Looking Forward: Expectations for the NFL Salary Cap

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By Bernard Faller

Updated: June 23rd 2022

Covid issues created unique salary cap problems for the NFL following the 2020 season. The NFL salary cap unexpectedly dropped substantially after significant NFL revenue losses in 2020. The article details a brief history of recent cap progression to the current state and what we can expect in the future. The writing also examines how Reality Sports Online GMs may take advantage of the changing cap.

What happened?

Many teams played with near-empty stadiums primarily due to state Covid restrictions drastically reducing ticket and game day revenue while also seeing TV ratings dip in 2020. This resulted in the NFL losing approximately $3 to $4 billion in revenue that season. The NFL collective bargaining agreement (CBA) dictated those losses applied to the following year’s salary cap which would have resulted in the cap dropping by about $70 to $80 million in 2021. NFL owners and the NFL Players Association, however, came to an agreement in which those losses would be spread out over a three year period instead of the single year. In effect, the NFL would have three seasons of relatively modest below-market salary caps versus one year with a massive salary cap reduction. This move mitigated potentially disastrous team salary cap problems throughout the league and kept players from seeing drastic salary reduction in 2021.

What does the Salary Cap look like going forward?

The NFL salary cap averaged about 7% annual growth in the seven years before the 2021 season. The 2020 CBA increased player revenue shares to 48%+ in 2021 and going forward while an anticipated new TV deal was also expected to raise revenue significantly. An 8.5% annual growth in the NFL salary cap for the near-term future was a reasonable projection prior to the 2020 season. The new TV contract, sports betting deals, and potential international expansion may result in even bigger increases.

The chart below displays some of the effects on expectations to the salary cap due to the decreased revenues of 2021 and projections going forward using growth estimates stated above. The NFL salary cap decreased from $198.2 million in 2020 to $182.5 million in 2021. While this was only about a $16 million cap decrease, it also probably translated to approximately $30 or $35 million less cap space than NFL teams were planning for before 2020. The 2022 cap is set to grow a hearty 14% from 2021 but the cap will still be far below what was expected previously. 2023 will show much the same. These cap decreases have had real NFL consequences, particularly for those teams who were already up against the cap and essentially borrowing against future cap to pay for current player production. New Orleans and Dallas, for example, were forced to trade individuals (Amari Cooper) for little compensation or allow players to hit free agency (Terron Armstead) they would have preferred to keep if not for cap restraints.

Actual and Projected NFL Salary Cap 2020-2025

Things get back to normal in 2024, in terms of the salary cap, as the 2020 revenue losses will have been fully accounted for after the 2023 season. One consequence of this is that 2024 should see an enormous spike in the league salary cap with $40 to $50 million cap increases possible depending on further adjustments. We have already seen teams calibrating for this reality by heavily back-loading contracts (more than normal) and increasing the usage of “dummy” contract years (items such as voided years at the end of the contract in which the player won’t actually play on the contract but serves as a way to extend cap accounting into the future).

The Los Angeles Rams provide a nice example of this. Many question how the Rams keep paying big money extensions to players on the team. They are simply using the rules of cap accounting and taking into account the expected explosion in future team cap. Matthew Stafford’s contract contains cap hits of just $13.5 million and $20 million in 2022 and 2023, respectively, then balloons to about $50 million per year in future seasons. Aaron Donald’s new contract added multiple voided years at the end of the deal to help spread his signing bonus over.

What this means for Reality Sports Online GMs

As most Reality Sports Online (RSO) GMs know, RSO mirrors the NFL salary cap in that the NFL salary cap equals the RSO salary cap. This means we can also expect the RSO salary cap to also dramatically increase over the next few seasons. The previous Salary Cap Chart from above shows expected cap growth rates of 11% (2023), 19% (2024), and 8.5% (2025 and forward). Let us see how this compares to RSO contracts. RSO multi-year deals distribute the total value of a contract based on the number of years resulting in small salary escalations (between 6% and 10%) in each subsequent year. The four-year contract example from RSO is detailed below starting in 2022 with expected salary cap figures from our previous estimates.

Reality Sports Online Example Contract (4 year / $100 million total value)

“Expected Cap % “is the RSO salary divided by the expected cap. Most notably, compare the RSO contract salary growth rates with the expected cap growth rates above. The NFL Salary cap shows much higher expected growth than the contract salaries. The RSO example contract salary displays a 27% growth rate from year one to four while the salary cap is expected to rise by 43 percent during that period. This results in salaries taking a smaller portion of the expected total cap during the later contract years. In other words, the real expected yearly value of the RSO contract rises as the contract progresses.

The biggest takeaway for RSO GMs is that they should be more willing to invest in long-term contracts than ever before. Acquiring new multi-year deals in free agency and trading expiring contracts for existing long-term contracts should be a strategy focus for many teams. Hits on locked multi-year contract deals could become more valuable with time and misses make for more palatable release candidates with less cap consequences.

Bio: Bernard Faller has degrees in engineering and economics. He currently lives in Las Vegas and enjoys athletics, poker, and fantasy football in his free time. Send your questions and comments (both good and bad) on Twitter @BernardFaller1.

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2022 RSO Writer’s League Rookie Draft

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By Bernard Faller

Updated: May 16th 2022

Rookie drafts for Reality Sports Online teams involve a number of considerations different than a normal dynasty league. Selected rookies are typically given three or four year contracts at, hopefully, a below market contract. RSO GMs then have the option of extending a player with franchise tags, extensions, or final year options (depending on the chosen settings in your league) which usually are near or above market value for a given player. This makes the initial rookie contract years potentially extremely valuable and the real measure of worth for a rookie player.

