2021 NFL salary cap conundrum: Three major consequences of projected decrease

[HOUSE]

Complying with the NFL's salary cap from year to year is always a balancing act, and it's a job general managers and decision-makers don't take lightly, nor should they.

Right now, along with navigating a pandemic-impacted regular season, all 32 NFL organizations are preparing for perhaps the biggest challenge the salary cap has ever presented. Clubs are aware there will be a decrease in the cap number next year due to COVID-19 repercussions, but to what degree? That's still unknown, as there are estimates out there, but no official number from the league. All 32 teams must be below the cap number at the start of the new league year.

 

Challenges

 

1) Using the franchise tag will become more difficult.

 

2) Teams with less draft capital may be in for longer periods of hardship.

 

3) A major threat to veteran roster spots.

 

https://www.nfl.com/news/2021-nfl-salary-cap-conundrum-three-major-consequences-of-projected-decrease

Edited December 1, 2020 by HOUSE

[aristocrat]

i'm sure they will come to an agreement that doesn't lower it too much

[TroutDog]

8 minutes ago, aristocrat said:

i'm sure they will come to an agreement that doesn't lower it too much

This defeats the entire point of a salary cap. Not all teams have Pegula’s and Jones’ as owners. The cap will have to come down, it’s straight forward economics. 

[Big Turk]

They will likely do something that taps into future year salary cap increase projections to balance it out I am betting....maybe leave it flat for a period of time until the revenue increases past the point of the losses and then let it start going up again...

1 minute ago, TroutDog said:

This defeats the entire point of a salary cap. Not all teams have Pegula’s and Jones’ as owners. The cap will have to come down, it’s straight forward economics. 

 

The cap was designed to make it fair for all teams. How is it fair when some teams are able to have fans at the stadium and others are not? How it fair when some stadiums are at 25% capacity and others are at 10% or less? 

 

While much of this goes towards the cap, teams do get to keep club seats and booth revenue as well as concessions, etc.

 

I don't think the teams will allow the cap to have a huge dropoff due to circumstances far beyond anyone's control. Under normal circumstances you would be right. But these are far from normal circumstances.

[Kwai San]

Doomed.....not the Bills but good lord almighty the Aint's are HOSED!  I ma sure there are a few others that are going to be smacked...like Houston....

[Punching Bag]

Maybe no one will want Houston GM job and they will need to sign Bob - from Accountemps.

 

 

 

[Doc]

The Bills can clear almost $17M by cutting 3 players: Jefferson, Butler and Matakevich. 

[RoyBatty is alive]

1 hour ago, aristocrat said:

i'm sure they will come to an agreement that doesn't lower it too much

 

 

How?  Where is the $ going to come from?  

 

The finances of the NFL are not bullet /recession/covid proof.  This mentality that the salary cap can increase every year inexorably has been, imo, horribly flawed.  It took this year for it to be realized.

[Rc2catch]

It’ll be an interesting story to follow, and it should result in some extremely good veteran talent being released or traded on some teams. I see it as an opportunity for Buffalo to pounce and once again acquire an elite talent. I do feel we are in a position similar to last offseason that we can afford to move a 1st round pick to get an elite difference maker and I think 99% of the fan base would agree that would be a defensive end. 
As Doc pointed out above we have some options to free money up with a few easy releases on top of some expiring contracts. 
The Bears for example may be cleaning house and going into a full blown rebuild, they clearly would consider moving Mack in that scenario. I for one would gladly take on that contract for a 1st and 5th type combo. 
Until we commit to Allen big time we can take advantage of a situation like this with the salary cap and other teams hurting. 

[wjag]

Next year will separate the wheat from the chaff in GMs.   Figure those monster contracts given out to QBs this year will make things interesting next year for some of those GMs.  There are three teams, NYJ, JAX, CAR, with dead money north of 49M this year.  Ouch.   Imagine being an owner and paying that much money for guys no longer on your team.  Drops significantly starting next year.   Most teams under 10M.

Edited December 1, 2020 by wjag

[aristocrat]

34 minutes ago, RoyBatty is alive said:

 

 

How?  Where is the $ going to come from?  

 

The finances of the NFL are not bullet /recession/covid proof.  This mentality that the salary cap can increase every year inexorably has been, imo, horribly flawed.  It took this year for it to be realized.

 

well they were doing just fine until a global pandemic that hit.  They could borrow from future years perhaps.  They will go right back to printing money next year.  Remember they are set to start brining in gambling money as well so their model is just fine. 

