Cleveland Browns will benefit from upcoming free agent glut
2021 is the year that analytics-minded teams like the Cleveland Browns will score big. The reason is that NFL revenues dropped in 2020, mainly due to Covid, obviously, which means that the teams’ Annual Salary Cap Allowance is going to go down in 2021, resulting in much lower salaries for free agents that we have seen in years.
Well-managed teams with Ivy League brainiacs managing the salary cap will thrive. Other teams may have front offices with great football expertise, but if they cannot manage finances, they will be destroyed this season.
Dee and Jimmy Haslam, aided and abetted in no small way by Paul DePodesta, had the foresight to install people with a combination of football knowledge and business smarts, led by Andrew Berry, the young general manager of the Browns. Cleveland now has the savvy to manage the salary cap which they lacked in previous campaigns.
The Annual Salary Cap Allowance is based on a five year average of revenues and will drop significantly from its current level of $198.2 million. Overthercap.com is estimating $175 million and Spotrac.com is going with $176 million. If so, suddenly teams will be $20 million dollars over their projections, and are going to have to cut some veterans in order to make room for draft picks.
This will result in a glut of free agent players, who will be shocked at the lack of interest from teams, as most teams are paring down their payrolls to meet the lower cap. If you think of players’ salaries like stocks or commodities, the market is about to crash.
We saw a harbinger of a financial crash in 2020 with the cases of defensive linemen Jadeveon Clowney and Everson Griffen, who were planning to cash in big last year. Clowney was looking for upwards of $20 million dollars a season for four or five years, and turned his nose up at the Browns, who were among the highest bidders.
Griffen turned down $43 million for three years with the Vikings. Then Covid hit, and the market tanked. Clowney wound up signing a one year deal for only $13 million, and Griffen signed with the Cowboys for one year, $6 million, with only $3 million guaranteed. Crash! Clowney and Griffen were blindsided. This is going to happen league-wide in 2021 as teams find themselves overspent and having to shed payroll.
Using numbers from overthecap.com, league-wide the Annual Salary Cap Allowance can be calculated as follows:
The 32 teams in the NFL, based on guesstimated $175 million in Annual Salary Cap Allowance, will have $5.6 billion dollars worth of payroll. Plus their carryover dollars can increase that figure to about $5.8 billion.
However, right now there are already $5.8 billion worth of players contracts for 2021. There’s also another $250 million worth of 2021 NFL draft picks to be signed, or $6.1 billion worth of commitments. That means the NFL as a whole is already over the cap. and will have to make cuts to fit within the cap, before the first free agent is signed.
Speaking of free agents, last year the NFL teams spent $2.3 billion dollars on free agents. So that means if everyone got what they are used to, that would be $8.4 billion dollars compared to the maximum possible spend of $5.8 billion. That’s an oversupply of player contracts by about $2.6 billion dollars, or about $80 million dollars per team that has to be cut back.
The economics appear to be totally out of whack, unlike any other year. Nobody knows exactly how this will be resolved, but player salaries are coming down one way or the other. Some contracts will be renegotiated, non-guaranteed contracts are going to be cut, and there will be a number of unhappy players and agents.