Breaking Down the NFL Salary Cap

Story posted February 18, 2021 in Sports, CommRadio by Emma Holtz

The NFL offseason may not be as action-packed as the regular season, but it brings its fair share of excitement. The 2021 offseason promises major changes, as ESPN television analyst Adam Schefter predicted in a tweet on Jan. 25 that 18 quarterbacks will be switching out their team colors going forward.

The majority of an NFL organization’s decisions are driven by the salary cap, or an agreed-upon spending limit on player salary money between the league and the National Football League Players Association, or NFLPA. No team can exceed the set cap for any reason or risk violation of keeping the playing field equal (no pun intended).

There are two cap figures that are extremely important when understanding the salary cap: unadjusted cap and adjusted cap. Unadjusted cap includes, “the yearly unadjusted cap number plus any previous year cap carryover” according to authors Jason Fitzgerald and Vijay Natarajan of “Crunching Numbers: An Inside Look At the Salary Cap and Negotiating Player Contracts.”

The adjusted cap factors in increasing league revenues as television contracts and stadium seating prices see yearly growth. According to the NFLPA, the adjusted cap should accurately reflect what players should be paid in relation to the league’s revenue stream.

This is all to term with the NFL Collective Bargaining Agreement, which plans to expand the 2021 regular season from 16 games to 17. The extra addition to the regular season schedule would lessen the severity of a dip in salary cap money due to limited stadium attendance and ratings fluctuation as a result of the COVID-19 pandemic.

While the NFL has evolved to tailor a younger generation of athletes, there are plenty of vested veterans on the free agent market right now or still fighting for their roster spots. Vested veterans are players with more than or equal to four years of experience in the NFL. Their contracts weigh heavily on teams’ salary cap space.

For example, the Houston Texans released defensive end J.J. Watt after a mutual parting agreement. Since Watt was drafted in 2011, his vested veteran status earned him an offseason  release from his contract, rendering him a free agent who can be immediately picked up by any willing team.

This is different from a vested veteran entering a waiver system, which goes into effect if the player is released following the NFL trade deadline midway through the regular season. The waiver system prevents the player from being claimed instantly after contract termination.

Cap space value is precious and many teams this offseason are having serious conversations regarding aging players. Pittsburgh Steelers quarterback Ben Roethlisberger is holding a substantial $41.25 million of the Steelers’ salary cap, which leaves very little room for the seven free agents currently vying for contract extensions in the Steel City.

If the Steelers decide against bringing Big Ben back to the starting lineup, they still lose $22.25 million in dead money, or a guaranteed amount that the organization must pay to the player even if he does not return to the roster. Steelers General Manager Kevin Colbert has not discouraged a salary negotiation for Roethlisberger, but the massive hit to the salary cap and decreased revenue from COVID-19 restrictions has complicated Roethlisberger’s status with the team.

The New Orleans Saints are in a similar situation this offseason with 19-year veteran quarterback Drew Brees. Originally with a $36.15 million cap hit, Brees renegotiated his contract to take the veteran player minimum of $1.025 million.

According to NBC Sports and OvertheCap.com, his new price tag is $12.225 million, saving the Saints’ pocketbooks nearly $24 million in cap space that can be allocated to other positions.

One final salary cap issue to watch for involves Houston Texans quarterback Deshaun Watson as his strained relationship with the organization sparked trade rumors. One crucial component in Watson’s contract includes a rare no-trade clause, which gives Watson the final say when discussing possible trade deals. In other words, the Texans cannot trade Watson anywhere he does not see fit.

The Texans have been stern in their opinion against trading Watson despite his requests. The release of J.J. Watt as well as wide receiver DeAndre Hopkins’ trade to the Arizona Cardinals in 2020 tainted Watson’s opinion of the organization’s credibility based on their financial decisions.

More important salary cap moves are expected to occur within the coming weeks as the offseason ramps up considerably with tough cap decisions ahead.

Emma Holtz is a freshman majoring in public relations. To contact her, email exh5337@psu.edu.