The Saints Have Serious Cap Problems

Whether or not Drew Brees retires, the Saints' cap situation could keep them from returning to the playoffs in the 2021 season.

Image credit: MGN Online

If you were to ask people about which teams that made the NFL playoffs this season, are most likely to miss the playoffs next season, the teams that come to mind may be those who earned a wild card berth, but may not have the strongest teams this season.

Teams such as the Cleveland Browns, the Chicago Bears and the St. Louis Rams may come to mind, and some will debate between the Tennessee Titans and Indianapolis Colts in terms of who will win the AFC North in 2021.

But a better bet might be the New Orleans Saints.

It's not simply because Drew Brees may retire after the season (though it's part of the equation). It's because the Saints are projected to be so far over the cap, it's going to be difficult to keep everyone together and build the team.

Each year, the NFL sets the base salary cap, which has usually gone up the past few seasons, thanks to increased revenues. This year, though, there's a chance the cap will drop, because revenues declined amid restrictions in place because of the COVID-19 pandemic.

The NFL and NFL Players Association negotiated a few items because of the pandemic, and one was to set the base cap's floor at $175M -- though there's been talk that the actual base cap could come in higher than that, perhaps around $195M.

But regardless of how high the cap is set -- and it appears the cap won't go any higher than the base cap of $198.2M for 2020 -- the Saints are going to be in a tough predicament.

Assuming a base cap of $176M, the Saints are projected to be $99M over the cap, once they have 51 players under contract for 2021. (For offseason accounting purposes, only the top 51 cap hits count toward the cap.)

Even if the cap gets to, say, $196M, the Saints would be $79M over the cap. Even if the COVID-19 pandemic hadn't happened and NFL revenues don't drop, the Saints would still have problems.

But what if we assume the base cap would have gone up as it has the past few seasons. If we assume it goes to $205M, for instance, the Saints would still be $70M over the cap.

Simply put, the New Orleans Saints have a lot of problems.

How did the Saints get into this predicament? Much of it goes back to the Saints trying to keep as many players around as possible, because they have been chasing Super Bowls, hoping to get one final trip to the big game before Brees retires.

The Saints have used contract restructures, which involves converting base salary into a signing bonus, to keep certain players around. In Brees' case, the Saints have signed him to extensions in which they've used void years to spread out cap hits.

A quick primer: When a player signs an NFL contract, he may receive a signing bonus that is spread out over the length of the contract for cap purposes, though he still gets the cash in the first year of the contract.

For example: Suppose a player signs a four-year, $40M contract. The contract won't necessarily pay the player $10M per year. A team could give the player an $8M signing bonus and a $4M base salary in the first year, meaning the team spends $12M in cash in the first year of the contract.

In this example, $2M of the signing bonus counts toward the cap for the first year, and with the $4M base salary, it's a $6M cap charge. In each of the remaining years, there's a $2M cap charge, plus whatever the base salary is that year, for the total cap charge.

What the Saints have done is utilized a lot of big signing bonuses to squeeze players under the cap each year. Creating cap space to get players isn't always a big deal, because there are ways to structure contracts so you can fit them under the cap. In reality, it's more about the cash teams have to spend in a given year, than about cap space.

That is, until you reach the point in which your roster's collective cap hits exceed the NFL's base cap.

Each time a team restructures a contract, the signing bonuses increases the cap hit in future seasons. If you have to cut the player later, the signing bonus cap hit accelerates to the year you cut the player. For example, if you have $10M left from the signing bonus cap hit, that entire $10M applies to the cap the year you cut the player.

It's possible for teams to carry unused cap space from a previous year, into next year's cap. But that isn't always enough to help a team get under the cap.

To do so, you either have to cut players to free up space from their base salaries, trade players or convert base salaries and roster bonuses into signing bonuses. You can also extend players to lower their cap numbers, too.

You can check Over the Cap's salary cap calculator for the Saints to see their situation. In some cases, they have players due fully guaranteed money in base salaries, meaning they still owe the player the money if he's cut. In other cases, they've done so much restructuring or extension of player contracts, that they won't get enough cap relief by cutting the player.

The Saints would get $13.5M in cap relief if Brees retires, but that by itself won't be enough to get them under the cap.

They do have an obvious cut in linebacker Kwon Alexander, who would free $13.4M in cap space with no dead money (he was acquired in trade from the Niners, and the Niners took the dead money charge on Alexander's signing bonus). But that, combined with Brees' retirement, won't get the Saints under the cap.

Instead, the Saints are going to have to restructure multiple contracts, and cut a few players, just to get them close to being under the cap. At that point, they can explore options such as extending Ryan Ramcyzk and what to do with Marshon Lattimore (do they extend him after a down season or would they rather trade him?).

But after all of that, the Saints will still need space for their draft picks -- they have four, one each in rounds one through four, and that will require about $4M in cap space.

In other words, the Saints aren't going to get much of a chance to explore free agency, whether through extending their own players or adding players who were on other teams in 2020.

And while the Saints don't have a lot of needs, they have one in particular that will need addressing if Brees retires: Quarterback.

Taysom Hill has shown that he really isn't the long-term solution, while Jameis Winston was under a one-year deal and is more likely to sign a contract that falls more in line with a QB who is competing for a starting job. And because the Saints draft late in the first round, and have just four picks, getting a top QB draft prospect is going to be difficult.

So how will the Saints get under the cap? Jason Fitzgerald, who maintains the Over the Cap site, took a shot at it, and considered what to do depending on Brees' decision about 2021. You'll find out just how hard it will be for the Saints to navigate their cap situation.

With all the work ahead of the Saints, and the possibility that they won't have a capable starting QB in 2021, that's why the Saints might miss the playoffs next season.

The Saints are the prime example of what happens when you kick the cap can down the road too far. Even without unexpected factors such as the pandemic, the cap can become a major issue if you aren't careful with future cap hits.

Because once the good times come to an end, you may find yourself in a hole that will be difficult to escape.