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On December 10, NFL owners convened in Dallas for a one-day league meeting. During the meeting, projections for the 2015 salary cap were provided to the owners by the NFL Management Council. The 2015 salary cap is projected to rise 4.2%-6.6%, from $133 million to $138.6-$141.8 million.
When the actual figures are announced in late February, I believe the salary cap will increase to $145-$146 million. My projections are based on the recent trend-line, observations from the NFLPA, and increases in league revenue from the new television contracts.
NFL/NFLPA 2015 Salary Cap Projections
NFL Management Council informed teams at league meeting today '15 cap projects b/n $138.6M-$141.8M. I bet it ends up higher. Often does
— Jason La Canfora (@JasonLaCanfora) December 10, 2014
NFL believes 2015 salary cap will be between $138.6 -- 141.8 million; NFLPA believes a "substantial increase"... http://t.co/wDJHF04343
— Adam Schefter (@AdamSchefter) December 11, 2014
The day after the league meeting, the NFLPA sent out a memo to its executive committee, player reps and contract advisors (as reported by Adam Schefter):
This is a memo that was sent out this morning to the NFLPA's executive committee, player reps and contract advisors:
"As you may have read, recent media reports from the NFL owners meetings in Dallas projected the 2015 NFL Salary Cap to be between $138.6 and $141.8 million. Last year, these same "projections" called for a flat cap that was ultimately a $10 million increase from the previous year. The salary cap is inextricably tied to League revenues and as we saw last year, substantial increases in revenue will lead to substantial increases in the salary cap.
We have become increasingly concerned about these early projections and in the upcoming months the NFLPA will issue projections based upon our analysis of expected revenue. We believe that this will aid players, agents and general managers to more effectively forecast the salary cap and aid players in contract negotiations. Additionally, we will provide you with information previously shared with players about the current spending levels of all teams and their compliance with the minimum cash spending requirements of the new CBA.
As Partners in this business, our expectation is that NFL revenues will continue to grow and our business will continue to thrive."
Why did the NFL Management Council present ultra-conservative salary cap projections to the owners? In turn, why did the NFLPA feel compelled to issue a memo bringing those projections into question, and by extension, suggest those figures will be higher once finalized?
Underestimating the projected salary cap benefits the teams/owners in a couple of different ways.
A lower projection discourages teams from over-spending (when attempting to re-sign their own free agents) before the actual salary cap figure is determined in late February. A lower projection also gives the owners/teams leverage in contract negotiations taking place before the beginning of the new league year on March 10 (the notion of a lower salary cap equating to lower dollar amounts available for individual player contracts).
The NFLPA has a vested interest in performing due diligence with regards to league revenues and issuing salary cap projections that invariably end up close to the actual final figures. The NFLPA's diligence inevitably results in more money for the players; plus, as stated in their memo, it aids all concerned parties in contract negotiations and in effectively forecasting the actual salary cap in any given year. The NFLPA is also well aware of the fact that the new television deals were negotiated with the league's revenues steadily rising throughout the life of the contracts (which means the players' share will consistently rise as well).
The memo also mentions compliance with the minimum cash spending requirements of the 2011 CBA. The reference is to the salary cap "floor" instituted in the new CBA. The final eight years of the CBA are broken out into four-year periods (2013-2016 and 2017-2020). In each period, teams are required to spend up to 89% of the salary cap with a guaranteed league-wide spending amount reaching 95%. The consequences for non-compliance? The league/clubs must pay the difference to the players.
My 2015 NFL Salary Cap Projections
In 2014, the salary cap rose from $123 million to $133 million, an 8.1% increase. The substantial rise in the salary cap came on the heels of modest increases in 2012 (.005%) and 2013 (1.9%). The full impact of the new television deals only began to take hold in 2014, and had a dramatic effect on the salary cap. Increases in revenue from television contracts will once again result in a substantial increase for 2015's salary cap.
In their memo, the NFLPA alluded to a "substantial" increase in the 2015 salary cap, one exceeding the NFL's own projections. League revenues continue to grow at a healthy rate. The salary cap will follow suit, as it's unequivocally tied to league revenues.
