Cleveland Browns can take advantage of free agent discounts in 2021

How will the NFL teams get under the reduced cap??

There are only three things that the team can do to fix the budget situation. They can refinance contracts (play-now, pay-later plan), cut players with non-guaranteed contracts, or spend less at the free-agent marketplace.

1. Refinance existing contracts

If a player has a one-year contract, that could be extended to three years. Because of the way the signing bonus rules work, the player receives that money upfront, but it’s charged equally over all three years of the contract. The salary is usually discounted the first year, so the net result is that the salary cap is discounted the first year.

So, for example, the Browns were charged $8 million for Jack Conklin last season, but that rises to $13 million in 2021. Cleveland could refinance Jarvis Landry, Odell Beckham, Jr. Joel Bitonio, J.C. Tretter, and Sheldon Richardson and bring down the 2021 cap charge by about $25 million dollars if they want to, but of course, eventually, all hell breaks loose in three years from now when the team has too much guaranteed money tied up in older players.

But you might pick two or three players to go this route with, as a guess. Let’s say that the average NFL team nets $10 million dollars via this route.

2.  Cut players outright

This is actually a two-step re-negotiation process and is a way of lowering the pay scale. When players are cut due to salary cap reasons, they typically do not retire but get added to the free agents already on the market. They eventually sign somewhere else. So as players are getting cut, it will drive salaries down even further. That brings us to the business of signing free agents.

3.  Spend less on free agents

These free agents are not going to retire if the market collapses, but they are going to play for less money. A lot less money. Assuming that the average NFL team chooses to stay within the annual cap limit of $180 million, that is going to leave only about $17 million for free agents, a huge drop from the $29.1 million from last season. Remember also, that there were several players cut from the roster to get the team within budget.

In the example, below, it is assumed that the management plans on fielding five undrafted free agents rather than investing in additional veteran free agents.

Somehow, the average NFL team has got to refinance or cut outright $25 million dollars worth of its existing player contracts to make room for its 2021 draftees, undrafted free agents, injury replacements, practice squad players, and last but not least, new free-agent signees. Let’s estimate they obtain $10 million of cap space by renegotiating contracts, and $15 million by outright cuts.  Then their spend plan would look something like this:

2021 Slashed Payroll                                                       $151.0 million

2021 NFL Draft Requirement                                             $7.4 million

Undrafted Free agents   (5)                                                 $3.0 million

2021 Practice squad  (~12 players)                                  $1.7 million

2021 In season (injury) replacements                             $2.5 million

2021 Free agent budget                                                    $14.4 million

2021 Total  Budget plan                                                  $180.0 million

Remember that we are using one averaged NFL team and that some teams will be higher and some will be lower. But in all cases, the teams lower their payroll by cutting players, and that results in additional free agents hitting the streets. That again means that free agent salaries have no choice but to head south.

This isn’t much different than the oil glut of a year ago when gasoline prices went well below $2 per gallon. There was just too much gasoline on the market and not enough ability to consume it.

The free-agent pool, then, will grow from its original (2020) value of $29.1 million by the $15 million of additional player cuts, so that there is now $44 million worth of players available, but only $14.4 million to pay for all these players. That comes to a 67 percent discount. Teams could decide to add some of their hard-earned carryover money and increase their buying power to the average level of $25.5 million.

It is not going to affect the low end of the pay scale, which is fixed by the NFL minimum, and the high end is fixed by general managers and their torrid love affairs with quarterbacks, which may refuse to obey economics for a few years. For example, it’s total insanity to pay a second-year franchise tag of $37.7 million for a quarterback in today’s market (20.9 percent of the total annual cap allowance), but Jerry Jones will probably do it for Dak Prescott.

Last but not least, here are a few crazy-sounding proposals on how the Browns can benefit from the salary implosion in 2021.