NFL Salary Cap Management

When NFL teams and general managers are deciding how to invest money into their roster, they must contend with the salary cap. From resigning homegrown talent to making splashy free agent moves, teams have a wide range of options. Dave Archibald explains NFL salary cap management and the different strategies teams employ under the current system.

Every season one team wins the Super Bowl and the offseason is seemingly dominated by other teams trying to recreate that team’s championship formula. Super Bowl 50 featured two squads heavy on free agent investment, especially the champion Denver Broncos, but history tells us that big spending in free agency provides poor returns more often than not. Dan Hatman, director of The Scouting Academy and a former employee of the New York Giants, New York Jets, and Philadelphia Eagles, opined on Twitter recently:

My comments on free agency are simple. You don’t build a team there and spending $50M does not equate to winning. You need to be targeted in your approach. Teams study team building over many years and the draft gives the best infusion of surplus value. Winning in free agency means you met market value for the player and gives very little to no opportunity for surplus value.

Front offices are not stupid and understand that spending on free agents is paying retail price. The Green Bay Packers and general manager Ted Thompson are often lauded for their more modest approach. They build through the draft, develop youngsters, and spend their budget extending their own players, avoiding the free agent pool almost entirely. The problem teams like the Jacksonville Jaguars and Tampa Bay Buccaneers run into is: what if the players you draft aren’t very good?

A look at the teams with the most cap space since 2011 (the inception of the current Collective Bargaining Agreement) makes apparent that the teams with the most cap room tend to be the least successful. The five teams with the fewest wins in that time period – the Jaguars, Buccaneers, Cleveland Browns, Oakland Raiders, and Tennessee Titans – all rank among the teams with the most average cap space:

Team Salary Cap Chart

A scatter plot with trend line reinforces the connection between poor on-the-field results and lots of cap space (shoutout to NFL lineman Geoff Schwartz (@geoffschwartz), who theorized this relationship and brought it to our attention):

Wins versus Average Cap Space

Three teams stand out, ranking in the top 10 in average cap space but still have fielding perennial playoff squads. Those teams – the Cincinnati Bengals, Indianapolis Colts, and Seattle Seahawks – all feature quarterbacks who have been on rookie contracts for the bulk of their careers to date. The teams averaging the least cap space – the Dallas Cowboys, New Orleans Saints, Pittsburgh Steelers, and New York Giants – show the inverse, with very expensive quarterbacks taking up a ton of cap room. A deeper dive into spending habits can reveal different patterns of spending.

We Don’t Need No Stinking Free Agents

The Packers are notoriously homegrown – their opening-day roster featured just five players who had ever played in another organization – in most years eschewing the free agent market entirely. They spend their money on extending their own players, such as quarterback Aaron Rodgers, linebacker Clay Matthews, and receivers Jordy Nelson and Randall Cobb. At times this can leave the team with holes – the offensive line was a weak unit for several years due to underperforming and injured draft selections – but general manager Ted Thompson keeps the team’s focus on drafting, developing, and extending its own young players.

Teams fitting this model: Packers, Bengals, Steelers

Money Burning a Hole in Your Pocket

It’s easy to lampoon teams like the Jaguars, Raiders, and Buccaneers for spending big on underperforming free agents like Jared Odrick, Julius Thomas, LaMarr Woodley, Josh McCown, and Anthony Collins, but under the new CBA teams are required to spend to a salary floor. The problem isn’t the free agents those teams chose – though perhaps their choices were not optimal – but that their young cost-controlled draft picks were so unworthy of extensions. Gerald McCoy earned a long-term deal, but disappointments like Derrick Harvey, Blaine Gabbert, Darrius Heyward-Bey, and Rolando McClain – all top-10 picks – did not. Aside from the misses, trades left these teams without high picks at times. The Browns didn’t select until the fourth round in 2008, and a trade for Carson Palmer cost Oakland a 2011 first-round pick and a 2012 second-rounder.

The lack of young talent means these teams have boatloads of cap space every offseason. Fortunately, there is hope on the horizon for some of these perennially-struggling teams, as young signal-callers Blake Bortles, Derek Carr, and Jameis Winston figure to fill the quarterback position long term for the Jags, Raiders, and Bucs respectively. Emerging stars at other positions like Allen Robinson, precocious route-runner Amari Cooper, wrecking ball Khalil Mack, and Mike Evans give these franchises young players worth extending in future seasons.

