The N.F.L. has determined the salary cap for the 2021 season, saying each team will have $182.5 million to spend on player payroll, nearly 8 percent less than in 2020, when revenues were cleaved by the coronavirus pandemic. In 2020, the salary cap was $198.2 million, a league record.
A decline in the cap, the maximum amount available for teams to spend on player salaries and bonuses, was expected, but it was less severe than anticipated. Still, N.F.L. franchises will have nearly $16 million less than they had last year to pay players, which is sure to distort how general managers allocate their more limited funds.
Sports Business Journal was first to report the final salary cap figure, which fell for only the second time since the spending limit was introduced in 1994.
With the free-agent market loaded with big-name quarterbacks and other star players looking to relocate, teams seeking to sign those players will have less money left to fill out their rosters. That could lead general managers to sign more rookies and free agents who are willing to play for league-minimum salaries or to sign the biggest names to one-year deals, rather than look to veterans seeking lucrative long-term contracts.
Of the 500 or so players looking for new deals, many of them are young players at the end of their rookie contracts who are seeking second deals that reflect their value (think JuJu Smith-Schuster of the Pittsburgh Steelers) or established players seeking to cash in on longer résumés. Trent Williams, an eight-time Pro Bowl offensive tackle, and Jadeveon Clowney, a three-time Pro Bowl defensive end, are expected to garner significant interest, as are midcareer players like defensive end Shaquil Barrett, whose stock has risen because of his role in helping the Tampa Bay Buccaneers win the Super Bowl in February.
As a practical matter, each team’s salary cap is subject to adjustments based on rollover amounts from players under contract that they cut or traded. Some teams, like the Cleveland Browns and the New England Patriots, will have more than $200 million in payroll to spend in 2021.
Still, the salary cap is a barometer of the health of the league, and the lower cap reflects some grim math: The N.F.L. lost about $4 billion in revenue last season by limiting attendance at games. About 1.2 million fans watched N.F.L. games in person, down from about 17 million in a typical season. Teams lost tens of millions of dollars because of a decline in sales of tickets, suites, food, beverages, parking and sponsorships.
The league initially set a salary cap of $175 million to make up for the lost revenue, then raised it to $180 million before settling on $182.5 million.
The only other time the salary cap declined was in the 2011 season, in somewhat of a fluke. In 2010, the N.F.L. played without a cap because team owners, unhappy with the labor agreement, exercised their option in 2008 to end the deal ahead of schedule as a way of prompting both sides to return to bargaining. The union and league failed to reach a new deal, however, triggering a capless year. When the two sides ultimately agreed, the salary cap for 2011 was set at $120 million, less than the $123 million salary cap in 2009.
The final increase does not reflect revenue that will be generated in newly negotiated broadcast agreements, which are expected to be completed in the coming weeks. The money from those deals is expected to grow by 50 percent to 100 percent over the next decade or so, a windfall that is likely to grow the salary cap significantly in the coming years.
ESPN’s deal to broadcast games on Monday nights expires at the end of the 2021 season, as does Fox’s agreement to carry Thursday night games. The league’s other contracts, with CBS, NBC and other carriers, expire after the 2022 season.
The N.F.L. and the N.F.L. Players Association could have faced a far worse situation had they not agreed to a 10-year labor agreement last year on March 15 as the coronavirus pandemic was causing shutdowns in the United States. That agreement ensured the two sides would have terms in place to avoid a work stoppage and gave the league enough certainty to begin negotiations with its broadcast partners.
A person familiar with the league’s finances said the salary cap could have fallen to about $160 million if the labor agreement had not been signed last March and had negotiations spilled into what was already a chaotic 2020 season. The new labor deal gave the owners the right to add a 17th regular-season game, which they are likely to do in 2021, adding another source of revenue to offset the impact of the pandemic.