NFL Economics 101: How are Rams building a 2021 NFL Budget?

Mandatory Credit: Kirby Lee-USA TODAY Sports
Mandatory Credit: Kirby Lee-USA TODAY Sports /
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LA Rams Free agency
Mandatory Credit: Kirby Lee-USA TODAY Sports /

Positional Spending

Well thankfully, it’s not all blind monkeys throwing darts at a dartboard. NFL teams employ a strategy called Positional Spending. That may seem like pretty fancy terminology, but it’s the term used to name the process of allocating the available annual salary-cap across distinct and separate positions on the team roster.

So how does that work?

Well, NFL teams build roster two ways. One way that everyone understands is the raw number count. So of the 53 man roster, how many players will the team dedicate to the quarterback position?  Some teams elect to go with two quarterbacks, while others elect to go with three quarterbacks. That’s how teams build rosters with numerical allocation.

But that does nothing for the salary cap allocation. So NFL teams use a separate technique that they call ‘positional spending’. How does that work? Well, the coaching staff and the front office collaborate in the offseason to create a positional spending priority. Then that becomes the template for the front office to know how much the team is willing to spend on each positional group.

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If done correctly, the template for how much to spend is self-correcting. How so? If a team agrees to spend 10 percent of the annual salary cap allotment on the quarterback position, the team creates an auto-adjusting dollar budget as soon as the NFL announces the annual salary cap.  So if the cap rises from 200 to 220 million, a 10 percent allocation raises the quarterback position raises from 20 to 22 million.

And this year, the NFL salary cap appears to be dropping from the 2020 salary cap of $198.2 million to an amount no less than  $180 million. So using the same 10 percent for the quarterback position, the team would need to get from $19.8 million to $18 million.

So that is the basic principle. And it’s this fundamental basic principle that gives NFL teams enough information to trim roster salary expenses before the NFL Free Agency market arrives, and where the trim needs to occur.