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Salary Cap

What is Salary Cap?

A term in football that refers to a binding contractual agreement between teams in the National Football League that limits total expenditures on player salaries to a specific maximum amount.

Sporting Charts explains Salary Cap

The salary cap is calculated as a percentage of the league's revenue and divided equally among all teams in the league. The NFL utilizes what is referred to as a "hard cap", meaning that under no circumstances can a team spend more than the salary cap that was agreed upon for the season. Usually accompanying a salary cap is a salary floor, represented as a percentage of the total salary cap, requiring teams to spend the floor sum at a minimum during the course of a season. During a year in which the collective bargaining agreement has been revised, salary floors will sometimes not exist per team, but will instead be applied to the league as a whole (e.g. the league must spend a minimum of $3.5 billion).

The goal behind a hard salary cap is to make the NFL more competitive. If teams have the same amount of money to spend, the assumption is that they will acquire or retain a similar amount of talent. The salary cap prevents organizations with higher overall revenues from spending more to fill their rosters with better players. There still remain inequities in the league, however, as player skill and coaching varies widely.

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