Warning: this post contains a lot of arithmetic plus educational stuff that you may already know or not want to know, and is presented in a manner that some may find to be boring and pedantic. Read at your own risk, or skip to the final paragraph that will tell you my best guesstimate of potential Broncos' 2021 cap space available for free agency after making some unpopular roster moves including cutting Von and other high dollar veterans is about $51M.
Hypothetical League cap number
This is a number tied to NFL revenues that must be agreed to by the NFL and the NFLPA. Last year the League cap number was $198.2M. In 2019 it was $188.2. In 2018 it was $177.2. In fact the number has been increasing by $10-12M per year since at least 2014. Alas, it won't be increasing this year at all. In fact it will probably decrease considerably since NFL revenues in the year of Covid decreased by an estimated $2.7B. So I googled NFL revenue by year, found some numbers to play with, and found a relationship between the revenue number for the years 2014-2019, and the following year's total cap number for all 32 teams the following year. It ran between 40 and 42% with a low of 40.6079% in 2017 and a high of 41.56255% in 2020. I used the 2019 NFL revenue number of $15.26B, subtracted $2.7B, multiplied the result by 0.42, and then divided by 32 to determine that the 2021 cap number "should" be about $165M. But the NFL and NFLPA have already agreed to set a 2021 cap floor at $175M. Could the number go higher? Yes, it could. Back in December, I saw some overly optimistic forecast that the number might be as high as $195M, but thought that was unlikely. More recently I've seen a report speculating a cap number of about $180M, and I found that believable.
Back in "the good old days" before Covid, there was always a big owners' meeting in December, a cap number would "leak," and it would turn out to be darned close to the real number for the following season. Maybe the $180M is this year's version of the "leak" I've been looking for. Also, if the Covid situation is sufficiently under control to allow something approaching a normal 2021 regular season, League revenue may recover to something close to 2019 levels such that the 2022 cap number "should" be about $195M. However a 2021 cap number of $180M is about $15M too high. So a flat cap in 2022 might be just about right to compensate the owners who want their negotiated share of NFL profits. And if all goes well with new TV contracts in 2022, perhaps the cap can begin to grow again in 2023. All this is just a very wordy way of explaining why I decided to use $180M as my hypothetical cap number since I need one to do what I want to do in the rest of this post, and why I think 2022 will likely be a flat cap year.
Where the Broncos stand now (and unless stated otherwise, I'm rounding numbers to the nearest $1000.00)
A League cap of $180M + rollover of $17.788M gives the Broncos a total cap number of $197.788M. For sources of cap and contract information, I use Spotrac primarily, but also OTC. And for those who aren't familiar with the "top 51" rule, a brief explanation is in order. During the offseason, teams are building up to training camp rosters of 90 (80 in the year of Covid), but few if any teams can fit all 80-90 contracts under their caps. So only the top 51 cap hits (and dead money) count against the cap until after the roster cut to 53 before the regular season begins. At that point, everything will count: all cap hits for players on the roster of 53, players on IR, and practice squad salaries. And all 32 teams must remain under the cap. Any contract that would put a team over the cap once free agency begins in March will not be approved by the NFL.
Spotrac says the Broncos's top 51 contracts cost a total of $173.636M against the cap. I'm going to make a correction and an adjustment to that number. The error has to do with a per game roster bonus incentive for Graham Glasgow. He was active in 13 games last year, but they only gave him credit for 3. The adjustment is for Melvin Gordon since he will almost certainly be suspended for the first 3 games of the regular season, voiding his remaining guarantees. For now, I've decided we should keep him, but the Broncos don't have to decide whether he has a future in Denver until he's eligible for reinstatement from the suspension. I could go after a portion of his already paid signing bonus, but I've decided not to do that. But I am taking out 3 seventeenths of his 2021 roster bonus and salary, and I'm not paying him the rest of the roster bonus until I decide about his future in Denver.
Anyway, my corrected and adjusted Spotrac number clears $0.978M resulting in a top 51 cap cost of $172.698M. Adding $0.602M in dead money to that, results in a $173.3M charge against our cap. Subtracting that from the $197.788M number in the previous paragraph gives me a "starting" point of $24.488M in top 51 cap space. I want MORE! I want to maximize my potential cap space, take care of important business [ensure I have what I need to franchise Simmons (hopefully as a prelude to an extension), tender the RFAs and ERFAs I want to keep, and sign our draft picks]. Which brings me to....
I call this little section of my rambling post "paper cuts" because they hurt, and also because the cuts I'm about to show you are only "on paper," not real, and can be undone or modified if the cap space I end up with when I'm done with the things I consider essential are "paid for." Call it potential cap cuts if you prefer. So, after dead money, I get the following from making paper cuts:
$18M (Von Miller) + $10M (K. Jax) + $11.875M (J. Casey) + $11.689M (A.J. Bouye) + $2.7M (N. Vannett) + $2.5M (J. Driskel) = $56.764M. Add that to my previously calculated starting point of $24.448M, and I have $81.252M to play with. It isn't top 51 space because I just "cut" 6 players, so I'm only counting 45 players, not 51. In order to not keep adding and subtracting the same money over and over, I'll just keep count, and fix it later.
I want to get Simmons signed to a long term deal, but am not counting on getting that done before free agency begins. If his relationship with the Broncos has turned sour, I want to at least get some trade value out of him. So I'm going to tag him again at a 20% increase over his 2020 price. That's going to take $13.729M out of my $81.252M play money leaving me with $67.523M in play money and 46 players I've counted.
