The NFL Salary Cap.
In today’s world - there’s a lot of confusion around this complex topic. Whenever you find yourself engaged in any discussion among any real-life friends or on sports radio, this is sometimes how we feel:
Whether it’s an outrageous, mind-bogglingly stupid comment posted on an NFL thread on Facebook, or if it’s a clearly delusional hater spewing hate on a Profootballtalk article, there’s always been a constant flow of misguided information penetrating fan circles.
And truthfully – I don’t blame most of them.
The NFL’s salary cap is an overcomplicated system with millions of little rules, exceptions, and guidelines. I had no idea how the NFL’s salary cap worked for the longest time. When I first started studying the salary cap and doing some side work for Jason Fitzgerald at Over the Cap – I was truly shocked by the amount of dedication and time some of these salary cap experts spent studying it. This is how I envisioned Jason when he would answer some of my questions:
And you know what? I was absolutely right. Jason is a wizard - the rumors were true. I kid, I kid.... sort of.
Due to the sheer complexity of the salary cap, several myths have been perpetuated for far too long. In specific, there are three myths (or lies) regarding the salary cap that I’ve encountered in my experience studying it and observing fan conversations. This conversation will be a three part series in an effort to simplify the subject and organize my thoughts to make it easier to follow. We’ll start off easy and slowly work our way up to more difficult concepts.
Without further ado, let’s dive right in.
Myth #1: More cap room is always better
In many conversations that I’ve witnessed, fans (and even media pundits) will argue for or against a team’s cap health based on how much cap room a team has. It will sound like this:
Field Gulls on Facebook
Field Gulls on Facebook
"The Seahawks are so screwed man – they have like no salary cap room! How are they going to sign all their stars?"
I know you’ve heard those words far too many times.
The NFL salary cap is currently $143.28M – meaning a team cannot spend more than $143.28M on all their players (53 man roster, Practice Squad, IR, etc). The salary cap limit is determined by league revenues – and with increasing league revenues – the salary cap increases. It’s important to note that coaches and staffing personnel do not fall under the NFL’s salary cap. Teams can pay those employees as much as they want or as little as they want – as they are not subject to the salary cap.
People will argue that because a team has more cap room that their team is in better standing – cap-health wise. This isn’t always true. Having only a little bit of cap room is not necessarily a bad thing. It might even be a really good thing. For example: can you guess which top four teams have the most cap room?
The answer: the Jaguars, Browns, Titans, and the Raiders. Hmmmm....interesting. It seems that arguably the worst teams in the NFL have the most cap room.
Here’s the key that I want you to remember: having your money tied up in players is NOT a bad thing – it’s only a bad thing when you have money tied up in not very good players.
The Seahawks, I would argue, are in strong salary cap position (despite having barely any room in 2015) – because they have money tied up in really, really consistently good players...players that are arguably at the top of their respective position groups. Players such as Kam Chancellor, Richard Sherman, Earl Thomas, Bobby Wagner, and Marshawn Lynch – all guys that a majority of the NFL would consider either the best at their position or top two.
Teams get into trouble when they start overpaying for players just because they have the money/space to do it. The most common examples of this occur frequently in free agency – where teams will bid too high for a player. Recent examples I can think of are Byron Maxwell and Ndamukong Suh. Both are really good players – but I think there is little doubt that both players were overpaid (simply because they were products of free agency). Byron got a 6 year/$63M contract with $22M fully GTD with the Eagles – making him the fifth highest paid cornerback in terms of AAV (average annual value).
On the other hand – it works the other way too. Just because a team spends a lot of money on their players does not automatically mean those are wise investments. For example – the Saints, Rams, and Jets are three out of the top four teams with the least salary cap room. They spend a ton of money on players. They certainly aren’t afraid to dish it out. However, those teams didn’t exactly produce at a high level last year.
So what is the goal for all NFL teams? Tie your money up in consistently good, foundational players for your organization.... and draft a ton of players. Acquire as many picks as possible during draft time. No NFL organization has a goal of not spending money...if they did – they wouldn’t be in the NFL.
Many organizations get into salary cap trouble because they draft few players each year. For example – the Panthers only drafted five players this year. Teams like the Saints have done this in the past, and in my opinion, it's landed them in hot water.
Why? Because the most important way to maintain a health cap situation is to draft, draft, draft. Teams that draft a high volume of players tend to "hit" on more players - and are able to have those players fill holes on their roster at incredibly cheap costs (since rookie contracts can't be renegotiated till the third year).
Drafting only five players a year generally means teams "hit" on fewer players (or the odds of hits go down, anyway) - and the club has control over fewer players for cheaper contracts. As a result, these teams build their teams through free agency - and are forced to overpay for players.
This was a long-time coming for the Saints - as they drafted only four (!!!!) players in 2009 - and then rotated between drafting 5-6 players every single year until now. For comparison - the Seahawks have drafted on average about 9-10 players every year under the Pete Carroll era (and brought in numerous free agents).
Note: numbers pulled from Over the Cap.