2024 NFL salary cap spike: Free agency, team spending impact

ByDan Graziano ESPN logo
Thursday, March 7, 2024

The NFL salary cap went up a record 13.6% this year, from $224.8 million to $255.4 million per team. The jump could be a huge benefit to players hitting free agency in the coming week, as teams will have more cap space to spend. But the news was also received well in front offices, where teams had been budgeting for a cap in the range of $240-245 million and had some recalculating to do once the news dropped at the end of February.

"We were hoping it would get to $250 [million], but we didn't really expect it to," said Brandon Beane, the general manager of the cap-strapped Buffalo Bills, last week at the combine. "We were conservatively planning for a number in the 40s. So to get the 255 [million], I was smiling."

Good for the players, good for the teams. The NFL is financially healthy, and everyone's making money. But what do fans need to know about the unprecedented $30.6 million salary cap jump and what it means for this season -- and seasons to come? We've got you covered with big questions and takeaways, including which teams and players could be most affected.

Jump to the cap increase impact on:

Franchise tags | Teams with cap issues

Free agent spending | Cut designation

Why did the cap go up so much this year?

The NFL's salary cap is calculated based on a percentage of projected league revenues for the coming season. The collective bargaining agreement (CBA) breaks the revenues down into three buckets: league media revenue (basically, money made from television rights deals), NFL ventures/postseason revenue (money made from postseason games and NFL-operated entities such as the NFL Network) and local revenue (money made by teams in their local markets, such as selling local broadcast rights to preseason games). The total player cost for the year is the sum of 55% of league media revenue, 45% of NFL ventures/postseason revenue and 40% of local revenue.

The league can reduce the total number via stadium credits -- money used for stadium construction and renovation -- as long as the player cost number doesn't fall below 48% of the total revenue projections. And the player cost can be increased via a "media kicker" as a result of new TV rights deals negotiated since the 2020 signing of the CBA.

Basically once that player cost is established, the number gets divided by 32 to get to the per-team salary cap number for the year. This season's player cost number was determined to be about $10.54 billion, and when you divide that by 32, you get $329.4 million per team. Subtract another $74 million per franchise for the cost assigned to player benefits (such as performance-based pay and benefits for retired players), and now you get the $255.4 million per team for player salaries.

According to league and NFL Players Association sources, the 2024 number was significantly larger than the 2023 figure for at least three reasons:

  • Revenues were impacted by the massive new TV rights deals signed by the league with its broadcast partners in 2021.
  • All of the player benefits deferred via the 2020 "COVID-19 CBA" have now been paid back. The league and the union paid those benefits back gradually over the previous few years, deducting the amount from the final cap calculation, and they no longer have to do so.
  • Several teams outperformed their revenue projections for 2023, leading to improved revenue projections for 2024. Two teams cited as examples here were the Detroit Lions (who had two home playoff games after not having one since 1993) and the New York Jets (whose local revenues were significantly impacted by the offseason acquisition of Aaron Rodgers, even if Rodgers' season lasted four snaps).

So is this a one-time thing, or will the cap start going up $30 million every year now?

The sources to whom I've spoken don't expect a similar increase in 2025. In fact, in the negotiations between the league and the NFLPA to finalize this year's cap, an agreement was reached to "float" about $8-10 million of this year's increase into next year. Yes, this means that this year's cap could have been as high as $265 million if it were based solely on the raw revenue-production numbers.

But why defer some of the increase into 2025? It's easy to understand why the league would agree to such a thing, because the cap as a general concept benefits the teams and not the players. But the NFLPA was concerned that the 2024 increases that resulted from the bump in TV revenue wouldn't translate into next year, and the union felt it would be unfair to the 2025 free agent class if the cap went up by $30 million this year and only, say, $2 million next year.

It's possible that 2025 revenue projections will come in higher than expected and the cap will spike again. But at this point, the expectation is that the 2025 increase will be more in line with the $10-12 million annual increases we've become accustomed to seeing.

What effect did this have on franchise tag usage this offseason?

It's hard to look at the list of players who got tagged and find someone who wouldn't have been tagged had the cap been lower. One reason is that the tag numbers are tied to the cap number, which means once the cap came in high, so the tags did, too. Carolina'sBrian Burns and Jacksonville's Josh Allen, for example, will earn $24.007 million each if they end up playing on the tag. Had the cap come in at $242 million, that franchise tag salary for linebackers would have been around $22.5 million.

One thing the higher cap might do -- and we'll see whether this happens at all -- is increase teams' ability to tag and trade players. Once a team tags someone, it has to carry the full amount of the tag on its salary cap, even if the player hasn't signed it yet.

So take theKansas City Chiefs, who will be carrying a $19.802 million cap charge for cornerback L'Jarius Sneed as soon as the league year starts on March 13. Some around the league believe the Chiefs plan to trade Sneed to a team willing to give him the contract extension he seeks, and if that's true, the higher cap number makes it easier for the Chiefs to carry Sneed into the new league year before ultimately trading him. They have to clear about $13 million less in cap space than they planned in order to fit Sneed under the number. The same could potentially be said for Burns, Cincinnati receiverTee Higginsor any other player who might be a tag-and-trade candidate.

How does this help teams dealing with massive cap charges for their stars?

Let's look at the Dallas Cowboys. Quarterback Dak Prescott currently carries a $59.455 million cap charge for 2024. He has one year left on his contract, plus two void years in 2025 and 2026. The Cowboys could lower Prescott's cap number with a contract extension, but in the past they have found it difficult to reach agreement with him on an extension. Plus, the QB has the leverage, since a $59.455 million cap number is brutally high. (The highest in the league in 2023 was Patrick Mahomes' $37 million.)

