2019 draft class has several candidates for an early deal, including Murray, Niners edge rusher Nick Bosa, Jets defensive lineman Quinnen Williams, Buccaneers linebacker Devin White, Panthers edge rusher Brian Burns and Titans defensive lineman Jeffery Simmons.
If those totals go up, so do the cap hits.
Big-money trades are here to stay
Snead noticed a shift about four to five years ago as he talked with other executives: Fewer players were untouchable.
“We’ve entered that new era where teams are, let’s call it admitting they may not be ready now,” Snead said. “They are more willing to trade some of their proven or even better first-, second-, third- or fourth-best players on their team for future draft picks. … Maybe even six years ago that wasn’t the case. You would have kept that player even if you’re not winning because he’s a pillar in the community.”
Only a few players are truly considered untradeable. Otherwise, general managers are young, can adapt and are comfortable dealing key players now. Trades can even save teams from albatross contracts. The Rams and Eagles paid quarterbacks Jared Goff and Carson Wentz after three seasons in the NFL, and after the QBs struggled, the teams found ways to trade them despite absorbing nearly $60 million combined in dead money. Both teams considered this a sunk cost; they admitted the mistake and moved on. That seemed unfathomable a decade ago.
“Teams are super competitive. It’s a high-pressure business,” Beane said. “If you have the right nucleus, you’re probably feeling more aggressive to make a move, whether it’s trading a draft pick or getting a big-money player.”
Purists of the game say no splash move can substitute good team culture. Atlanta Falcons head coach Arthur Smith says Sean McVay’s job building a foundation in Los Angeles gets overlooked by the trades.
“[The mentality of] let’s make a transaction and go win a Super Bowl — it doesn’t work that way,” Smith said.
2:18
Domonique Foxworth and Tedy Bruschi break down the Tyreek Hill trade and whether it was the right move for the Chiefs.
Teams use the salary cap as a scapegoat in negotiations
This is the classic refrain from league execs when meeting with agents in hotel lobbies during the NFL combine. You know, we’ve got some cap issues we’re sorting through, and we’re really not going to be able to spend much on your guy in free agency …
Agents hear it all the time, and they largely don’t believe it. That’s the team’s way of either driving the price down or politely saying they aren’t interested.
But most teams I spoke to say they rarely let a player they really want to keep walk because of the cap. They can work around cap issues for the most part. The team either doesn’t think the player is worth the money or believes it can find a replacement elsewhere, thanks to trades, comp picks or old-fashioned saving.
“That’s why I think the Saints aren’t all that worried about it each year,” one veteran NFL agent said. “Look at all those years they kept redoing Drew Brees’ deal to create cap space. They can do whatever they need to do each year.”
