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NFL Economics 101: How are Rams building a 2021 NFL Budget?
The LA Rams free agency is subject to an allocation process. NFL Economics 101: How are the Rams building a 202 budget for free agency?
ramblinfan.com
The LA Rams front office is gearing up. In a very short period of time, the NFL Free Agency market will open for business for the 2021 NFL season. When that happens, the NFL has its version of ‘Black Friday’. You see, on that day, 32 NFL teams unleash their checkbooks upon the NFL’s best and most promising players, making them instant millionaires.
This annual ritual brings the mighty teams to brief moments of humility, and the bottom feeders of the NFL to the sunlight of hope and optimism for a brief moment. Each new signing is touted with such descriptions as ‘incredible fit’ or ‘dominating performance’. Teams that have grown accustomed to the annual expectation of a Super Bowl future find the annual hype is rolled out once more, like a red carpet to the rich and famous of the NFL.
But you probably haven’t thought much about the process of building a great NFL-winning roster, have you? And yet, each year, we find ourselves subject to the magic of team spending. Of course, there is a story about it behind the scenes. But many of us are content to watch the magic unfold, never wishing to crawl behind the math of the magic.
What truly is behind the magic of making some players rich and others getting cut in the same year? Is it true that the cause of a player ‘not a fit’ serves as the universal solvent used to justify all roster decisions? There seems to be a science or at least some pattern of the mathematics behind the chaos of decision-making in the NFL. After all, how do teams know who to cut if they cannot be certain who they will use to replace the vacated roster spot?
Positional Spending
Well thankfully, it’s not all blind monkeys throwing darts at a dartboard. NFL teams employ a strategy called Positional Spending. That may seem like pretty fancy terminology, but it’s the term used to name the process of allocating the available annual salary-cap across distinct and separate positions on the team roster.
So how does that work?
Well, NFL teams build roster two ways. One way that everyone understands is the raw number count. So of the 53 man roster, how many players will the team dedicate to the quarterback position? Some teams elect to go with two quarterbacks, while others elect to go with three quarterbacks. That’s how teams build rosters with numerical allocation.
But that does nothing for the salary cap allocation. So NFL teams use a separate technique that they call ‘positional spending’. How does that work? Well, the coaching staff and the front office collaborate in the offseason to create a positional spending priority. Then that becomes the template for the front office to know how much the team is willing to spend on each positional group.
If done correctly, the template for how much to spend is self-correcting. How so? If a team agrees to spend 10 percent of the annual salary cap allotment on the quarterback position, the team creates an auto-adjusting dollar budget as soon as the NFL announces the annual salary cap. So if the cap rises from 200 to 220 million, a 10 percent allocation raises the quarterback position raises from 20 to 22 million.
And this year, the NFL salary cap appears to be dropping from the 2020 salary cap of $198.2 million to an amount no less than $180 million. So using the same 10 percent for the quarterback position, the team would need to get from $19.8 million to $18 million.
So that is the basic principle. And it’s this fundamental basic principle that gives NFL teams enough information to trim roster salary expenses before the NFL Free Agency market arrives, and where the trim needs to occur.
Positional Spending – Intermediate
So that’s a great basic understanding. Now, the real world creates a few wrinkles that each team must address separately. Like what? Well, dead cap money for starters. Special teams players for another. Versatile players who fit in more than one positional-category for another. Nothing is clean and clearly distinguished in the real world. So let’s attack these problems one by one.
Dead cap money creates a problem because it is money can is committed without the benefit of a player’s performance to benefit the team. To resolve the matter, the team can apply the dead cap as a reduction to the overall salary cap (all positions are penalized) or directed to a specific position (Gurley dead cap money added to the running back total).
Special teams are not typically broken out with their own category (see Over The Cap.com Positional Spending). To avoid confusion, some teams will factor the placekicker as a member of the offense, and factor the punter into the defense. Any method is correct, as long as the team applies the same method to each year.
Finally, players who can contribute in two distinct areas (such as a hybrid linebacker/safety combination) can be considered in either category or split evenly between two or more positions on the field. Of course, if the cause for using the safety on the field is due to sub-defensive packages, then the team would probably just plan to spend more on the more heavily used positions. As of today, the LA Rams have 64 players under contract for the 2021 NFL season. The team has $96,024,279 committed to the offense and $90,219,094 committed to the defense.
Right now, the LA Rams are at a salary cap deficit of between ($35 million) and ($39 million), In comparison to other NFL teams, the Rams spend less on the offensive line and running back, and spend more on tight ends and wide receivers than other teams. The Rams spend less on edge rushers, linebackers, and safeties, spend more on cornerbacks and are the NFL’s top spending team on interior defensive linemen.
Now you have a good basis to form your opinions and expectations for the LA Rams to be active in free agency and the NFL Draft. What can the LA Rams truly afford to spend, and where? Good luck and happy shopping!
