LA Rams Salary cap: Setting stage for 2021

Established in 1994

The salary cap was established in 1994 as a way of leveling out the playing field. Since the NFL (like most professional sports teams) have teams in cities of various populations.  To remain competitive, the league abandoned the old economic models of individual teams and adopted a business model of negotiation with television networks for packages of football games.

The NFL separately packaged nationally televised NFC games, AFC games, and Monday Night Football games. Thanks to a higher contract than expected with Fox Sports, the first NFL salary cap in 1994 was $34.6 million per team.

And so it has become one of the most talked-about and least understood elements of the modern-day NFL. The salary cap is the reason NFL teams justify being unable to re-sign their outgoing players. It is the reason teams cut players, or restructure contracts, or even renegotiate player contracts.

Some argue that the NFL salary cap does not exist. It does exist, but it’s similar to grocery shopping. Some families will spend a fixed amount for groceries each month, regardless of the income. Some families spend a fixed percentage of their income on groceries. And still, other families will buy groceries with credit cards, knowing that the bill will need to be paid in the future. For NFL teams, they have linked the salary cap directly to the previous year’s league revenue. So as revenues go up or down, so too does the next season’s salary cap.