RFAs have 3 seasons accrued toward free agency when their current contract expires, and the Broncos have several: They are Tim Patrick, Austin Calitro, Kevin Tolliver, Josh Watson, A.J. Johnson, Phillip Lindsay, and Troy Fumagalli. There are 3 levels of RFA tenders: 1st round, 2nd round, and original round. Tendered RFAs can theoretically shop their wares in the free agent market and get offers for a contract they can accept or decline. All tender levels come with a right for the original team to match the offer and keep the player. But 1st and 2nd round tenders require the team making the offer to give up their corresponding round draft pick in the current year's draft to the RFA's current team that declined to match in compensation for the player. Players with 1st and 2nd round tenders rarely get offers. However, a RFA with an original round tender may be in play, especially if he was originally signed as a college free agent since zero draft compensation is required. I considered tendering Troy Fumagalli at the original round level (5th round pick), but came to my senses. wouldn't be a cost effective decision. Don't want to spend that much to keep him, and might be able to keep him for less anyway.
2021 prices for RFAs are $4.873M (1st round), $3.422M (2nd round) and $2.240M (original round). Those numbers represent a 5% increase over last year's levels. the CBA requires RFA tenders to increase between 5 and 10% per year depending on the cap, and we already know the 2021 cap is not going up. I decided to tender Tim Patrick, A.J. Johnson, and Phillip Lindsay all at the 2nd round level. I thought long and hard about Lindsay, even considered an original round level, but he was undrafted, is a local hero to a number of fans, the Broncos won't have Gordon for the 1st 3 weeks of the season, Freeman is occasionally serviceable but nothing special, and there's no guarantee the Broncos will get an NFL ready stud RB in the draft. So the Broncos probably need to keep him. Anyway, $3.422M X 3 RFAs = $10.266M. Subtracting that from $67.523M in play money leaves me with $57.257M and 49 players counted.
ERFAs have less than 3 accrued seasons toward free agency when their contracts expire, and can be retained by their current teams for non-guaranteed 1 year deals for veterans' minimum salary based on the number of credited seasons they have. This brings up the point that accrued seasons and credited seasons aren't always equal in number because they're defined differently and serve different purposes. Accrued seasons are about progress toward free agency. Credited seasons are about NFL benefits and veterans' minimum salaries. Anyway, teams almost always tender their ERFAs because they liked them enough to sign them in the first place, the players have some experience with their current teams, and they're cheap.
The Broncos have 3 ERFAs with 2 credited seasons (veteran's minimum salary of $0.850M each), namely Diontae Spencer, Austin Schlottman, and Calvin Anderson. They also have one with 3 credited seasons (Trey Marshall for a veteran's minimum salary of $0.920M). Tendering all of them will cost $3.47M of my play money. (Veteran minimum salaries by year and number of credited seasons are specified in the CBA.) Subtracting that from the $57.257M I came up with a couple of paragraphs ago gives me $53.787M, and 53 players counting. My goodness, I'm counting more than 51. I'll fix it later. Moving on to the draft.
Estimating the price required to sign draft picks (Gonna party like it's 2018)
It takes exactly zero cap space to draft players, because as soon as a player is drafted, it is assumed for cap purposes that he's received a minimum salary tender for a player with zero credited seasons ($0.660M in 2021), and that will fall outside of the top 51. Signing the draft picks is a different story. They will get a contract for that minimum salary in their rookie year plus a signing bonus that will prorate. When I checked yesterday, OTC projected the Broncos' 1st 4 rounds of draft picks will be at #9, #40 #71, and #113. That's based on their projected comp. picks. But their projected estimates of rookie pool numbers looked ridiculously low to me.
The rookie pool is a subsection of the cap, and goes up and down with the rest of the cap, but their numbers for 1st and 2nd rounders have decreased more than they should have, even if I use a "2021 League cap number should have been $165M" number, roughly 83% of last year's $198.2M. So, I don't want to use their projections, but I need projections. That's where the "party like it's 2018" thing comes to my rescue. In 2018, the league cap number was $177.2M which is in the range of the $175-180M league cap number I'm projecting for 2021. So I looked up the 2018 prorated signing bonuses for picks 9, 40, 71, and 113 in 2018, added $0.660M to those numbers, and came up with $3.515M (#9) + $1.424M (#40) + $0.909M (#71) + $0.831M (#113) giving me $6.679M. Subtracting that from my previously calculated $53.787 gives me $47.108M and 57 players. But I only have to count the top 51. I'm counting 6 too many. I didn't bother guesstimating cap hits required to sign rookies drafted in the 5th and later rounds because they will fall outside the top 51.
Applying the top 51 rule
Currently my lowest listed (by Spotrac) top 51 cap hit is $0.780M (minimum salary for a veteran with 1 credited season), and I count 9 of those, (and there are some other slightly higher cap hits currently listed in the top 51 as well). 6 of those are falling out. 6 X $0.78M = $4.68M. Adding that back to the $47.108M I calculated in the previous paragraph gives me $51.788M for free agency. Every time I sign a higher dollar player, at least $0.78M will fall out of the top 51 cap. For example if I change my mind about the "paper cut" for K. Jax, his $10M cap hit after dead money counts again (now I'm down to $41.788M) but I get to add back $0.78M, and my new top 51 cap space is $42.568M.
I've "paper cut" 6 players, franchised Simmons, tendered 3 RFAs at the 2nd round level, tendered 4 ERFAs, and reserved an amount of cap space that should be adequate to sign our draft picks, and I have $51.788M in remaining top 51 cap space for other roster moves. So, what do you want the Broncos to do with it? You must prioritize. You can't do everything you might want to with it, but there are a lot of possibilities.