2023 NFL free agency: The salary cap explained
It’s an important day in the NFL because by 4 p.m. today, teams have to be under the 2023 salary cap. But what does that even mean?
The NFL salary cap is a complicated beast, but it’s one of the most important things to know in order to form a good team. The 2023 salary cap is set to $224.8 million. Here’s what that means for the teams, players, and the players’ contracts.
What is a salary cap?
The salary cap is a limit on the amount of money an NFL team can spend on player contracts (including base salary and bonuses). This is different from other sports leagues like the NBA because it is a hard cap, leaving no room for flexibility. The cap is set to $224.8 million this year, and no team may exceed that number.
It was implemented as a way for the league to control spending on player salaries and limit financial risks. The NFL believes that it is more fair to have every team with the same spending limitation to avoid rich owners simply buying better players because they can.
The salary cap number increases nearly every year (with the exception of 2020 after the Covid pandemic). It is decided by dividing the percentage of revenues negotiated in the Collective Bargaining Agreement (CBA) by the 32 teams in the NFL. The CBA says that NFL owners and players must split revenues (from media, NFL ventures/playoffs, and local); players are currently receiving 48% of profits.
Though teams cannot exceed the cap, there are, as always, loopholes. Signing bonuses are typically paid immediately, which are prorated over the length of the player’s contract (or five years, whichever is shorter). For example, if a player gets a $20 million signing bonus on a five-year contract, he gets that money upfront, but the team is only getting $4 million hits in cap space each year. And of course, contracts can always be restructured by manipulating base salaries and bonuses to allow for more cap space.
Most teams will be over the cap space in the offseason, and have until the start of the next season to adjust. The 2023 season “starts” March 15, and the teams have until 4 p.m. on that day to get within the cap, which means trading and restructuring contracts. After 4 p.m., they can officially start signing contracts with unrestricted free agents.
Coaches, owners, and NFL staff members’ salaries are not included in the salary cap equation.
The teams have to keep in mind what they call “dead money”, which is the money that’s been fully guaranteed to a player who is no longer on the team due to a release or trade. If a player is cut, he still must be paid for the full outstanding amount, which can reduce a team’s cap space by a lot. On the other hand, it protects the player from being cut if the team is tight on cap space. It is possible to spread the dead cap hit over two seasons if the player is released or traded after June 1.
What is “effective cap space”?
Effective cap space is the true amount of money the team has to spend after taking into account all future expenses and subtracting any dead money.
“The Rule of 51″
The NFL’s Rule of 51 says that during the offseason, only the 51 most expensive contracts count against the team’s salary cap, staying in effect until the start of the regular season. Once the regular season begins, all 53 players on the roster will count towards the salary cap, plus those on IR, Pup, and the practice squad.
Unused salary cap
There is actually a salary floor as well as a salary cap. Teams do not have to spend all the allowed money, but they must spend at least 89% over a four-year timespan. The NFL as a whole must spend at least 95% of the cap.
Any money that is not used in the allowed cap space can be rolled over to the next season. The teams have to tell the league they plan to do so by 4 p.m. ET the day after the regular season ends.
Which NFL team has the most salary cap space in 2023?
The Chicago Bears have around $44.9 million in cap space for free agents according to Over the Cap, plus the first pick in the NFL Draft. Even after adding several players during the offseason, the Bears have remained the team with the most in cap space in 2023. After the Bears, the teams with the most in cap space currently are the Atlanta Falcons ($39.9 million), Arizona Cardinals ($33.1 million), Cincinnati Bengals ($29.1 million), and New England Patriots ($24.8 million).
Which NFL team has the least salary cap space in 2023?
The team with the least amount of cap space currently is the New Orleans Saints. At the moment, they have just $0.7 million in cap space, but have already signed QB Derek Carr to a four-year, $150 million deal, restructured a one-year, $8 million deal to keep QB Jameis Winston, and gave a two-year extension to TE Juwan Johnson. Behind the Saints are the New York Giants ($2.5 million), and Tampa Bay Buccaneers ($3 million).
Salary cap space for all 32 NFL teams in 2023
(All numbers taken from Over the Cap)
Green Bay Packers
Kansas City Chiefs
Las Vegas Raiders
Los Angeles Chargers
Los Angeles Rams
New England Patriots
New Orleans Saints
New York Giants
New York Jets
San Francisco 49ers
Tampa Bay Buccaneers
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