Two weeks ago, NFL commissioner Roger Goodell openly questioned the integrity of the league’s current salary cap system. He later stated that it was a priority issue among NFL owners going into the league’s next collective bargaining agreement. For reference, the current CBA, which was struck during the early stages of the COVID pandemic, will run out in March of 2031.
On its surface, the NFL salary cap should be simple. The NFL could set a cash limit on how much you can spend on players in a given year, and have that be that. To a certain extent, that’s what the NBA does, before their aprons come into play. The big difference between the NBA and the NFL, though, is guaranteed money and signing bonuses.
Because contributing NBA veterans receive guaranteed contracts, there’s no real reason for the league to operate in a signing bonus world. Thus, the NBA simply counts players’ salaries (game checks) in their salary cap equation.
Unlike the NBA, though, the NFL teams typically don’t guarantee the salaries of players beyond the first one or two years of veteran deals, in part because of the frequency of injuries in the sport and how much older professional football players are when they enter their second contracts. There’s no promise that a player signed in 2025 will be wanted by the team come 2027 in a league that turns over talent so quickly. Thus, a lot of the money NFL players receive in their veteran contracts comes in the form of a signing bonus, up-front money that is counted against the cap for the lifetime of a contract.
For example, the Green Bay Packers signed guard Aaron Banks this offseason to a four-year, $77 million contract that featured no guarantees beyond his $27 million signing bonus. Despite receiving that $27 million in cash in 2025, Banks only counts $9.03 million against the cap for the Packers this year, because his signing bonus will count $6.75 million per year against Green Bay’s cap space for each season from 2025 to 2028. If he’s ever released from the Packers, the remaining signing bonus that hasn’t been accounted for on their salary cap, but has already been paid out to Banks, will accelerate to their updated books.
This is all fine and dandy and worked quite well for the league up until the end of Drew Brees’ run with the New Orleans Saints and Tom Brady’s run with the New England Patriots. In an effort to make title runs at the end of each of those quarterbacks’ careers, both of their teams learned how to use the NFL’s void year mechanism to take advantage of the current cap system.
A void year is essentially a way to stretch out a signing bonus to have it count on the cap in years where a player isn’t going to be under contract. For example, if you wanted to pay a player a $10 million bonus on a one-year contract, you previously would have had to account for all of that on the cap in the year that he was on your team. With void years, you can add on up to four extra seasons at the end of the deal, stretching the cap accounting of a one-year signing bonus to just one-fifth of the amount for that individual season.
At the time, this was viewed as a risky move, as teams mostly matched cash spending with what the salary cap was in a given year. Some viewed the Saints’ and Patriots’ strategy as essentially juicing their team by taking a loan from their future teams, something that they’d eventually have to pay off.
Then the pandemic season happened, and the NFL’s salary cap rose from just $195.9 million in 2019 to just $208 million in 2021, a net increase of $12.1 million on the salary cap over three seasons. For reference, the cap rose $28.1 million from 2017 to 2019.
From 2020 on, teams had to learn how to manipulate the salary cap with void years and salary conversions just to keep their teams together in this period where the league’s salary cap did not advance as previously projected. Salary conversions are essentially turning a player’s game checks into a signing bonus, which allows teams to pay off the cap accounting of those previously agreed-upon game checks over multiple seasons.
But eventually, teams had to pay off that debt, right? Well, sort of. In theory, the cap dollars will be due eventually, but there’s no limit on the “debt” a team can take by just perpetually pushing cap hits into future years. No limit as in the amount of money or the time it can be perpetually pushed forward.
Post-COVID NFL Cash Spending
To explain this, let’s take a look at a table and a bar chart.
The table above shows the league’s cash spending (an average among 32 franchises, in millions) and salary cap since the 2011 CBA that instituted the rookie salary scale. The league never once spent 5 percent over the salary cap in cash spending from 2011 to 2019. Since 2020, though, cash spending has eclipsed the salary cap by more than that number every year, usually by around 10 percent.
The bar chart above shows a visual of the league’s cash spending compared to the salary cap, where you can see the clear spike beginning in 2020. While it looks like cash spending relative to the cap is actually coming down, remember that the 2025 number only counts players under contract on June 5th, with free agents like Von Miller and Aaron Rodgers still looking for a home and pleanty of contract extensions (i.e.: signing bonuses) to be inked between now and the end of the league year.
