New TV deals reportedly holding up setting the 2021 NFL salary cap

The NFL is 30 days from the start of the 2021 league year. The importance of the new league year is twofold as unrestricted free agents can officially sign with new teams while franchises must be compliant with the 2021 salary cap. The problem at this moment is the NFL has not stated what the salary cap will be for 2021.

There are a few things we do know about the salary cap for this coming season. We know it cannot fall below $175 million as this number was decided upon by the NFL and the Players Association prior to the 2020 season. We also know that the cap is not going to be set based completely on last season’s revenue as a lot of games were played in front of empty or low capacity stadiums.

It has been estimated that the salary cap will be slightly higher than the $175 million floor and experts such as overthecap.com currently have the 2021 salary cap projected at $180.5 million.

So what’s the hold up? Why won’t the league just tell teams how bad it is so they can start making the appropriate moves?

I have a theory as to why I believe they were waiting. I’ve heard some rumblings about it but nothing exactly concrete to say that this was exactly what was going on. I have written about it in some previous articles, so here’s a quick excerpt from what I had said recently:

Before getting into exactly where the Steelers stand, to quickly answer the question as to why the NFL has not announced the 2021 salary cap is because there are many things going on with the 2021 season which have not been agreed upon between both the league and the NFLPA. Is the NFL going to a 17-game season this fall? Will there be a new TV contract? Will both sides agree to not lower the salary cap as much for 2021 due to a projected cap jump for the 2022 season?

There is no guarantee anything is being worked out between the NFL and the Players Association which will help the salary cap, but if there is even a possibility of the two sides agreeing on something different for 2021 it would most likely benefit for Steelers in some way.

I did my best to phrase everything in a way that people weren’t thinking I was breaking news or saying this is exactly what was going on, but I felt that there were other factors which could help bring the salary cap a little higher for the 2021 season. A lower cap is not good for the players, and a low cap also has many teams struggling to conduct business. Taking as much time as possible in order to try to improve the cap situation for 2021 is not a bad choice.

It appears this might be exactly what the NFL is doing. According to Jabari Young of CNBC, the NFL is waiting to set the 2021 salary cap based on the upcoming TV deals.

According to Young’s sources, the NFL is waiting to see if the expanded revenue could be used to spread out the difference in salary cap:

The NFL is looking to finalize frameworks of new TV rights agreements in the next few weeks and wants to do so before setting the 2021 salary cap figure in March, according to people with knowledge of the situation.

The people asked not to be identified as they aren’t allowed to speak publicly about league affairs.

Network partners Fox, ViacomCBS, NBC and Disney’s ESPN pay the league roughly $6 billion per year, with AT&T-owned DirecTV adding another $1.5 billion for the Sunday Ticket package. It’s been widely rumored the next agreement could reach $100 billion via a 10-year deal. Other options include a seven-year deal at $14 billion per year or an eight-year deal at $12 billion per year.

Working in the NFL’s favor is a new 10-year labor agreement reached last year with the NFL Players Association (NFLPA), more postseason contests and a 17-game regular-season schedule, which the league is planning to implement next season. Hence, with the extra games added, the NFL wants its fee.

So if the NFL can generate more revenue going forward because of an extra regular-season game and new TV deals as a result, it would be in the league’s best interest to not have the salary cap take a large dip in 2021 and then a huge jump in 2022. What is unclear at this time is how much of a loss teams took during the 2020 season and how much extra revenue will be gained by the new deals.

Even if a new TV deal was worked out, the loss in revenue from 2020 could be too great in order to make up the difference. According to Young, the NFL is in the process of determining these figures.

The NFL is currently calculating losses for the year, with its clubs submitting financial information for the 2020 season, according to one of the people.

The NFLPA will then review revenue reports as the two sides negotiate a new salary cap for the 2021 season. The NFL could suffer a $4 billion loss among its clubs due to Covid-19 preventing full stadiums.

As it is with about everything, this all comes down to money. Can the NFL make up their lost revenue from 2020 with a new TV deal? By getting a new deal in place, can the league use it to keep having a large dip in the salary cap? Will the NFL know these numbers in time?

This is the reason it has been speculated the salary cap may not be known until the very last minute on March 17. If the salary cap is going to be closer to the $175 million mark, I’m sure the league will make sure teams are prepared leading up to the new league year.

If the new TV deal can bring a situation where the salary cap even remains the same from the 2020 season, the Steelers will obviously be better off with their cap situation. But even if the salary cap magically goes up $20 million from what was initially expected, it still may not mean the Steelers will definitely be able to retain any additional players. Ultimately who will benefit the most from the salary cap not taking a major dive would be players in the ‘second tier’ of 2021 free agency as it would not dry up the market nearly as fast. The biggest benefit for the Steelers looks to be not having to make as many tough decisions in releasing players who are under contract for 2021.

As with so many things with the NFL, we are currently in a ‘wait and see’ mode. As the NFL works out its numbers to see if they can salvage more of the 2021 salary cap, the Steelers still need to prepare for the worst in order to figure out how they will release, restructure, or extend contracts of the current players in order to become salary cap compliant by March 17.