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A look at Dalvin Cook’s contract’s salary cap implications
News broke on Wednesday that the New York Jets and former Minnesota Vikings runningback Dalvin Cook had come to an agreement on one-year, seven-million dollar contract.
Given some analytic estimates suggest Cook’s performance is in decline, some Jets fans were less than thrilled about giving Cook a contract with the 9th highest average annual salary among runningbacks. A common retort to such claims was along the lines of “They had the cap space and it wasn’t doing any good being unused.” While true as it pertains to the 2023 season, this ignores the unique nature of the NFL’s salary cap.
Let’s start at step 0, what is the salary cap?
Within sports, the salary cap is an agreement between the players and the owners on what teams are allowed to spend on players. For the NFL, this number was $224,800,000.
Will it always be $224,800,000?
No, in fact, it is pretty unlikely it will be $224,800,000 ever again. This is because the salary cap changes every year based on NFL revenue. Given the ever growing popularity of the NFL, this means the cap almost always goes up.
Specifically, over the last decade, the salary cap rises basically every year by 5-8% annually; the lone exception to this rule followed the COVID season. Practically, this means the salary cap is likely to increase at least 10 million every year.
Okay, so the salary cap sets a limit on how much teams can spend. Is that the only limit in place?
No, the NFL’s salary system features a salary floor in addition to a salary cap. A salary floor sets the minimum owners can spend on team salaries.
So what is the NFL’s salary floor?
For the NFL, the salary floor is 89% of the salary cap. This means that each NFL team was allocated 199,360,000 million dollars worth of player salaries for their 2023 salary cap.
So each team has to spend at least $199,360,000 this year?
Well, no, not quite. While each team was allocated that amount, the 89% rule is applied on a four-year rolling system.
What is a rolling system?
A rolling system means that a specific number of a given resource is allocated for a period of time and anything less than that numbers “rolls over” (or is then added) into your allocation for the next period of time.
As an example, a person is given 20 days of paid time off at their job for a given calendar year. If the person used only 15 of those days during 2022, then the person would have 25 days of paid time off in 2023. If the person used all 20 of those days in 2022, then the person would have 20 days of paid time off in 2023.
What does that mean for an NFL team in regards to the salary floor?
For an NFL team, this means that rather than spend 89% of the salary cap in this specific year, they have to have spent 89% of the salary cap across the cumulative last 4 seasons.
Importantly, this rolling period extends every time the NFL calendar year changes, so for 2023 the rolling cap years are 2023, 2022, 2021, and 2020.
By comparison, in 2024 the four rolling cap years would be 2024, 2023, 2022, and 2021.
Is the salary floor the only thing that rolls?
No, the salary cap also rolls. This means that teams that spend less than the salary cap in a given four-year period are allowed to roll that money over into future year; this allows the team to essentially spend “above” the year’s salary cap.
In an example, a team that was $10 million under the salary cap in 2023 could spend an additional $10 million in 2024.
And that’s where the “They had the cap space and it wasn’t doing any good being unused” argument gets complicated, isn’t it?
Yep, because while Dalvin Cook’s contract does no harm to the 2023 New York Jets (since they had that money available within their salary cap), they will now have ~$7 million less in rollover money they can bring into future years.
In other words, the 2024 New York Jets have $7 million less to spend on players because the 2023 New York Jets paid Dalvin Cook $7 million.
Originally posted on Gang Green Nation – All Posts