Despite what many people will say and think, the NFL salary cap is not fake. It’s just malleable because of how the money is allocated each season.
We’re approaching the end of the NFL’s regular season, and soon the playoffs will begin. Once the Super Bowl ends, teams will start juggling rosters and potentially contracts. That’s when the inevitable social media post or blog post will come out about how the NFL’s cap is fake. The reason is that people don’t understand reality.
The yearly salary cap isn’t a cash limit on spending per year. If it were, there wouldn’t be any big signing bonuses or incentives. It would be just the base salary for the players.
Each year, a team has its own salary cap number, and that’s based on the base league salary cap, plus salary cap carryover from the previous season, plus or minus any adjustments made from things like incentives earned or not earned.
The final number arrived is the amount of charges a team can incur for the season. Cap charges are not cash spent in a season. It’s the combination of cash that’s guaranteed to a player, will be paid to a player, was paid to a player, and expected to be paid to a player.
Let’s look at a Jets player’s contract.
Jamien Sherwood signed a 3-year, $45 million contract with the Jets this past offseason. He’s going to make $15 million per season (not just the average).
Cash Per Year
2025: $15 million
2026: $15 million
2027: $15 million
Cap Charges
2025
Base Salary: $2.5 million
Prorated Signing Bonus: $2.5 million
Cap Charge: $5 million
2026: $11.5 million
Base Salary: $2.5 million
Prorated Signing Bonus: $2.5 million
Prorated Option Bonus: $1.5 million
2027: $19 million
Base Salary: $2.5 million
Prorated Signing Bonus: $2.5 million
Prorated Option Bonus: $1.5 million
2028: $9.5 million (void year, dead)
Prorated Signing Bonus: $5 million (two years)
Prorated Option Bonus: $4.5 million (three years)
As you can see, every dollar spent on Jamien Sherwood will count against the cap at some point. It’s just a matter of when, because the signing and option bonuses are prorated for the length of the contract (5 year maximum). Teams will add void years to push the proration into later seasons when the cap is expected to be higher, which is why you see Sherwood’s void in 2028.
This is also where the “fake” part comes in. Teams are allowed to restructure contracts. Sometimes with the player’s consent, and many times the player doesn’t have to consent.
If the restructure requires contract language to be changed, then a player must essentially sign a new contract. However, if it’s just shuffling money around — also known as a simple restructure — then it can just be done by the team.
Let’s say in 2028, the Jets were to need to make some cap space for that season, and Jamien Sherwood is still worth keeping around on the team. That $19 million cap charge can be reduced in two ways.
In a maximum restructure, the Jets would add a void year in 2031 to essentially make the contract a five-year deal. Then, they’d convert the $15 million base salary to the minimum base salary — which for Sherwood will likely be $1,260,000 — and the remainder would be a signing bonus. The addition of the void year requires Sherwood’s signature, because it’s changing the contract. Usually, players will sign because it’s upfront cash.
The remaining money that becomes a signing bonus is prorated over the five years (2027-31). So, the Jets charge would go from $19 million to $8.008 million. However, their dead cap charge in 2028 would go from $9.5 million to $20.492 million.
A simple restructure is just the shifting of the money without the added void year. So the proration would just be 2027-30. This would reduce their cap charge to $8.695 million in 2027. However, that would increase their dead cap charge in 2028 to $19.805 million.
Then, there are incentives and per-game roster bonuses, which aren’t in Sherwood’s contract, but must be discussed.
Those two line items in a contract are handled very differently from prorated signing bonuses, prorated option bonuses, base salary, roster bonuses, and workout bonuses. Base salary, roster bonuses, and workout bonuses all count in the year earned. The others are prorated evenly over a five-year maximum of the contract. Per-game roster bonuses and incentives either fall under the categories of likely to be earned or not likely to be earned.
Likely to be earned means the player either did or would have earned the contract incentive the prior season, and not likely to be earned is the opposite. An example of the would have earned part is if a player were to be traded to the Jets in the 2026 offseason, and he has incentives that include playoffs, then it would be not likely to be earned since the Jets aren’t making the playoffs, even if the team he was on made the playoffs this season.
So, let’s say, a player has a per-game roster bonus of $1.7 million ($100k per game) in his contract. If he was on the game day active roster for 14 games the prior season, the team is charged $1.4 million in cap space for that season. If he plays in fewer than 14 games that season, the team gets a cap credit of $100k per game he’s inactive. Any game above 14, the team loses $100k in cap space the following season.
For the incentives example, let’s be a little more convoluted. A player has the following incentives in his contract:
50% snaps: $250k
65% snaps: $250k
80% snaps: $250k
95% snaps: $250k
Pro Bowl: $125k
Team Playoff Wins (including first round bye): $218,750
The player gets hurt and only plays in 67% of his team’s snaps. He doesn’t get voted into the Pro Bowl, and the team misses the playoffs. If his incentives were completely NLTBE in that season, the team would have a reduction of $500k during the adjustment period, and in that season, the team would be charged $500k of LTBE incentives.
Now, let’s say that player doesn’t miss a snap in the $500k LTBE season. He also makes the Pro Bowl, and the team makes it to the conference championship and loses. He earned $1,562,500 in incentives that season, but the team was only charged $500k. So, the cap would be adjusted the following season by $1,062,500 by the team losing that cap space. If he failed to earn the $500k, the team would gain that cap space the following season.
There are also gains and losses from non-public data, like contract insurance payments and grievance payments.
Every dollar spent on a player counts against a team’s total cap charge at some point. Sure, when a team restuctures a contract to open up cap space, it appears on the surface that the cap might be fake. In the end, though, the dollars are accounted for. It’s just a matter of when they are accounted, not that they are.