NFL's salary cap boom comes with a warning from NBA's brutal 2016 lesson

The NFL's salary cap has increased, but buyer beware after three years of unprecedented growth.

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NFL teams got news that will be viewed as an overwhelming positive: The salary cap is increasing from $224,800,000 in 2023 to $255,400,000 in 2024. That's a 13.61% growth year-to-year, the largest raw dollar amount the NFL has ever seen.

In general, the reasoning is Covid irregularities now behind the league and growth in revenues (perhaps, incidentally, thanks to Taylor Swift?!). In a statement from the league:

"The unprecedented $30 million increase per club in this year's salary cap is the result of the full repayment of all amounts advanced by clubs and deferred by the players during the COVID pandemic as well as an extraordinary increase in media revenue for the 2024 season."

More money is great, especially for competitive teams that were already struggling with cap space and up against the $240ish million number, needing to do some restructures or make savvy signings to keep competitive in 2024. But buyer beware, with the NBA serving as an important reminder of just that.

NBA salary cap explosion had teams making risky decisions in 2016

In 2016, the NBA salary cap exploded in a similarly unprecedented manner, jumping from $70 million to $94 million. To put that into context, while the NFL's salary cap will jump a shade under 14 percent this year, the NBA's 2016 cap jumped nearly 35 percent.

On a per-roster-spot basis, the salary cap jumped $1.61 million, the NFL will jump $577,000 this year.

That year of the unprecedented jump, NBA teams had money to blow, and did so in an undisciplined manner, signing players to massive contracts that were as unprecedented as the salary cap increase itself.

Nicolas Batum got $120 million, Chandler Parsons got $94 million, and Evan Turner got $70 million. For the uninitiated basketball fans, these players were largely role-playing and in some cases even average, making massive money because they were free agents at the right time.

Those contracts, even today with the cap having grown since 2016, look absurd on paper, and were even worse in practice. Teams spent with the inflated money at the forefront, not recognizing that the cap growth would not be extreme in later years of the contracts, making building around them difficult.

The NFL may be approaching that point, with its three-year cap space growth (in terms of percent) reaching the high levels of the NBA's 2016 explosion:

In 2016, the NBA's three-year average of growth was 17.65% (7.47/11.00/34,49). The NFL's this year is 11.89% (14.08/7.97/13.61).

Does football's roster model insulate it from NBA's past contract issues?

The NFL has one big advantage over the NBA: More roster spots. Bad contracts absolutely still exist for the NFL, but they are far less detrimental than a bad contract in the NBA, all else equal. With only 15 roster spots on an NBA team (now more if you count two-way contracts), one bad contract can be a massive burden on your overall cap hit.

In the NFL, one contract is a smaller piece of the puzzle, and there are also mechanisms (like contract restructures) that give NFL general managers a bit more latitude and control over the situations than in the NBA.

In the NFL, with 53 roster spots (and practice squad contracts as well), general managers have to constantly be thinking about resource allocation and may just be generally better equipped to bring a mental model to the balance sheet that will ward off making bad decisions in a cap growth year.

That doesn't mean it's a reason for GMs to get lazy, though and to start doling out ridiculous money to marginally additive players. More cap space is good, but using it wisely will take it even further, and could very well be the trait that separates the built-to-last teams from the transient competitors in the next several years. Remember, these lessons are usually only learned in retrospect.

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