Free Agent Fizzle: A bad year for free agents looking for a payday

Free agency officially begins at 4pm on St. Patrick’s day, but the ‘legal tampering period’ begins even earlier, which puts us just over a week away from the opening whistle.

It’s gonna be a bad year to be a veteran free agent if your goal is to score a big payday, except for the top one or two guys at their respective position groups.

Here’s why I say that:

Figures per Over The Cap

All salary cap figures used by the general public are always estimated. Different sources make different assumptions and there is no definitive source. Over the years, I have found OverTheCap to be the most reliable source for league-wide salary cap information, and we will be working in broad strokes anyway, so their numbers should be more than good enough for the purposes of this article.

The numbers above have been rounded by dropping the last three numbers (that is, OTC’s estimate of Washington’s cap space is actually $54,210,822, but I dropped the 822). This will lead to a small rounding error, but again, I’m doing an overview from 30,000 feet here, so this shouldn’t be significant.

OTC says that they are working with assumed 2021 league cap number of $180.5m, but no one knows the final figure yet. To the extent that it is higher or lower, the cap space per team will be affected. One reason I haven’t written more about salary cap this offseason has been the tremendous uncertainty surrounding the expected number. Even now, when there have been strong indications that the final league-wide cap number will be between $180m and $182m, that number could change if the league finalizes one or more significant broadcast contracts this week.

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With the above caveats in mind, when I aggregate the OTC estimates for salary cap for all 32 teams, I get a league-wide figure of $421.5m in available cap space for 2021.

That ain’t much.

In fact, that represents an average of just $13.172m per team.

Hypothetically, if Dallas signed Dak Prescott to a long-term contract tomorrow that carried a 2021 cap hit of $32m (not unrealistic), then the average cap space per team would drop by $1m per team to just $12.172m.

But this roughly $13m isn’t the total amount that teams can spend on free agency. There are at least two factors to consider first:

• Each team needs to have enough money available to pay its draft picks. The calculation can be a bit convoluted to explain, but let’s use a working number of $4m per team, which should be fairly close.
• Each team needs to have a cushion or contingency salary cap space available during the season to allow them to sign replacement players when injuries occur. There’s no “magic number” for how much this contingency needs to be, but I normally estimate it at around $5m per team.

If you reduce the available salary cap per team by $9m ($4m rookie pool + $5m contingency), then you are left with roughly $4m per team to spend in free agency!

$4m per team — that’s really tight.

Related Articles:

Salary Cap Nuggets - No. 8: Rookie Contracts

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As you can see from the chart above, OTC currently estimates that NINE teams will be over the salary cap on 17 March if they take no action between now and then. That means all of them will be taking action since the league requires every team to be in cap compliance, and that means they will have to cut players or restructure existing contracts

Another five teams have a surplus cap position of $4.6m or less — not enough to sign their draft picks and have sufficient injury contingency at the start of the season. They will need to actively manage the cap through cuts & restructures as well, though not as aggressively.

So, based on where we are today, fifteen teams (including the Giants, estimated to have a surplus of just $6m) aren’t currently projected to have sufficient cap space to sign any free agents at all, Those 14 teams all have to reduce cap space in the coming nine or ten days just to have sufficient space for rookie draft picks and contingency for regular season injuries, so all of them should take action to improve their position before the 17th arrives.

Meanwhile, the veteran free agent market is going to be flooded with high-dollar, older veteran players who will be squeezed off the roster by a drop in the salary cap that was unanticipated 24 months ago.

Teams that have a quarterback on the roster and cap space are going to be sitting pretty in a buyer’s market where only about a dozen teams will have enough money to expand their roster spending.

Tier 1

The Jags and Jets have high draft picks and the most cap space in the league. Each team is in a position to draft a rookie signal caller and spend big to put the offensive and defensive players in place to be highly competitive this season. The Jets also have the option of sticking with Darnold and drafting even more talent for the rest of the roster.

Tier 2

New England and Washington need quarterbacks, but have enough cap space to acquire a veteran and still have money to spend on one or two high-dollar additional veteran free agent signings.