Teams fitting this model: Jaguars, Raider, Buccaneers, Titans, Browns

Hitting the Target

Hatman espouses a targeted approach, using free agency as a tool to fill specific holes or fill key positions. The New England Patriots, who have the most wins since 2011, rarely grab the free agent with the biggest name, preferring to supplement their homegrown talent with moderately-priced veterans like LeGarrette Blount, Brandon LaFell, Danny Amendola, Jabaal Sheard, Brandon Browner, and Patrick Chung. Not all these signings work out, nor do they linger on the cap in the event of a flop. Even big-name acquisitions, such as Darrelle Revis in 2014, often ink surprisingly small contracts – Revis was only a Patriot for one season.

The Seahawks tend to target specific positions in free agency, filling out their defensive line with veterans Cliff Avril and Michael Bennett while the back seven remains almost entirely homegrown. New England and Seattle are two of the most active teams in the trade market, with the Seahawks making big moves for skill players Marshawn Lynch, Percy Harvin, and Jimmy Graham while the Patriots netted contributors Aqib Talib, Akeem Ayers, and Akiem Hicks in smaller moves.

The Super Bowl runner-up Carolina Panthers under general manager Dave Gettleman have also done a fine job with targeted free agent pickups. Left tackle Michael Oher manned the blind side for an offensive line that was among the league’s most underrated. Key receivers Ted Ginn, Jr. and Jerricho Cotchery, cornerbacks Charles Tillman and Cortland Finnegan, and safeties Kurt Coleman and Roman Harper all capably filled roles on the cheap, and a 2012 trade for tight end Greg Olsen gave the team its most dynamic receiving threat.

The Chicago Bears haven’t been as successful but have employed a similar model to New England, Seattle, and Carolina. The Bears have picked up contributors in free agency like Eddie Royal, Martellus Bennett, Matt Slauson, Pernell McPhee, and Lamarr Houston, and have gotten some production from that group, but they boast only one winning season in their last five. Inconsistency from quarterback Jay Cutler, turmoil from multiple coaching changes, and disappointing draft picks like Shea McClellin and Gabe Carimi have hurt Chicago. They serve as a reminder that a sound approach to the cap and free agency will only take a team so far.

Teams fitting this model: Patriots, Seahawks, Panthers, Colts, Bears

The Big Splash

The Broncos dipped into the free agent pool more than most, but what is perhaps most fascinating is where they added these players. Rather than fill holes, they largely added strength to strength, adding veteran pass rusher DeMarcus Ware to complement star linebacker Von Miller, adding wideouts Wes Welker and Emmanuel Sanders to pair with Demaryius Thomas, and supplementing versatile cornerback Chris Harris with secondary additions Aqib Talib and T.J. Ward. The big exception, of course, is quarterback Peyton Manning, who general manager John Elway signed after the five-time MVP missed the entire 2011 season with a neck injury. With five consecutive playoff appearances, two conference championships, and a Super Bowl ring, Denver has benefitted from Elway’s plan.

Most forays into free agency are not so successful, as this list of current free agents deals averaging more than $10M per year makes clear:

Current FA Deals Over 10 mill yr

Twice in the last three years the Miami Dolphins have landed the off-season’s big fish, adding Mike Wallace in 2013 and Ndamukong Suh in 2015, but they haven’t parlayed those moves into in-season success, trading Wallace after two 8-8 seasons and finishing 6-10 in Suh’s first season in South Beach. The 2011 Philadelphia Eagles are another memorable example of free agent folly: after adding stars like Nmandi Asomugha and Dominique Rodgers-Cromartie to what had already been a playoff squad, the self-proclaimed “Dream Team” was expected to dominate the league. Instead, they finished a disappointing 8-8. Via Twitter, Hatman, a scout on that Eagles team, expanded on the negative effect free agent signings can have on team chemistry:

Great teams look at every avenue, but Washington in the last decade and the Eagles “Dream Team” show that you can’t buy mercenaries and expect to win it all. Targeted free agency is great. I lived what mass free agent signings can do to the locker room. Please stop ignoring the human element. Home-grown players don’t like it when money goes to players outside the organization.

Aside from the chemistry issues, there are often problems of scheme fit. Asomugha had been a lockdown man-to-man outside cornerback in Oakland, but he struggled in an Eagles scheme that asked him to play more zone and line up in the slot more frequently. And with 22 players on the field, one non-quarterback can only make so much impact, and one contract consuming 10% of the cap or more often precludes filling other holes.

