How the coronavirus could wreak havoc on the 2021 salary cap

The news all over the world is centered around one thing, and that is how the coronavirus is affecting the daily lives of people all over the globe. Whether it’s deaths being counted in the thousands daily, the reopening of schools in the center of the original outbreak or the economic impacts of the pandemic, it’s a subject that is nearly impossible to ignore. With the 2020 NFL Draft in the rear view mirror, the schedule release slated for Thursday evening and team offseason programs having gone virtual, there may not be a lot of concrete news between now and the scheduled start of training camps.

For the Seattle Seahawks there are just eleven weeks, give or take a day or two depending on the specifics of their preseason schedule, until the scheduled rookie report date for training camp. That means Wednesday is closer to the start of training camp than to the announcement of the first known case of COVID-19 in the state of Washington back in January. While large portions of the country are starting to open back up, and the state of Florida having declared athletes as essential employees, the next few months will certainly be interesting to watch with the continued development of the pandemic and how things will play out with professional sports.

So far the NBA, MLB, NHL, MLS, WNBA and other leagues have been sidelined, and the debate about whether the NFL could play in the fall has been raging for weeks. Some say no, some say yes, some say possibly with the right precautions and the debate rages on. Whether the league will see players take the field this fall is anyone’s guess at this point, but what can be analyzed is the impact of various proposals regarding playing in the fall.

Perhaps the most prevalent option that has been floated has been the idea of playing the games without fans. Obviously, that would result in a loss of revenue, and the question has been posed how that loss of revenue could impact the salary cap going forward. NFL insider Adam Schefter recently postulated that the revenue loss to the league could negatively impact the cap by anywhere from $30M to $80M for the 2021 season.

Those amounts would represent a decrease of anywhere from 15% to 40% of the 2020 salary cap from this season to the next, and to understand just how that could transpire, here’s a very quick look at the impact from just one factor.

Since the NFL publishes paid attendance and average ticket prices, those can be used to calculate gate receipts from tickets sales for all 32 teams individually, as well as the league totals. They are in the following table.

It’s pretty easy to see how just ticket sales generates $1.722B in revenues for the league, and taking the players share of that 48.5%, the players would be allocated roughly $835M of that money from ticket sales. Dividing the $835M amongst the 32 teams comes out to north of $26M per team. Now, that’s a rough ballpark, and not all of that money comes out of the cap, as there are some player expenses which come out prior to the cap being set. Health insurance, for example, is a benefit which comes out of the player’s share of revenues, but which is paid for out of the revenue before setting the cap. Thus, a massive increase in the cost of health insurance for current and former players could see a reduction in cap space in future years through an increase in premium cost.

In any case, this is a very rudimentary analysis that is meant to show that just playing games without fans could result in a drop in the salary cap of more than $20M in 2021 before even considering the impact of lost revenues from sources outside of ticket sales. That is an absolute baseline number, and represents nothing more than the starting point for any deeper analysis. Add in the potential loss of advertising from the cancellation of super-early slot London games, along with the potential impact from other revenue streams shutting down for the season, and it’s not difficult to understand how the impact could be great.

For those wanting a far more robust and in-depth analysis on the potential impact on the cap, Jason Fitzgerald of OverTheCap.com performed just such an analysis and came to numbers that were very similar to those tossed out by Schefter on his podcast.

None of this takes into account the loss of national revenues but even if that is a small number (and there will likely be some loss) my guess is that you are looking at the cap to drop anywhere from $40 million from projections to $85 million from projections for 2021. This would assume that 2021 growth remains steady pace from where 2020 was expected to be. We had projected a cap of about $215 million in 2021 based on players share increasing from 47 to 48% so anywhere from $130 million to $175 million. $130 million is where the NFL was in 2014 to give some context to it.

Just to put some context behind those numbers, here’s a quick look at the ripple effects that could have on 2021 roster construction of teams could be extremely impactful. Take, for example, the Seahawks in 2021 and the players currently slated to have the largest cap hits next year.

That’s a combined total of $111,450,366 in 2021 cap hits for those ten players. Just to field a full roster of 53 players at the nfl rookie minimum salary of $660,000 in 2021 would require a further $28,380,000. That total is before allocating any cap space to dead money, the 2020 draftees who are currently unsigned or 2021 draft picks. In short, the team might have to make some difficult choices regarding key members of the team if the the cap were to drop by some of the larger proposed amounts.

The names with the biggest potential cap savings are, obviously, some of the highest paid and best players on the team. Releasing Duane Brown would save $11M. Just under $10M could be freed up through the release of Bobby Wagner. Quickly moving on from recent additions to the offensive line Brandon Shell or B.J. Finney would free up $3.5M for either. Saying goodbye to Kicker Jason Myers could see the team save $2.35M, and even 2018 first round pick Rashaad Penny would be one of the cuts with the largest potential cap savings at $1,368,014. That’s not to say that Penny is on the chopping block, but if his recovery from ACL reconstruction is slowed by the pandemic and DeeJay Dallas or Travis Homer prove to be a somewhat adequate replacement at running back, would the team be tempted to move on? It just goes to show how, as Field Gulls own Alistair Corp noted, Penny’s injury came at the absolute worst time, just as the coaching staff was beginning to properly utilize his skillset.

So, the layers to peel back on the questions surrounding the NFL will become multiple in the coming weeks and months. Not only is the question whether there will be a 2020 NFL season, it becomes necessary to look at the future impacts of playing 2020 under various contingencies. Will fans want a 2020 season if it means needing to move on from some of their favorite players in 2021? Would fans prefer to skip 2020 if it means a more normal 2021 season? In short, the question about whether or not there will be a 2020 season is just the tip of the iceberg, because how that question is answered leads to an avalanche of related questions that then must be addressed.