[wvbillsfan]

I’d keep the cap flat for the next several years. 
Nfl and their owners already have the capital and assets to borrow money if needed. 
When the cap should rise keep it flat and recoup lost or borrowed money

[BuffaloBill]

1 hour ago, Doc said:

The Bills can clear almost $17M by cutting 3 players: Jefferson, Butler and Matakevich. 

 

The situation will likely lead to some surprising cuts across the NFL.

[Doc]

5 minutes ago, BuffaloBill said:

The situation will likely lead to some surprising cuts across the NFL.

Probably. But those three wouldn’t be.

[H2o]

6 minutes ago, BuffaloBill said:

 

The situation will likely lead to some surprising cuts across the NFL.

Absolutely. Just look at the teams listed from 23, down.

https://www.spotrac.com/nfl/cap/2021/

[costrovs]

I wouldn't be surprised if McBeane tries to trade Brown in the off season to help with the cap. The way Davis has been playing, and with Brown being injured, it makes sense.

Brown will have a 1.6M dead cap hit, and a savings of 8.15M.

[TroutDog]

3 hours ago, matter2003 said:

The cap was designed to make it fair for all teams. How is it fair when some teams are able to have fans at the stadium and others are not? How it fair when some stadiums are at 25% capacity and others are at 10% or less? 

 

While much of this goes towards the cap, teams do get to keep club seats and booth revenue as well as concessions, etc.

 

I don't think the teams will allow the cap to have a huge dropoff due to circumstances far beyond anyone's control. Under normal circumstances you would be right. But these are far from normal circumstances.

The sums of money for those numbers is minuscule in the big scheme of things. I don’t see how the cap does not drop. It won’t add up, financially speaking. 

[Nester]

3 minutes ago, H2o said:

Absolutely. Just look at the teams listed from 23, down.

https://www.spotrac.com/nfl/cap/2021/

Wow @ philly and Atlanta.

 

gonna be pain for years....

 

at least the saints win games..

[RoyBatty is alive]

48 minutes ago, wvbillsfan said:

I’d keep the cap flat for the next several years. 
Nfl and their owners already have the capital and assets to borrow money if needed. 
When the cap should rise keep it flat and recoup lost or borrowed money

 

You endanger the entire system when you start advocating  to borrow money when revenue starts declining.  One thing the NFL has largely done is struck parity, uber-rich owners can't buy a team like they can do in baseball.  Not all owners financial situations are the same, you start tacking on debt and if revenue doesnt accelerate, some owners are going to get in financial trouble.  There is no guarantee the cap will go up in the future, especially with the plight of the sports media with declining viewership and advancing technology.  Just look at the state of the mighty ESPN.

[Tuco]

A lot of people don't seem to realize, the deal has already been struck. There is no keeping it flat for a couple years.

 

The CBA covers this scenario. It says in the event of catastrophic (me paraphrasing but whatever) decrease in revenues due to something like a Pandemic, both sides will work it out. And they did. But the players are still going to get the same percentage of revenue they were always going to get.  And in the long run, that will be less for at least one year. Owners get less, players get less.

 

This year's cap is based on this year's projected revenue, just like every year. But it was projected before the pandemic. Every year the cap is figured on projected revenue and then an adjustment is made to reflect any gains or shortfalls from the previous year in relation to its projection.  So the huge shortfall in revenue this year will be reflected in next year's cap.  The players could have agreed to lower this year's cap, but they weren't interested, so they kicked the can. The agreement was next year's cap will be no lower than $175 million, even if it's supposed to be less than that (the owners were pushing for $165M because they know how much they're losing). And any amount it's supposed to be  below $175 will be absorbed by reducing the remaining shortfall from the total cap in the subsequent years. I'm not just making this number up. It was agreed to via an amended CBA back in September.

 

Could they just amend the CBA again? Sure. But don't think for a moment the owners are going to give a bigger percentage away. And the serious loss of revenue this year is going to be reflected in next year's $175 million cap. That cap has already been negotiated. The only real issue is how much it will affect the cap in the years after that.

[colin]

the suggestion above about blending the impact over a few years, be it explicitly or with some kind of carve out allowances, makes a lot of sense.

 

the three players above, along w brown and murphy might solve our entire issue.

[Matt_In_NH]

2 hours ago, RoyBatty is alive said:

 

 

How?  Where is the $ going to come from?  

 

The finances of the NFL are not bullet /recession/covid proof.  This mentality that the salary cap can increase every year inexorably has been, imo, horribly flawed.  It took this year for it to be realized.

It comes from future years.  