The RSO Writer’s League recently finished our three round rookie draft with results posted below. The league is a 10-team Superflex PPR format. This article analyzes some general thoughts on the draft in comparison to other drafts and my own pick decisions along with a couple of other interesting players.

Writer’s League Draft

Overall Draft Thoughts

The Writer’s league draft likely mirrors other drafts in many ways. The players of picks 1-7 probably remain the same in most formats, in some order, with maybe one or two surprises sneaking in. Likewise, the 8-13 tier in this draft represents players likely seen in most superflex drafts for this range. Things get very interesting afterwards. I wouldn’t be surprised by any of around fifteen to twenty names go next in the draft, a true crap-shoot. It’s a very broad tier of players where team fit and individual evaluation will drive selections. This group is highlighted with role-specific running backs, 3^rd round NFL quarterbacks who might never be even the short-term answers, and the top tight ends who are notoriously slow developing for fantasy football.

It’s also worth comparing this rookie class to last year’s group. The lack of legitimate starting quarterback prospects really lowers the potential of a rookie class in superflex leagues. One could reasonably make the argument that every 1^st round pick from 2021 would be in consideration for a top-five spot in this year’s draft. The afore-mentioned lack of highly drafted quarterbacks contributes to some intriguing dart throws potentially available in the 3^rd round of drafts. Willis and Ridder offer excellent athletic upside (and with it fantasy upside) if they ever get starting QB consideration by their teams. The sheer amount of mid-round running backs taken by the NFL in this year’s draft makes for a lot of potential committee backs with significant chances of some relevance for fantasy leagues.

Notes on Selected Picks

1.08, Kenny Pickett QB

Pickett earns the distinction as the only quarterback selected in the first round of the NFL draft with the 20^th selection by the Pittsburgh Steelers. He could start as early as this season with an uninspiring Steelers quarterback depth chart. The Pittsburgh product showed excellent accuracy on and off platform. Pickett made one of the most dramatic leaps we have ever seen from a college quarterback. The following excerpt from PFF’s Draft Guide displays just how big of an improvement Pickett made last season.

There are a host of potential downsides. The question is was last season a one year wonder? Pickett provides adequate arm strength and mobility but nothing that will “wow” anyone while also struggling with pressure at times. Does he possess a fantasy ceiling of more than a moderately useful QB2? Pittsburgh might also end unexpectedly bad in a stacked AFC leading to a high draft pick next season. NFL teams have shown a willingness to move on quickly from these mid-first type quarterbacks if they don’t pan out. That makes his job security very questionable at this stage.

1.10, Skyy Moore WR

My first pick ended up with the new Kansas City wide receiver, my WR6 both pre and post-NFL Draft. The Central Michigan product and James Jones favorite gets to play with one of the top quarterbacks in the league on his rookie deal. Moore brings inside outside versatility despite a smaller frame with a solid build, big confident hands, and explosive play-making routes. He rated among the top wide receivers in the draft for open percentage and catch rate statistics per The Analyst. There’s also room for improvement to Moore’s game as he only converted to wide receiver in college. The Kansas City provides lots of opportunity, especially after this season, as all the primary wide receivers are in the final contract year or have contract outs after the 2022 season.

The major concern with Moore, and small school prospects in general, is how they translate to the NFL after winning against lesser athletic competition in college. Moore’s 4.41 forty-time and elite-level 10-yard split helps alleviate that concern to a degree by showing off enough athleticism to win at the next level.

2.02, Jahan Dotson WR

Dotson seems a player that the NFL was always higher on when compared to the fantasy community. Multiple reports predicted him going in the first round before the draft. Dotson is another smaller receiver who nonetheless played a lot in the outside in college (a lot more than players like Burks and London). Many film analysts grade Dotson with the best hands in the draft and he had to utilize those skills regularly thanks to some of the worst college quarterbacking from a major school last year. The former Penn State star produced a fabulous third year and could have entered the draft after it if he wanted. He should start immediately for the Commanders and Washington doesn’t have anything locked in at wide receiver for the future as Terry McLaurin still has no extension.

Size likely presents obstacles to Dotson ever becoming an upper-level after-the-catch receiver and also showed up as an issue when faced with physical corners. His college contested wins may not materialize against bigger, more athletic corners in the NFL.

2.03, James Cook RB

Cook is easily one of the most fascinating players in rookie drafts. Most draft analysts considered Cook a mid round undersized committee back at the NFL level. He routinely went in the late second round of fantasy drafts before surprising second round draft capital by the Buffalo Bills but has seen a meteoric rise since. This is as late as I have seen him go in rookie drafts after the NFL draft. Cook rates as the top receiving back by many. He looks a lot like his brother Dalvin when running outside showing off easy speed and fluid movement skills.

The real question for Cook is what role he plays for the Bills. Is Buffalo expecting a primary back, a role he never played in college and one we don’t see often at his size? Will he be primarily used on passing downs? If so, Buffalo ranked bottom-five in running back target percentage the last two seasons when Josh Allen emerged as a top quarterback. The Bills clearly wanted to upgrade the receiving back position after signing J.D. McKissic before he backed out of the deal. Is Allen suddenly going to be a lower depth-of-target thrower and reduce his role near the endzone? Overall, there are a lot of questions on what Cook actually does for Buffalo and how that translates to fantasy football but also a ton of upside if he takes a big role on a top-tier offense.

Bio: Bernard Faller has degrees in engineering and economics. He currently lives in Las Vegas and enjoys athletics, poker, and fantasy football in his free time. Send your questions and comments (both good and bad) on Twitter @BernardFaller1.

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