How potential drop in salary cap would affect Miami Dolphins’ rebuild now and in 2021
We have heard the question a handful of times in recent days:
With wide receiver Albert Wilson’s contract restructuring freeing up additional cap space, should the Miami Dolphins make an aggressive bid for one of the top remaining free agents?
And there are some interesting names available, such as guard Larry Warford (cut by the Saints last week), cornerback Logan Ryan (put him with Xavien Howard and Byron Jones and it’s the best cornerback trio in the league), edge players Jadeveon Clowney and Everson Griffin, veteran starting left tackles Kelvin Beachum and Jason Peters, former Pro Bowl safety Eric Reid, or running backs Devonta Freeman, Lamar Miller and Carlos Hyde.
Or why not trade a mid-round 2021 pick to Jacksonville and give a multiyear deal to 2017 Pro Bowl defensive end Yannick Ngakoue?
The answer is pretty simple: Unless Ryan, Reid or Clowney agrees to a low-money deal, it doesn’t make sense financially to give big money to anybody remaining in free agency (or to Ngakoue), primarily because the salary cap is in danger of falling dramatically in 2021.
Miami appears at least somewhat interested in signing at least one of those aforementioned players (Ryan) if he accepts a deal well below his initial expectations. But that would be a surprise, and the Jets — who need cornerbacks more than Miami — are reportedly the front-runner for Ryan.
So why would a signing this summer affect Miami’s 2021 cap standing?
Because teams can carry over unused 2020 cap space into 2021. And that cap space might be essential in 2021 if the coronavirus pandemic results in limited fan attendance at games this season, which would cause a potentially dramatic reduction in the 2021 cap.
Using figures on the NFL players union’s website, the Dolphins likely will be left with about $13 million in 2020 cap space after signing this draft class and filling out a practice squad. (Spotrac.com puts the figure closer to $17 million.) Barring major injuries necessitating a roster move, it’s becoming vitally important for the Dolphins to hold onto much of that space.
Here’s why: According to Over The Cap’s Jason Fitzgerald, the 2021 cap — which had been projected to be anywhere from $215 million to $230 million before this pandemic — could end up being $130 million to $175 million if league revenues take a big hit from coronavirus.
The reason is an anticipated drop in local revenues, which includes ticket sales, stadium sales, merchandise, sponsorships and local radio and preseason TV rights.
Fitzgerald estimates that if teams “lost all local revenues, you would probably be looking at an $80 million loss in cap space while a 40 percent loss would result in a $31 million drop in cap room.”
It’s highly unlikely all local revenue will be lost, but a sizable share could be if fans choose not to attend games or local governments restrict attendance.
Keep in mind that the new collective bargaining agreement gives players 48 percent of all revenue in the 2021 season (up from 47 percent), with the potential for a half percentage point more when a 17th game is added for each team, which could happen in 2022.
In his informative piece, Fitzgerald notes that “the way that clause is written in the CBA it sounds as if the entire [revenue] loss would be reflected the following year. But I would imagine there has to be some wiggle room for a side negotiation to find a way to basically borrow from future salary caps to prevent teams from cutting most of their roster. Owners would probably hold more of the cards in this situation since they are the ones taking the massive hit and can start cutting players.”
The collective bargaining agreement addresses potential canceled games this way:
“If one or more weeks of any NFL season are canceled or AR for any League Year substantially decreases, in either case due to a terrorist or military action, natural disaster, or similar event, the parties shall engage in good faith negotiations to adjust the provisions of this Agreement with respect to the projection of AR and the Salary Cap for the following League Year so that AR for the following League Year is projected in a fair manner consistent with the changed revenue projection caused by such action.”
CBS’ Jason Jones, in his piece, also notes the possibility of the two sides agreeing to borrow against future earnings, which could result in the 2021 cap staying flat, close to its current $198.2 million.
If there is a big 2021 cap drop, how would it affect the Dolphins? Considerably, as it would any team.
According to overthecap.com, the Dolphins have $160 million in cap liabilities for 2021, a figure that will grow by another $7 million once Miami signs draft picks Austin Jackson ($3.1 million cap hit in 2021), Noah Igbinoghene ($2.6 million) and Robert Hunt ($1.8 million).
So that’s $167 million, and Miami will need at least $10 million to sign a 2021 draft class and practice squad, though keep in mind that only the top 51 players count against the cap. So the cheapest of those draft picks will replace other players in the top 51, creating a small offset.
So if the 2021 cap is $175 million, the Dolphins could try to fill most of their needs in the draft, restructuring a few contracts or cutting Bobby McCain ($5.7 million cap savings), and try to get defensive tackle Davon Godchaux, linebacker Raekwon McMillan and center Ted Karras on cheap deals or find alternatives elsewhere.
That’s where the $13 million carryover space from 2020 — if left unused this season — would be a huge help.
But if the 2021 cap ends up closer to $140 million or $150 million — and I would be somewhat surprised if that happens — agonizing decisions would need to be made by the Dolphins and most teams.
And Miami would need to go to work to reduce the 2021 cap numbers of some among Jones ($16.1 million), Kyle Van Noy ($13.9 million), Xavien oward ($13.5 million), DeVante Parker ($11 million), Ereck Flowers ($10 million), Shaq Lawson ($9.3 million), Emmanuel Ogbah ($7.5 million) and McCain ($7.1 million).
Miami could save $9.3 million against the 2021 cap next spring by cutting Xavien Howard, and the 2021 cap hits of Ogbah ($7.5 million) and Jordan Howard ($5 million) and Clayton Fejdelem ($2.5 million) could be completely erased by simply cutting them next offseason.
But if the league and union figure out a way to keep the 2021 cap at, say $198 million, the Dolphins — factoring in next year’s draft class — would have $21 million or so in space plus whatever they carry over from this offseason, leaving them in good shape.
But the uncertainty ahead is why Miami should hold onto most of its remaining 2020 cap space, knowing its chances of winning should be better in 2021 than it will in 2020.
So if you can get Warford (a Pro Bowler the past three seasons) or Ryan for a third of the money they are reportedly seeking (Warford wants $7 million and Ryan $10 million, per NFL Network), then consider it. Otherwise, leave yourself the flexibility to gear up for a run at an AFC East championship in 2021.
This story was originally published May 13, 2020 at 2:24 PM.