The Colts & Bengals each have a quarterback on the roster already and enough money to secure one or two top-tier free agents.

Tier 3

Broncos, Chargers, Niners, Dolphins, Browns, Ravens, Texans all have a quarterback today (though there could be some changes), and enough money to maintain or slightly enhance their rosters in veteran free agency.

Tier 4

The Cardinals & Buccaneers have quarterbacks and just enough cap room to pay for their draft picks and injury contingency. Finding room for veteran free agency will require cuts or restructures, which should be relatively easy to accomplish, but may preclude signing top-tier free agents.

Tier 5

The Cowboys and Panthers have salary cap space but each team needs to secure a quarterback. Dallas will need to be creative just to sign Dak Prescott; they will need quite a lot of cap manipulation to free up money to make any further significant moves in veteran free agency.

The Giants, Titans, Seahawks, Steelers, Raiders, Bills, Vikings, Lions, and Bears and are all within +/- $7m of the salary cap. To be active in free agency will require cuts or restructures.

Tier 6

The Packers, Falcons, Chiefs, Eagles, Rams and Saints are all estimated to be more than $10m over the cap. Each team needs to shed the amount of the surplus and another $9m just to sign their draft picks and enter the season with a contingency fund. It will require significant manipulation of the cap in the form of cuts and restructures for any of these teams to make significant signings in veteran free agency this season. None (outside of maybe the Packers) is likely to be in the market to sign top-tier free agents when free agency opens up.

What it all means

Veteran free agents will face the toughest market since 2011 as teams try to manage the first salary cap reduction they’ve faced in a decade — and one that was unanticipated when most veteran contracts were signed two or three years ago. Teams who had been expecting a $10 - $12m increase in salary cap in 2021 are instead staring at a$15m or $18m decrease. That swing of $25-$30m per team is going to make it tough on front offices to meet the expectations of players who have short careers and limited windows of opportunity to get big paydays. Some players get one chance; a few get two. Not many get three bites of the apple, so it will be a bitter pill to swallow if they face a money drought this off-season.

Elite free agents like Allen Robinson will likely still find enough bidders to sign the kind of contract that he would have achieved in 2019 or 2020, but the cap space pool is going to dry up quickly. Personally, I have my doubts whether Brandon Scherff will be able to find an offer that will match his 2020 salary unless the deal is creatively structured and relatively back-loaded.

Exacerbating the issue will be the roster cuts that teams across the league will be making over the coming days. Washington has already made its biggest move by releasing Alex Smith. Other teams have released some big-dollar free agents like JJ Watt to give those players a chance to sign early with another team, but there will almost certainly be a flood of veterans released between now and St. Patrick’s Day, which means that there will be a LOT of players looking for work, and a very limited number of teams with meaningful cap space. Players like Ryan Kerrigan may find it a bad year to be over 30 years old and searching for a lucrative contract.

There will be a lot of bargains to be had for teams that are patient and clear in the types of players they want to target. The top one or two free agents in each position group will get signed quickly, and then the well will be nearly dry for most teams. Dozens — maybe hundreds — of veteran players will be looking for work, and the teams won’t have money to pay them what the players believe they believe they are worth. This could be good news for Washington as they try to re-sign or replace a guy like Ronald Darby, who, in a normal year might have been able to create a Dutch auction for his services, but who, in 2021, may find himself trying to find milk in a dry teat.

Eventually, players will realize that the account is empty, and that if they want to play in 2021 then they’ll have to take what they can get. Many will opt for a one-year contract, hoping to reenter the market in a year when there is more money from new TV contracts and full stadiums in the ‘21 season. If Washington is patient, as one of the few teams with money to spend, the WFT front office may be able to fill out the roster in the second and third wave of free agency with the same kinds of players that they made use of last season — guys like Wes Schweitzer, JD McKissic and Cornelius Lucas who can play, but who won’t command big contracts, especially this off-season, allowing them to grab one or two top-tier playmakers at the WR, LB or DB positions.

The situation should be temporary, with the NFL salary cap number bouncing back above $200m very quickly, but the start of the 2021 league year is less likely to feel like a Free Agent Frenzy, and more like a Free Agent Fizzle.