The following articles take in-depth looks at the new television deals, league revenues, and expected salary cap increases:
The NFL Signs TV Deals Worth $27 billion: Forbes
Cap could hit $160 million in 2016: NBC Sports
TV money up 20% for NFL clubs: Sports Business Journal
NFL, DirecTV sign deal reportedly worth $12 billion over 8 years: CBS Sports
Given the expected growth in league revenues, and the $10 million/8.1% increase in the 2014 salary cap, I believe the 2015 NFL salary cap will rise to $146 million. This represents a $13 million/9.8% increase over the 2014 salary cap.
The St. Louis Rams & The 2015 Salary Cap
The Rams currently have 70 players under contract. As noted on January 6, in "St. Louis Rams: Roster Update & Eligible Free Agents", the Rams have 14 players eligible for free agency on March 10. The remaining 56 players on the off-season roster are under contract through at least 2015.
Those 56 players (plus 2015 outstanding dead money) account for a total of $143,356,423 against the 2015 salary cap. However, in the off-season, only the "Top 51" contracts (plus 2015 outstanding dead money) notionally count against the salary cap. As a result, the Rams currently have $139,961,401 in contractual obligations counting against the 2015 salary cap. The total contractual obligations I've calculated match the figures published by the NFLPA.
If my estimates prove to be correct, the NFL salary cap will rise by $13 million in 2015 (from $133 million to $146 million). Most of the expected/estimated increase will be absorbed by additional financial obligations (est. $10 million) incurred by the Rams throughout the year:
- A season-opening reserve set aside for signing additional players during the regular season (due to injuries) (est. $3.5 million).
- Net league adjustments related to salary cap carryovers, earned incentives, contract offsets (Cortland Finnegan), accrued workout bonuses, and proven performance escalators (est. $1.5 million).
- Practice squad salaries (est. $1.1 million).
- The NET cost of signing the 2015 NFL Draft class (est. $2.8 million).
- The cost of adding 2 additional players to bring the roster up to the 53-man limit (est. $1.1 million).
Summary
2015 NFL Salary Cap (est.) $146,000,000 Less: Current 2015 Contractual Obligations -$139,961,401 Less: Additional 2015 Financial Obligations (est.) -$10,000,000 Total Current 2015 Available Salary Cap Space (est.) -$3,961,401
The bottom line: The Rams will need to create a substantial amount of salary cap space if they wish to re-sign any of their eligible free agents, or those from another team. Currently the Rams sit close to $4 million over the projected salary cap, with all costs for 2015 taken into consideration.
The Financial Foursome
Restructuring existing contracts and outright releases of higher-salaried players are the primary means at the Rams' disposal for creating salary cap space.
The Rams have four prime candidates for an outright release or contract restructuring (based on the size of their salary cap hits and individual circumstances): Sam Bradford, Kendall Langford, Scott Wells, and Jake Long.
Sam Bradford will be returning to the Rams after back-to-back season-ending ACL tears. Bradford is due to earn $12.985 million in base salary next season, the final year of his rookie contract. If the Rams decide to retain Bradford, they will likely attempt to restructure the last year of his rookie contract, converting a substantial portion of his base salary to NLTBE incentives. This type of restructure allows the Rams salary cap relief and flexibility. The incentives, if earned, can be counted against the Rams' 2015 or 2016 available salary cap space.
Scott Wells is nearing the end of his career. Wells is 34 and injury-prone, accompanied by declining skills and a large salary cap hit in 2015. All of which makes him a potential target for release. The Rams would gain $3.75 million in salary cap relief if Wells is released.
Kendall Langford will be entering the final year of his contract in 2015. He's been supplanted in the starting line-up by rookie star Aaron Donald. Although an integral part of the defensive line rotation, Langford might have to take a cut in pay (or have a portion of base salary converted to incentives) in order to remain with the Rams. Langford's base salary for 2015 is $6 million.
Jake Long's year ended with his second ACL tear in as many seasons. Greg Robinson has been moved to LT to replace him in the starting line-up. Robinson will likely remain there for many years to come. Injuries - and the presence of Robinson - could mean the end of Long's days as a Ram. Could the Rams restructure his contract and move him to another position on the line, if they don't re-sign Joe Barksdale? The Rams would gain $8 million in salary cap relief if Long is released, or if he retired.
Effectively managing the salary cap will be a key to the Rams' fortunes in 2015...and beyond. Many difficult decisions lie ahead. The salary cap is the "horse", with free agency and the NFL Draft as the "cart".