The NFL may gift the LA Rams a huge boost to salary cap space

The annual NFL salary cap announcement is a rather well established event. The report of how much NFL teams can spend is one of the true prerequisites to the annual NFL Free Agency market. Not only does reporting what the number will climb to allow NFL teams to lock in their hard budget number to spend in the new NFL season, but agents and players leverage the percentage growth of one year to the previous year as a sort of inflationary index to target their fair market value in the upcoming negotiations.

So it is safe to say that even beyond the normal curiosity of NFL fans, there is a lot at stake with the new salary cap, and how much money NFL teams are permitted to spend as a result. But there are complications to that number as well.

For starters, each NFL team is permitted to carry over any excess funds from the previous season that were unspent as a result of the previous season. Per Spotrac.com, for the LA Rams that carry-over amount is projected to be just shy of $7.7 million. Projected because there are still other factors at play. The other factor is the application of Proven Performance Escalators (PPEs).

PPEs are regulated escalators that kick in for rookies who were not selected in Round 1 (so all Rams players on rookie contracts may be eligible) and who have outperformed their contracts. These contract escalations impact the player's fourth year in the NFL. For the LA Rams, players who were selected in the 2021 NFL Draft are now up for PPEs. They are:

• WR Ben Skowronek
• WR Tutu Atwell
• DT Bobby Brown III
• ILB Ernest Jones

Beyond that, there is the calculation and application of incentive clauses. Incentives come in two categories: Likely To Be Earned (LTBE) and Not Likely To Be Earned (NLTBE). LTBE incentives are charged against the current year salary cap, while NLTBEs are charged off against the following year's salary cap. What is the difference? A 1000 yard incentive clause for a running back can be either. If the player ran in excess of 1000 yards in the previous year, then the incentive clause falls into the LTBE category. If the player did not run for 1000 yards in the previous year, then that incentive falls into the NLTBE category, and will impact the follow year's salary cap.

But there are more factors to factor in as well. Let's pivot to PPE's, and how they may impact the Rams salary cap for 2024:

What will the NFL set as the base 2024 NFL salary cap?

1. Let's discuss PPEs and how they work
2. So how much can teams spend in 2024?

Let's discuss PPEs and how they work

The LA Rams roster is built primarily from players who were selected in the NFL Draft in rounds two through five, with the occasional undrafted player sprinkled in intermittently as well. Because the NFL and NFLPA Collective Bargaining Agreement has negotiated a rather strict pay scale for rookies in their first contact, the two sides agreed to define specific PPEs to add additional compensation to the final year of that rookie's contract.

• Level One - Level One is structured a bit differently for Round 2 players versus Round 3-7 players. Path A requires the player (Round 2) to play 60 percent of the offensive or defensive snaps in any two of his first three seasons. For other players (Round 3-7) they need only play 35 percent of the offensive or defensive snaps in any two of his first three seasons. Path B requires the player (Round 2) to average 60 percent of the offensive or defensive snaps over his first three seasons. Other players (Round 3-7) need only to average 35 percent of the offensive or defensive snaps over their first 3 seasons.
• Compensation for Level One PPEs increases the compensation in the fourth contract year to that of an original-round tender for restricted free agents in that fourth year.

• Level Two - Level Two PPEs require the player to participate in at least 55 percent of the offensive or defensive snaps in each of his first three seasons.
• Compensation for Level Two PPEs increases the compensation in the fourth contract year to that of an original round tender for restricted free agents in that fourth year, plus an additional $250,000.

• Level Three - Level Three PPEs require the players to be selected to the Pro Bowl on the original ballot in at least one of his first three seasons. Because the Pro Bowl is a rare honor for a player on their rookie contract, this is an especially difficult plateau to reach. In 2024, both WR Puka Nacua and RBB Kyren Williams were able to achieve this feat.
• Compensation for Level Three PPEs increases the compensation in the fourth contract year to that of a second-round tender for restricted free agents and the player's Year 4 rookie salary, less any signing bonus prorations. For Puka Nacua and Kyren Williams, their projected fourth-year compensation will now rise to more than $4.633 million. Williams will earn that amount in 2025, while Nacua will earn that amount in 2026.

That is just the tip of the iceberg, but it does give you a solid beachhead to navigate the white water rapids of how various factors can impact how much a team can spend on players, and how those unknown variables from the past can play a significant role in how much the Rams can spend in the future.

Now that we have that all behind us, and assuming that you are still reading along, let's get to the juicy stuff, just how much can the Rams spend in 2024?

So how much can teams spend in 2024?

For Over the Cap.com, the projected 2024 NFL salary cap was projected to come in at $242 million. For Spotrac.com, the projected 2024 NFL salary cap was projected to come in slightly higher at $242.5 million. So that difference of starting points is only one of several factors that has altered the competing sites projections for the LA Rams in 2024. With a range from $27.7 million to $35.3 million, there are plenty of differences to unpack. But it's about to become even more complicated.

Some projections for the 2024 NFL salary cap are no more than $243 million. But there is speculation among the latest NFL rumors that the 2024 NFL Salary cap could come in as high as $250 million. So now we have to ask ourselves - how much can the Rams spend this year?

The best way to present the different projections is to factor in the various scenarios in a data table, so that is what we will do.

The numbers are still what accountants and finance professionals refer to as 'squishy,' meaning that the numbers are in the right ballpark, but they can shrink or expand with further details. With an increase to $250 million as the base 2024 NFL salary cap, fitting IOL Kevin Dotson into the teams spending budget seems more likely, but only in a scenario where his salary demands to return to not increase as well.

Now that we have some idea what the team can spend, we can revisit several topics that remain unanswered about the team's free agency priorities and which players are most likely to return. We may even have a better idea of how the team will budget funds over positional groups this year.

One more piece to the puzzle has been placed. But the image remains a far distance away from forming.