Some teams have now made pushing cap hits into the future a full-blown strategy. The Philadelphia Eagles, coming off of a Super Bowl, have timed up their roster for perpetual salary conversions up to the 2029 season, around the time when the NFL will have a new set of television (or streaming) contracts that will likely increase the salary cap more rapidly than the $25 million per year pace that we’re seeing at the moment. So if the Eagles take on $20 million of debt now, and that $20 million in debt will be a smaller drop in the bucket come 2029, why should they just keep kicking the can forward?
And that is why NFL owners are worried.
Previously, the NFL’s parity model worked well. Between the draft, the salary cap and free agency, top teams were torn to shreds as they were unable to keep all of their star players together for long periods of time, which benefited rebuilding teams the most. With the ability to push cap dollars into future years, though, fewer of these star players are getting to market in free agency. Even the pool of veteran cap casualties has taken a hit for teams looking to add talent, as void years and salary conversions have allowed these players to remain on their clubs for an extra year or two.
How big is the NFL's cash spending gap?
So, how bad has the cash differential gotten in the NFL? According to Spotrac, the Cleveland Browns have spent $401.3 million more on players than their divisional rival, the Pittsburgh Steelers, have since the start of the 2020 league year. That debt has been added to the team’s accounting in future years, but, again, there’s no due date to get cap neutral, so in theory, that money can continue to be kicked into the future in perpetuity.
While the Browns don’t make much of a case that spending equals winning, the next four teams behind them in 2020 to 2025 cash spending are a group of teams that have found success: the San Francisco 49ers, Buffalo Bills, Miami Dolphins and Philadelphia Eagles. Earlier this offseason, the 49ers’ CEO Jed York curbed cash spending on his team, following a season where San Francisco failed to make the postseason, sold six percent of the franchise and the team still has $92 million in dead cap on their books in 2025.
If an owner was well-moneyed beyond his football franchise, though, he could have continued to push through that bump in the road and spent and restructured deals to the NFL’s liking.
It’s hard to imagine what the $401.3 million cash spending gulf is like. It’s just hard to wrap your head around big numbers. I’ll never come close to 401 million of anything, let alone dollars. So with that in mind, let’s add some perspective here.
According to the team’s annual financial report, the Packers, a club that has been around for over 100 years and has several investments and revenue streams, have a cash reserve of $536 million. Mind you, this is a team without an owner who is siphoning off money for personal pleasure. And the Browns have spent about three-quarters of that more than the Steelers over the last six seasons.
The new free agent market
Soon, many owners will have to decide whether it’s time to reset their cap situation or continue to push forward. York won’t be the last owner to say it’s time to pump the brakes on dumping cap dollars into future seasons, despite his willingness to spend in the past. If other owners continue to use void years and salary conversions to keep their teams together, though, there’s no promise that using cap dollars on whatever free agents actually do get to the market in future seasons will be a “smart” way to operate in the NFL’s cap structure.
At the moment, non-Pro Bowl veteran starters are seeing the biggest salary increases right now, simply because those are the types of players who are getting to market. Back when Keisean Nixon inked his $6 million per year deal with the Packers in 2024, he was paid like an elite slot defender. Now, non-Pro Bowl slot defenders are already reaching the $10 million to $13 million per year range. That’s right, the price of starting, but non-Pro Bowl, slot cornerbacks more than doubled in about a year.
The New York Jets’ Jamien Sherwood, a one-year starter at linebacker, received a $15 million per year contract this offseason, as did former Kansas City Chiefs defensive tackle Tershawn Wharton, a fifth-year defender who made 13 career starts in KC. Just because there aren’t stars in free agency doesn’t mean teams won’t spend the cap space that they have available. For a team looking to scale back above-cap cash spending, letting go of a star this year might mean adding a mid-level veteran for the same cost in a year or two, with the way the market is working.
So while I’m about as pro-player as can be, it’s not my money, I can understand why ownership groups who want to rebuild are questioning whether or not the same benefits that rebuilding teams used to receive in free agency even still exist in a league if void year and salary conversion manipulation is rampant. And if those rebuilding teams do not have the same benefits they used to have, then deep-pocketed owners — on the relative scale of NFL owners, obviously they’re all rich compared to a blogger’s salary — will benefit the most in this era.
That’s where the “integrity” comment Goodell stated a few weeks ago probably stemmed from.