Does The Higher-Than-Expected NFL Salary Cap Mean Much?
The NFL recently announced that the 2014 salary cap would increase to a higher-than-expected $130 million. Before the news, many thought the salary cap would reach the $126 million level, up from $123 million in 2013. What does this mean for teams like the Oakland Raiders and Dallas Cowboys, that are on opposite ends of the salary cap spectrum?
For some teams that are struggling to stay under the salary cap, or are looking for maneuverability as free agent season gets set to start, the higher cap is a godsend. The Cowboys, in particular, must be happy about the higher salary cap, because they have been looking at ways to cut spending. The Cowboys are well above the cap, with more than $140 million in cap spending and another $10 million in “dead money.”
For other teams, the cap does not mean much besides a little extra spending money. In fact, for the Raiders, who have the most cap space in the NFL this offseason, this is not necessarily a good thing. With more money available, there will now be additional competition for quality players.
Previously, we have reviewed parity in the NFL as well as the salary cap, mean reversion, and why 2014 may bring some excitement to teams that have underperformed in recent years. In addition to a softer schedule due to the NFL scheduling system, teams that have underperformed, like the Raiders, gain a decent draft position.
The Raiders, in particular, are an interesting story this offseason. They currently have the largest salary cap space in the NFL. The majority of teams have cap space on the order of several million dollars, up to the $20 million range. The Raiders have more than $60 million of cap space. Without many long-term commitments to players, the Raiders currently have lots of flexibility.
In fact, if the Raiders don’t start spending, they will soon have to start dishing out the unused funds to their players. As part of the last collective bargaining agreement with the NFL Players’ Association, teams agreed to spend at least 89 percent of the salary cap in cash (over three year periods). Thus, Raiders fans should get ready for “Christmas in March.”
Big decisions will have to be made in terms of free agency, which will in turn impact the Raiders’ draft strategy.
Carlton Chin is a portfolio manager, quant researcher, and sports analysis contributor at Rant Sports. Please follow him on Twitter @QuantFacts, “Like” him on Facebook, or add him to your Google network.
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