It is easy to forget that the NFL is also a business, and like many businesses, there are financial aspects to take into consideration.
All 32 franchises are forced to make decisions based on the salary cap. The salary cap for the 2021 NFL season is $182.5 million.
What is a salary cap in the NFL?
The salary cap is a set amount on collective player spending that was established by the Collective Bargaining Agreement. The CBA is the regulatory document between the NFL and the NFL Players Association.
Everything about the NFL is rooted in maintaining a competitive balance. The deal between the league and its players will limit the amount of money a team can spend on players' salaries. The cap's purpose is essentially to level the playing field on the financial side.
The pandemic impacted not only the regular season but also the salary cap. The 32 NFL organizations expected a decrease in the salary cap, but it still presented a complex challenge for the clubs and their players.
Covid-19 has created a revenue shortfall, and the cap is taking a nosedive for the first time since its inception in 1994. Last year's salary cap was $198.2 million. For the 2021 season, the NFL raised the salary cap floor to $180 million after they initially agreed to $175 million with the NFLPA at the end of last July.
The 2021 salary cap is being rolled back to between 2018 and 2019 levels when it was $177.2 million and $188.2 million, respectively. There are many consequences of a reduced salary cap.
The league uses a hard cap, indicating that no team is allowed to exceed the cap limit for any reason.
What happens if an NFL team goes over the salary cap?
Abiding by the NFL's salary cap from year to year is always a balancing act and general managers don't make any decisions lightly. The NFL maintains a hard cap, and teams have to stay under it at all times.
If a team goes over the salary cap, they will face penalties for violating or going around the salary cap regulations. The teams will be fined up to $5 million for each violation. The franchise can also have contracts canceled and lose their draft picks.
If the maximum salary is a ceiling, then the minimum is a floor, and the organizations must also spend the minimum. If a team violates the salary floor regulations, they are not subjected to fines, but they will have to pay the remaining amount needed directly to players.
This has forced many cap casualties this season as the teams scramble to get under the cap ceiling.