Over the past 12 months, the 2021 NFL salary cap has been a subject of much discussion. Let’s look at the situation regarding the 2021 NFL salary cap, how the salary cap is calculated (and therefore how much spending space there is), as well as the minimum and average salaries in the NFL.
The 2021 NFL salary cap is $182.5 million
With ample deliberation regarding the salary cap over the last 12 months, a report from Adam Schefter indicated that the cap could sit in the region of $180-181 million. On the February 18 Draft Insiders show, Pro Football Network’s Chief Draft Analyst Tony Pauline confirmed this report. However, Pauline also discussed that there could be further developments in the 2021 NFL salary cap.
“I’m told that it could be closer to $181 million dollars, but then there are stories out, reports out there that the league is negotiating right now with new TV deals and depending on the size of those tv deals, they may artificially increase the cap this year and then pay it off down the road.”
The salary cap was not confirmed until just before the 2021 league year
On February 18, the NFL confirmed that the salary cap will be at least $180 million in 2021.
On the February 23 episode of Draft Insiders, Tony Pauline discussed how the final number could be higher than that $180 million figure.
“I’m hearing that that number is likely to grow when all the revenue is accounted. I’m hearing the number is likely going to be at least $185 million per team, but it could go as high as $193 million per team. From what I’m told, the $180 million figure was put out there because there were people, both on teams and the NFLPA players union, who were getting frustrated and wanted a base number to work off of.”
However, Pauline also noted there is “no specific date. All I was told is that it will happen before March 17th.”
On March 10, Ian Rapoport reported that the NFL salary cap will be $182.5 million in 2021.
How is the salary cap calculated in the NFL?
The 2021 season has seen the NFL get away from their usual method of calculating the cap. With the revenue from the 2020 NFL season significantly lower than earlier projections, the cap would drop significantly below the $175 million minimum if the NFL follows its standard procedure.
The system of setting the salary cap is reasonably simple, using the previous season’s revenue as a starting point:
- Revenue calculations x CBA percentage = Players revenue share
- Player revenue share – projected benefits = The amount available for salaries
- The amount available for salaries/number of teams = Base salary cap per team
The revenue is calculated as a combination of revenue generated from television deals and the revenue generated from day-to-day sales such as tickets, merchandise, and refreshments. In 2020, the revenue from those day-to-day sales was significantly lower than originally projected.
How did the NFL prevent the salary cap from dropping further in 2021?
It may seem that the NFL is generous by not letting the cap fall significantly in 2021. A drop in the 2021 salary cap to $182.5 million represents a 9% decrease in the 2020 cap number. Now, assuming the cap could have dropped by as much as 40% ($80 million), the NFL is essentially paying to keep the cap higher.
However, the system that will likely finance the NFL salary cap in 2021 is similar to a mortgage. The NFL will essentially loan the money to the players and then claim it back in future years. The exact amount of time they take to reclaim it will likely depend on how much money the NFL loans out.
They will reclaim the loan by taking the money off future salary caps. Let’s say the NFL loans $50 million per team to keep the cap at its level in 2021. In 2022, if the cap then calculates to be $250 million, the NFL may choose to set it at $225 million. They could then reduce the 2023 salary cap by the same amount. NFL Network’s Tom Pelissero reported that the NFL has capped the salary cap for the 2022 season at $208.2 million.
What is a salary cap, and what happens if a team goes over the salary cap?
A salary cap limits how much money a team can spend in any given year. However, the salary cap is not a reflection of how much cash a team can spend in that season. The salary cap is comprised of several elements of a player’s contract, and teams can restructure contracts to get under the salary cap.
There are several punishments if a team exceeds the salary cap
An NFL team rarely exceeds the salary cap. However, if they do, the NFL can fine them, remove draft picks, or even cancel contracts. The NFL can reject trades that will put a team over the salary cap.
On the other hand, they can also allow a window of up to seven days for a team to get back under the salary cap following a trade. This is often the case when a team is trading a player away and the acceleration of the various bonuses puts a team over the cap. During that seven-day period, a team cannot sign any more players until they have room to do so.
How is an NFL player’s salary calculated?
An NFL player’s contract is made up of a number of different elements that combine to set their salary cap number in a given year. The most basic of these is their base salary, which is split evenly across the games during a season. Taking Matt Ryan’s contract as an example, Ryan has a base salary of $2 million for the 2021 season.
On top of that, there are a number of bonuses. The most common of these is a signing bonus, of which the value is prorated across the length of the deal for up to five years. Ryan’s contract contained a $46.5 million signing bonus, which prorated across five years at $9.3 million per year. Teams can also include an option bonus that serves as a sort of deferred signing bonus. Ryan’s deal contained a $10 million option bonus, which prorated at $2 million per year.
During a player’s contract, teams can restructure the contract. This usually involves converting base salary to a restructure bonus. Much like the signing bonus, a restructure bonus prorates across the remaining contract for up to five years. Ryan’s contract has been restructured multiple times, and he has a prorated salary cap number in 2021 of $13.6 million in restructure bonus.
The final bonus is a roster bonus paid on a set date if the player is on the roster. Ryan has two of these in his deal in the coming years. If Ryan is on Atlanta’s roster on the third day of the 2022 and 2023 league years, he will be due $7.5 million each year.
What is the league minimum salary in the NFL?
Just over half of the NFL players operate on deals that pay them one of the minimum salaries. Unlike the NFL salary cap, the minimum salary is mandated by the Collective Bargaining Agreement (CBA). Yet, the minimum salary varies based on experience within the league and also grows through the life of the CBA.
In 2020, a player with less than one year of experience earned a minimum of $610,000. However, by the end of the current CBA, that will rise to $1.065 million. Players with more than one year of experience earned a minimum of $675,000 in 2020, rising to $1.185 million by 2030.
The final tier of minimum salaries in the NFL comes once a player has over seven years of experience. Those players earned a minimum salary of $1.05 million in 2020. That will rise to $1.48 million by the end of the CBA in 2030.
What is the average salary in the NFL?
Unlike elements such as the minimum salaries and the NFL salary cap, an NFL player’s average salary is extremely variable. As stated above, just over half of NFL players are on contracts paying them the minimum salary. Meanwhile, you have players such as Patrick Mahomes, who earns $45 million a year on average.
All told, the average NFL salary now sits between $1-1.5 million per year following the signing of the new CBA. In the past, this number has been suggested to reach as high as $2 million, with the exact number depending on the method of calculation used.
Are NFL contracts guaranteed?
Unlike other major sports, NFL contracts are not fully guaranteed at the time of signing. While draft prospects have a set amount of money in their contracts guaranteed, veterans have to negotiate the amount of guaranteed money in their contracts. Guaranteed money protects a player if they suffer an injury or are released during the contract.
Increasingly, we see deals include clauses where more money becomes guaranteed during the life of the contract. This is where a set amount of salary is not guaranteed at signing but becomes guaranteed at a set point during the contract. These guarantees offer players more protection while also setting out defined points during the contract where teams have to decide whether to sign players. Often these guarantees are used for players and agents to begin negotiating a potential extension to the current contract.
How much money is a max contract in the NFL?
There is no such thing as a max contract in the NFL. A player is free to negotiate a deal of any size. Currently, the highest-paid player in the NFL is Patrick Mahomes.
NFL salary cap by year
- 2021: $182.5 million
- 2020: $198.2 million
- 2019: $188.2 million
- 2018: $177.2 million
- 2017: $167.0 million
- 2016: $155.3 million
- 2015: $143.3 million
- 2014: $133.0 million
- 2013: $123.0 million
- 2012: $120.6 million
- 2011: $120.0 million
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