But again, every team in the league basically found roughly $13 million in cap space just lying on the ground a few weeks ago. So that's $13 million less work the Cowboys have to do to get under the cap. They still probably can't carry a $59.455 million charge for Prescott and operate the rest of their offseason around that. But they mightnot need to extend him to get where they need to go.

The Cowboys can convert up to $27.79 million of Prescott's $29 million in 2024 salary into a signing bonus. They can do the same with his March 17 roster bonus (assuming they do it before March 17). Just doing those two quick moves -- without adding any more void years to the deal -- would save them $21.86 million in cap space in 2024, and they wouldn't even need Prescott's permission to do it. Now the problem is that the Cowboys would have to carry a dead money charge of $58.32 million for Prescott in 2025 if they don't re-sign him. But they can buy themselves another year to solve that problem with the simple automatic conversion that doesn't require Prescott's approval.

Some more team-specific examples:

  • The Los Angeles Chargershave four star players -- wide receivers Keenan Allen and Mike Williams, and edge rushers Joey Bosa and Khalil Mack-- with cap numbers over $32 million for 2024. If the cap had come in at $242 million, they might have had to cut two or even three of those guys to get under it. At $255 million, they might have to release only one, maybe two of them.
  • The San Francisco 49ers have a better chance of being able to keep their Super Bowl team together. San Francisco is still going to need to restructure a contract or two -- maybe offensive tackleTrent Williamsor edge rusherArik Armstead--to get under the cap, but carrying receiverBrandon Aiyuk on his $14.124 million fifth-year option seems more palatable now than it did a couple of weeks ago. A lower cap might have forced the Niners to consider trading Aiyuk if they couldn't get him extended, but the higher number buys some time to figure it out.
  • The Cincinnati Bengals might be able to keep their offensive core together longer than expected. Cincinnati has cap space but a lot of needs on defense, so it will need to spend some there. Carrying Higgins on a $21.816 million franchise tag and running backJoe Mixon on his $8.85 million cap number would have been trickier at the lower cap number. But if the Bengals now want to squeeze another season out of this Super Bowl-caliber group they've built around Joe Burrow, it's going to be a little bit easier.
  • The Cleveland Browns don't want to cut running back Nick Chubb, who is coming off a knee injury. They love the guy. But they also can't carry him on a $15.825 million cap number. They will have to either extend him or negotiate some sort of pay cut if he is going to be on the 2024 team. If it's the latter, the expanded cap means the Browns might not have to offer as deep a cut to a valued player as they might have otherwise.

Who else does this higher cap number benefit?

Big-name free agents: With more teams flush with cap space -- and the teams that were already flush even more so -- the bidding for the top free agents should go higher this month. If you'reMinnesota Vikingsedge rusher Danielle Hunter, for example, and you just saw Allen and Burns get tagged, you can present yourself as the best edge rusher on the free agent market. Scarcity at that position increases demand, and the teams have more to spend. The same could be said for New York Giants safety Xavier McKinney, who did not get franchised while Tampa Bay Buccaneers safety Antoine Winfield Jr. did (and New England Patriots safety Kyle Dugger got the transition tag).

The wide receivers looking for new deals: Last offseason, the top end of the receiver market stood still after exploding in 2022. Stars likeJustin Jefferson and CeeDee Lamb sought but did not receive extensions. This year, the likes of Ja'Marr Chase and Amon-Ra St. Brown join them as extension-eligible. The top of the market at the position is likely to go over $30 million per year, and the looser cap might make it easier for teams to move on the extensions they didn't want to give out a year ago.

How will the cap number impact cut designations?

The post-June 1 cut is a device that allows teams to defray cap costs over multiple years. Generally, when releasing a player before his contract is up, a team must account for the remainder of his prorated signing bonus in a dead money cap charge. But teams are allowed to designate two players each year as post-June 1 cuts, which means they can split up the cap charge. Example: Releasing Russell Wilson will cost the Denver Broncos $85 million in dead money. This is because the extension he signed with Denver in 2022 included a $50 million signing bonus, a $20 million 2023 option bonus and a $22 million 2024 option bonus.

CBA rules allow teams to prorate the cap impact of signing and option bonuses for up to five years, so Wilson's signing bonus was assigned in $10 million increments to the Broncos' cap in 2022, 2023, 2024, 2025 and 2026. This means he has $30 million in signing bonus proration still to account for, and all of that accelerates onto the team's 2024 cap once he's released. The 2023 option bonus is split up into $4 million increments on the Broncos' cap in 2023, 2024, 2025, 2026 and 2027. So that has $16 million left on it, all of which will accelerate onto the 2024 cap. The 2024 option bonus will also accelerate onto the 2024 cap, bringing the total bonus proration charges to $68 million. Add in his fully guaranteed $17 million 2024 salary, and the dead money charge gets to $85 million.

However, if the Broncos want to designate Wilson as a post-June 1 cut, they'd have to carry only $35.4 million on this year's cap (the $17 million salary plus one year's worth of proration from the signing bonus and each of the two option bonuses), while the remaining $49.6 million would be a dead money charge on their 2025 cap. If the Broncos wanted to take the whole hit this season and keep it away from their 2025 cap, they could. This is obviously an extreme example, as there's no cap increase that's going to help a team carry $85 million in dead money charges for one player. But any other team in a similar situation at lower numbers might have an easier time taking the whole hit this year and keeping next year's cap clean due to the increase.

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