[QLBillsFan]

28 minutes ago, costrovs said:

I wouldn't be surprised if McBeane tries to trade Brown in the off season to help with the cap. The way Davis has been playing, and with Brown being injured, it makes sense.

Brown will have a 1.6M dead cap hit, and a savings of 8.15M.

Good idea other than we score more points and are much more dangerous with Brown. Like Davis. Has to be way better options to move out then Brown, yikes!!!

Edited December 1, 2020 by QLBillsFan

[RoyBatty is alive]

3 minutes ago, mattynh said:

It comes from future years.  

 

AH yes, the future, it will be there for sure.  Aint no guarantees in that.  Besides they have already done that this year, cant keep doing it.

[Matt_In_NH]

Just now, RoyBatty is alive said:

 

AH yes, the future, it will be there for sure.  Aint no guarantees in that.  Besides they have already done that this year, cant keep doing it.

The owners and nflpa will decide what happens. 

[RoyBatty is alive]

3 minutes ago, mattynh said:

The owners and nflpa will decide what happens. 

 

 I thought we were going to decide right here in this thread?

Edited December 1, 2020 by RoyBatty is alive

[Matt_In_NH]

Just now, RoyBatty is alive said:

 

Really?  I thought we were going to decide right here in this thread?

yes really

[Bleeding Bills Blue]

Buffalo is fine.  There is cap space there to keep this group together.  You can release players, or extend others and push base salary out as bonuses to be spread over years. 

 

If the NFL doesn't want to adjust the cap - you adjust the contracts towards years with higher caps.  The saints have done this for years.  

[dave mcbride]

When is the current set of TV deals going to end?

[wvbillsfan]

1 hour ago, RoyBatty is alive said:

 

You endanger the entire system when you start advocating  to borrow money when revenue starts declining.  One thing the NFL has largely done is struck parity, uber-rich owners can't buy a team like they can do in baseball.  Not all owners financial situations are the same, you start tacking on debt and if revenue doesnt accelerate, some owners are going to get in financial trouble.  There is no guarantee the cap will go up in the future, especially with the plight of the sports media with declining viewership and advancing technology.  Just look at the state of the mighty ESPN.

I don’t disagree with borrowing can put you in danger fiscally. Espn has been on decline for years. The NFL has continued to grow profits despite declining rating (which are hard to target because of different mediums to watch). The Packers had a profit of 70 million last year 2019 and they are the smallest market team  
https://www.sportspromedia.com/news/green-bay-packers-annual-nfl-revenue-2019-20

 

If the league values trends then 2020 was a blip on the radar and profits can be expected to continue to climb. If that’s the case borrowing money wouldn’t hurt a thing 

Edited December 1, 2020 by wvbillsfan

[Big Turk]

1 hour ago, TroutDog said:

The sums of money for those numbers is minuscule in the big scheme of things. I don’t see how the cap does not drop. It won’t add up, financially speaking. 

 

They could borrow from future year increases to keep things flat.

[boater]

People who want to borrow from the future to pay for today --- Can I have just one peak at your personal finances?

[spartacus]

9 minutes ago, boater said:

People who want to borrow from the future to pay for today --- Can I have just one peak at your personal finances?

must be a fan of Wimpy and Popeye

[H2o]

1 hour ago, Nester said:

Wow @ philly and Atlanta.

 

gonna be pain for years....

 

at least the saints win games..

Yep, bad QB contracts with Wentz and Ryan make it impossible to release them as well because of the dead cap associated with them. This year is it for NO. All their chips are in to win the SB. The run is over after that. They will basically have to blow it up to make the $$$ work. The Rams, Steelers, Packers, Texans, and even the Chiefs will have some tough decisions to make. 

[Rochesterfan]

5 hours ago, aristocrat said:

i'm sure they will come to an agreement that doesn't lower it too much

 

4 hours ago, matter2003 said:

They will likely do something that taps into future year salary cap increase projections to balance it out I am betting....maybe leave it flat for a period of time until the revenue increases past the point of the losses and then let it start going up again...

 

The cap was designed to make it fair for all teams. How is it fair when some teams are able to have fans at the stadium and others are not? How it fair when some stadiums are at 25% capacity and others are at 10% or less? 

 

While much of this goes towards the cap, teams do get to keep club seats and booth revenue as well as concessions, etc.

 

I don't think the teams will allow the cap to have a huge dropoff due to circumstances far beyond anyone's control. Under normal circumstances you would be right. But these are far from normal circumstances.

 

This is already done and agreed to prior to this year starting.

 

The salary cap was set with a minimum of 175 million to prevent a huge drop, but the expectation is once done and calculated- the future salary cap over the next 3 years will have to absorb another 20+ million in lost revenue for 2020.  

