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NFL Salary Cap Forces Teams to Budget Player Salaries How the NFL's Salary Cap Works

By Bailee Tucker

Financial Literacy Programs
© 2016 AP Photo/Mark Lennihan

Bailee Tucker:

You might ask yourself ‘Why didn’t my team keep their star running back?’ When his talent on the field seems too good to pass up. Like most things in this world, it all boils down to money.

Los Angeles Chargers receiver Keenan Allen was one of the team’s best weapons. The Chargers had to let go of Allen this season, however after he refused to take a pay cut.

Every year, the NFL puts a number on how much teams are allowed to spend on players called the salary cap. This year, that number is 255.4 million dollars.

BRAD SPEILBERGER:

“The salary cap is created by splitting the revenue between owners and the players. And the players as of now get 49 percent of the league revenue.”

Tucker:

Pro Football Focus salary cap analyst Brad Spielberger says that this 49 percent covers player salary and benefits, while the other 51 percent goes to the owners to pay staff and associated costs.

Incoming revenue comes from media deals, merchandising deals, ticket sales and corporate sponsors.

In the case of the Chargers, they didn’t have any extra cap space to keep Allen, leaving them no choice but to trade him.

Other teams have carried over some of their cap money to make sure this situation doesn’t happen to them.

SPEILBERGER:

“You’re allowed to carry over unused cap space from a prior season into the following year. So, you know, if you had 20 million at the end of the year last year, you could have a $275 million cap, you know, for your team only.”

Tucker:

Teams are required, however, to use 90 percent of their cap every year.

But what would happen if a team went over their allotted cap?

SPEILBERGER:

“you’re in a freeze, you can’t do anything else, you can’t make any moves, you can’t add any players. So the easiest way to answer is that you can’t. You can not be over the cap.”

Tucker:

While there’s never been an instance of this happening, the New Orleans Saints have came close on multiple occasions in order to have a competitive team.

So the next time your favorite team adds a new guy to the roster, remember that they might have just spent all the money they could to get him.

For NCC News, I’m Bailee Marie Tucker.

SYRACUSE, N.Y. (NCC News) – This NFL offseason, Los Angeles Chargers wide receiver Keenan Allen was a victim of his team not having the money to pay him. They offered to keep him for a decreased salary, but Allen was against this and decided to leave. Allen has been one of the top receivers for the Chargers in recent years, resulting in his departure being a major loss.

All of this occurred because of the NFL’s salary cap. The salary cap is an amount of money the league gives each team in order to restructure their rosters. This year, the salary cap value is set at $255.4 million meaning the NFL is giving each team that figure to spend on new players.

According to Pro Football Focus, this money comes from NFL revenue that is split so players receive 49% for their salary and benefits, and owners receive 51% to pay staff and associated costs. The NFL’s revenue comes from several different places including media deals, merchandising deals, ticket sales and corporate sponsors.

Teams are however, allowed to carry over cap money from the previous year. Pro Football Focus salary cap analyst Brad Spielberger says that there are rules, however, on how much money is allowed to be carried over.

“You have to spend at least 90% of the cumulative cap,” he explained.

Teams are also in no way allowed to go over the cap. Spielberger says that there are no ways around this rule.

“You’re in a freeze, you can’t do anything else, you can’t make any moves, you can’t add any players. So the easiest way to answer is that you can’t. You can not be over the cap.” 

The salary cap started in 1994, limiting teams to spend no more than 64% of their revenue on player salaries. Today, the salary cap is the highest it’s ever been.

 

 

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