Don’t Let The Reported Numbers Deceive You!
During any NFL team’s offseason, there are three timeframes during which fans will begin to discuss their favorite team’s Salary Cap situation. Unfortunately, too often, there’s a lot of missing information when such discussions surface, particularly when it comes to how much Cap space the team actually has to spend. This is where the team’s “effective” Cap space should always be kept in mind. Let’s explore that beginning with those said timeframes:
1. January/February: The season has ended and the team begins to sign their former practice squad players to reserve/future contracts for the coming season.
2. March/Beginning of new league year (3/16/2022): This is the point during which teams must be in Cap compliance and the free agency period commences.
3. Post-Draft: Free agency is largely over, save for depth signings or late-arriving and unexpected street free agents. Teams shift their focus towards signing draft picks and UDFA’s while keeping an eye on the start of the regular season.
During all of these timeframes, the exact amount of Cap space “available” is very misleading because of other factors that are not yet taken into consideration. For example:
1. January/February: This is an early peek at available Cap space but one that is incredibly misleading. At this point during the offseason many teams do not even have 51 players on their roster. Consequently, fans are lured into a false sense of security thinking the team has far more Cap space than they actually do. At this point teams have yet to tender their ERFA’s and RFA’s and before incentive adjustments (can be positive or negative) from the prior year have been applied. Re-signings and cuts that are made between January/February and the beginning of the league year will also change this number. This process is addressed in our 2022 Salary Cap preview.
2. March 16/Beginning of League Year: The team has now taken care of its offseason business and free agency has begun. Now, the team is Cap-compliant and has ascertainable “Cap space”. However this “Cap space” is not the spending budget that fans optimistically choose to believe is available for free agents.
3. May/Post-Draft: The free agency period and the draft are now over, but there are still many expenses that a team must be mindful of as the regular season approaches. These are expenses that teams are always factoring in, but which fans often aren’t mindful of but must be if you want to have a clearer understanding of the money a team has to actually spend. This is where the concept of “Effective Cap Space” comes into play.
SO, WHAT IS “EFFECTIVE CAP SPACE”?
Effective Cap Space is the amount of Cap space that teams really have to spend, so to speak. This is the amount of available Cap space a team has after all future expenses have been factored in. And, those expenses can be quite hefty, especially if the team is beset with a ton of injuries as happened to the Ravens in 2021. In fact, the injuries the Ravens were hit with in 2021 were so severe that they were beyond reasonable planning. This forced the team to further restructure contracts they otherwise wouldn’t have intended to do.
So, what are these future expenses?
First, during the offseason, only the largest 51 salary cap numbers (“The Rule of 51”) for players on the roster (and all other bonus prorations and dead money) count against the team’s Salary Cap. As such, when the regular season starts, two players need to be added to the team’s Cap to get to the 53 players that are on the team’s regular season roster. Also once the season starts, all players on the 53-man roster, IR, PUP and the Practice Squad – all of them – count against the team’s Salary Cap. So, at a minimum, the 14 players on the team’s Practice Squad are added to the Cap. And, unfortunately, as the Ravens well learned in 2021, all players on IR & PUP also count. But that’s not all. Since players go on IR during the season, the team must also set aside Cap space for the inevitable in-season injuries and the need to replace players who go on IR.
And, as the below chart shows, these expenses take up Cap space. A lot of Cap space.
So, to review, the Ravens currently have $9.771M in Cap space, but still have their ERFAs and RFAs to tender. Once those are accomplished, the Ravens’ Cap space will fall to around $7.174M. Now, keep in mind, this is before the team releases any players and makes other moves that will affect the team’s Cap space, but this is the starting point to determine what moves the team will need to make to create the requisite Cap space.
As an example, if the Ravens were to release OT Alejandro Villanueva, CB Tavon Young and WR Miles Boykin that $7.174M in Cap space would increase to around $20M. And while that sounds great, it’s worth repeating, but that $20M in Cap space does not mean the Ravens have $20M to spend.
In addition to any free agent signings or re-signings, the team will need to; sign its draft picks (approx. $3.8M needed); adding the two players to reach 53 players on the roster (minimum of $1.410M); set aside money for its Practice Squad (approx. $3.308M), set aside money for in-season elevations from the Practice Squad (est. $1.2M); and, lastly, set aside Cap space to for in-season injury replacements (est. $6M).
Now, some of these numbers are certainly speculative, but are all in the ballpark of the amounts needed. The in-season injury replacement reserve is the biggest variable – it could certainly be less or, as we saw in 2021, it could end being a lot more.
These expenses total almost $16M and, as the chart shows, that will take a huge bite out of the $20M created in the scenario described above.
Needless to say, the Ravens are going to have to make more moves than just releasing a couple of players. Extensions (Lamar Jackson; Marcus Peters) are an option to create Cap space, as is releasing additional players and/or restructuring contracts (Marlon Humphrey; Kevin Zeitler). General Manager Eric DeCosta made it clear last month that the team would be able to create the Cap space needed, but clearly, any talk of $40M in Cap space and $40M to spend on free agents, is not a realistic expectation.
This is the result of “Effective Cap Space” and what teams are always mindful of as they approach the offseason and the beginning of the new league year. Fans should also keep this in mind when they speculate on how much Cap space the team really has to use in free agency.