Teams fitting this model: mid-2000’s Washington, 2011 Eagles, 2011 Buffalo Bills, Broncos, Dolphins

Put It On My Tab

The Cowboys and Saints have averaged the least cap space under the new CBA. Both have spent big on extending their own star players, such as Tyron Smith, Dez Bryant, and Sean Lee for Dallas and Jahri Evans, Jimmy Graham, and Cam Jordan for New Orleans. They’ve also made some big splashes in free agency, netting big money secondary players Brandon Carr and Jairus Byrd, respectively. What stands out with these teams is the way they’ve structured their large contracts, particularly those of quarterbacks Tony Romo and Drew Brees:

QB Contract Structure

The Cowboys and Saints took modest cap hits in the early years of Romo’s and Brees’ contracts, but the time is coming to pay the piper. New Orleans will incur a cap hit of $30M in 2016 if they don’t restructure Brees’ deal. Romo’s cap hits aren’t quite that large, but the Cowboys are still guaranteeing nearly $32M to the 35-year-old over the next four seasons. Contrast those deals to the relative flat contracts that Aaron Rodgers of the Packers and Ben Roethlisberger of the Steelers signed: neither Rodgers and Roethlisberger has a season where their cap hit is less than $17M or more than $24M.

The presence of Baltimore Ravens quarterback Joe Flacco, who has even a more extreme slope to his deal than Romo or Brees, stands out, especially given Baltimore general manager Ozzie Newsome’s resume as one of the league’s best team-builders. The Ravens currently have the third-least cap space in the NFL and Newsome will need to make savvy moves to set the team up for success.

It should be noted that the Cowboys, Saints, and Ravens have all had some degree of success since 2011, combining for six playoff appearances and a Super Bowl victory in that time span. Rising NFL revenues have led to a larger cap and made some of the later salaries not as onerous as they once appeared. Still, back-loaded deals eventually force teams to discard good players to save cap space. Ware was only available to the Broncos because Dallas was no longer able to afford him at his current salary, and the Ravens were forced to trade longtime defensive lineman Haloti Ngata to fit under the 2015 cap. The Saints led the NFL in “dead money” (paid to players since cut or traded) in 2015 after jettisoning contributors Jimmy Graham, Ben Grubbs, and Curtis Lofton. These teams are learning what anyone who has run up too many charges on his credit card has – sooner or later, the bill comes due.

Teams fitting this model: Cowboys, Saints, Ravens

Wrapping Up

Managing cap space poses a big challenge for teams and front offices, and general managers have the unenviable task of trying to determine which of their young players to lock up to extensions, which holes to fill via trade and free agency, and which players to let walk away before they become too expensive. No one has a perfect answer, and every approach can succeed if applied correctly. What is clear is that having lots of cap space is an overrated asset, as teams can rarely bring tens of millions of dollars to bear in efficient fashion. Moreover, the teams that have a lot of cap space are generally in that situation because their young draftees failed to pan out. When it comes to building a championship team, the draft remains the best and most efficient avenue for success.

Team-by-team cap space figures courtesy of Over The Cap (2016), Pride of Detroit (2015), Jason La Canfora (2014 and 2012), Big Blue Interactive (2013), and NFL Football Now (2012). Contract information in charts and graphs from Over The Cap. Thanks to Dan Hatman (@Dan_Hatman) for his quotes and input on this piece.

Follow Dave on Twitter @davearchie.

Dave Archibald knows pass defense, specifically how coverage, the pass rush, excellent cornerbacks, versatile safeties and in-game adjustments can make a big difference.

2 thoughts on “NFL Salary Cap Management

  1. There are numerous issues with the graph showing the correlation between cap space and win %.

    1. Show the r squared value. You can run a regression with almost any set of random points and get a sloped line, but an r squared of .8 is much more telling than an r squared of .1. How strong is this correlation?

    2. The X-axis should be measured in average % of salary cap spent per year and not total unspent salary cap over the time frame. $1M in 2011 salary cap =/= $1M dollars in 2015 salary cap.

    3. The preferable way to run the correlation would be to include data points for each team in each season. So rather than having 32 data points, you would have 160. For example, if a team spent 95% of its cap in 2011 and went 6-10 and 75% in 2012 and went 10-6, all you would show is that on average, they spent 85% and went 16-16. However, breaking it down would show in finer detail how the money spent in each year impacts that particular W/L record.

    1. Steve, good points and good subjects for further exploration. For #2, the ability to carry over cap space under the new CBA is another point in favor of your suggestion of using % of cap rather than total $$, as some of the teams with lots of cap room year after year may be carrying that money over (which doesn’t invalidate the idea that it’s because they don’t have anyone worth spending the money on).

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