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The $5B Business of The NFL Offseason
The NFL is a behemoth.
It’s by far the largest sports organization in the world, despite being played primarily in North America.
You might have seen that Deshaun Watson (despite 22 accounts of assault) signed a $230M deal with the Cleveland Browns.
So how much money is spent during the NFL free agency period?
Let’s dive in 👇
The Jacksonville Jaguars spent over $175 million in guaranteed money to free agents during this current cycle.
That beats the record set by the Patriots in 2021, when they gave out $163 million in guaranteed payments.
Breaking it down further, the Jaguars (before the NFL draft) have spent $275,583,000 during the offseason.
Urban Meyer left them in a bad place. And the Jags owe him over $9M in buyout money…OUCH.
Their roster needed better players, so I guess it made sense to go out and buy top talent, even if they massively overspent.
Total Amount Spent This Year
So far in 2022, NFL teams have spent a whopping $4.5 BILLION in the offseason.1
$220M off waivers
$2.2B in extended contracts
$2.3B in free agents
While this might seem absurd, the same amount was spent during the 2021 offseason.
But what about a decade ago?
In 2012, $3.4B was spent during this same period.
So over the last 10 years, NFL teams have had a 32% increase in spending during the offseason.
Don’t expect this to slow down anytime soon as NFL contracts continue to increase.
So how’d we get here?
The History of NFL Free Agency
The road to free agency has mostly gone through the court system.
Originally, the NFL used the “reserve” system that was created in Major League Baseball. Under this system, once a player’s contract expired, they could renegotiate with the team that owned his contract.
If the player did not work out a new deal, his team could renew his old contract with up to a 10% pay cut. The only way a player could move to another team was to retire, or hope his team sold or traded his contract.
In 1962, R.C. Owens became the first player to change teams. He signed with the Baltimore Colts after playing out his 1-year option year with the 49ers.
This move prompted owners to create the “Rozelle Rule” in 1963.
Whenever a team lost a free agent, the team signing that free agent had to compensate his former team. If the teams did not agree to terms, NFL Commissioner Pete Rozelle had the final authority to decide what the compensation would be.
From 1963-1974, only 34 players signed with new teams.
In 1976, the player’s union won a court decision that found the “Rozelle Rule” to be an unfair restraint of trade and removed Pete Rozelle’s overarching power.
In 1987, unhappy with the system negotiated into the CBA, the players went on strike. The owners effectively ended the strike by using replacement players to continue playing the season.
In 1989, the players’ union sued the league again. In this decision, the court ruled that because the players had a union to negotiate, they were not allowed to sue the league for anti-trust violations.
With fear of another lawsuit, the league adopted a new system. Plan B.
So what was “Plan B”?
Under Plan B, teams were allowed to protect 37 players on their roster, and the remaining players became unrestricted free agents (this caused a lot of controversy as you might imagine).
Freeman McNeil, a running back from the New York Jets, was the lead plaintiff in a suit in which a federal jury ruled that Plan B was illegal.
After the McNeil case, a flood of lawsuits hit the league, so the owners decided to bargain with the players. In 1993, the owners granted the players free agency in exchange for a salary cap.
Set at $34.6 million for its initial season, the salary cap intended to serve as an equalizer in response to free agency.
This was the best chart I could find…and it’s extremely outdated in only 10 years.
2022’s NFL salary cap is set at $208M per team, which is a 14% increase from 2021’s cap of $184M.
Professional sports teams have been extremely profitable investments over the years. (Post on that coming soon.)
Revised version from patriots.com 2
What Teams Spent The Most This Year?
The Jaguars gave out the most in guaranteed money, but three other teams outspent them — and by A LOT!
Here were the 5 biggest spenders:
I know it’s kind of small, so if you can’t see it:
Miami Dolphins: $359M
Oakland Raiders: $327M
Green Bay Packers: $288M
Jacksonville Jaguars: $275M
Los Angeles Chargers: $270M
Who the heck are these teams signing?
Since we’ve been examining the Jaguars — let’s stick with them:
The Jags dropped nearly $100M on just Wide Receivers.
Record Breaking Deals
This offseason has seen some ENORMOUS contracts signed.
Aaron Rodgers - 3 years, $150M
Deshaun Watson - 5 years, $230M
Devante Adams - 5 years, $141M
Here’s one more interesting fact:
The New Orleans Saints saved over $91M by restructuring contracts with 13 different players.
Have friends who enjoy the NFL?
Share this post with them — I would greatly appreciate it.
Get after it this Wednesday!