 

The only advantage is the upcoming TV contract that will cause a healthy increase in the cap.  It is just going to take awhile to totally sort out after this years fiasco.

[Big Turk]

1 minute ago, Rochesterfan said:

 

 

This is already done and agreed to prior to this year starting.

 

The salary cap was set with a minimum of 175 million to prevent a huge drop, but the expectation is once done and calculated- the future salary cap over the next 3 years will have to absorb another 20+ million in lost revenue for 2020.  

 

The only advantage is the upcoming TV contract that will cause a healthy increase in the cap.  It is just going to take awhile to totally sort out after this years fiasco.

 

I just can't see ot dropping that much...unless they get players to accept 90% of their salaries or something for next year to avoid a huge number of cap casualties and low contracts in FA.

 

The players may be smarter to accept 90% of their salaries versus have a huge number of players get cut and then have no money to sign them.

[thenorthremembers]

Not sure, but I think I've read that the proposed $175 million dollar cap is actually already based on spreading the loss over a few years.   Greg Tompsett from Cover 1 just had a tweet about this a few days ago.   Buffalo Rumblings also had something similar below.

 

Buffalo Rumblings Cap Article

 

I don't expect the cap to be any higher than $175 in 2021, as such the Bills will have to do a lot of cap gymnastics on contracts for Jerry Hughes, John Brown, Micah Hyde, Vernon Butler, and Quinton Jefferson to have any hopes of re-signing Milano or Daryl Williams.   Best case is they add a second year to those players Hughes, Brown, and Hyde move a lot of the money to roster bonus, and spread the impact of the contracts over two years rather than one.

 

Good news is our GM is cap smart so I know they'll find a way to get under the cap.  Just dont expect large roster turnover,

[Rochesterfan]

11 minutes ago, matter2003 said:

 

I just can't see ot dropping that much...unless they get players to accept 90% of their salaries or something for next year to avoid a huge number of cap casualties and low contracts in FA.

 

The players may be smarter to accept 90% of their salaries versus have a huge number of players get cut and then have no money to sign them.

 

I am not sure what to say.  The negotiations for that are done.  The players are not accepting less.  The owners knew it was going to be bad.  They expected the cap to drop into the 150 million range and that was with stadiums opening more later in the year.  They haven’t and others have closed more.
 

The NFL and NFLPA agreed to set a minimum at 175 million and any additional loss below that was going to be spread out over the next 3 years.  
 

The 175 million gave GMs something to plan for in giving out contracts and structure.

 

It is part of the reason teams are looking to roll money and it is why a team like the Jets think they might turn it around as they will have a ton of space to pick up guys that are cut around the league.

Edited December 1, 2020 by Rochesterfan

[DaggersEOD]

2 hours ago, RoyBatty is alive said:

 

You endanger the entire system when you start advocating  to borrow money when revenue starts declining.  One thing the NFL has largely done is struck parity, uber-rich owners can't buy a team like they can do in baseball.  Not all owners financial situations are the same, you start tacking on debt and if revenue doesnt accelerate, some owners are going to get in financial trouble.  There is no guarantee the cap will go up in the future, especially with the plight of the sports media with declining viewership and advancing technology.  Just look at the state of the mighty ESPN.

 

I think ESPN's (and to be honest a lot of sports media's) demise has more to do with conflating sports/politics than a decrease in interest in professional sports.

 

That said, I 100% agree on the financial risks associated with borrowing from future earnings.  It would be a foolish decision which could literally put the entire league at risk.

 

At the end of the day, the only people who will have to get used to the new financial situation will be the players. Salaries will have to go down and I'm sure this will lead to a lot of unhappy superstars.

[Big Turk]

46 minutes ago, Rochesterfan said:

 

I am not sure what to say.  The negotiations for that are done.  The players are not accepting less.  The owners knew it was going to be bad.  They expected the cap to drop into the 150 million range and that was with stadiums opening more later in the year.  They haven’t and others have closed more.
 

The NFL and NFLPA agreed to set a minimum at 175 million and any additional loss below that was going to be spread out over the next 3 years.  
 

The 175 million gave GMs something to plan for in giving out contracts and structure.

 

It is part of the reason teams are looking to roll money and it is why a team like the Jets think they might turn it around as they will have a ton of space to pick up guys that are cut around the league.

 

I am shocked they didn't ask for concessions from players...in the long run they are the ones getting screwed in all of this...the stars will get paid its the guys on mid term contracts and vet minimum contracts that will end up bearing the brunt of it.