Salary Cap

//From the DFW Vault (originally published January 16th, 2015)

By Brian Hawkes (@bdhawkes)

Dynasty Leagues are for the committed. They follow a league, the NFL, that is the most successful powerhouse in all of professional sports. The NFL has done an excellent job putting together a year-round calendar of events to keep fans engaged. In my opinion, a good dynasty league should follow the same format to keep owners engaged every step of the way.

Keeping fantasy owners active and interested during the season is relatively simple. It is the off-season that poses a challenge when it comes to owner activity and interest. League rules play a huge role in owner engagement; it is important to consider rules that encourage owners to stay interested and active during the off-season. In many dynasty leagues, rosters are drafted for keeps…meaning there is no turnover unless a player is traded from one team to another. Although I respect this format, I would argue that there is opportunity to improve by building in ways to plan for roster turnover. One way to do this is to mirror the NFL by using a salary cap.

Salary caps add another element for league owners to consider when trading for a player. Players who are signed below market value have an increased value. Value can also be added to rookies if rookie salaries are assigned based on draft position, which adds value to draft picks.

Salary Cap Rules (21 player roster): Keep in mind this is one set of rules.  There are a multitude of ways to set up any Salary Cap League. 

  • Salary cap for all rostered players, including IR and Taxi Squad, is $63 M. This is a hard cap, meaning you must have adequate cap space to make roster moves (signing rookies, trades, free agent acquisitions).
  • Minimum player salary is $500 K
  • Maximum contract length is 4 years
  • Free Agents acquired in season are signed to $500 K/ 1 year contracts
  • Rookie salaries do not become guaranteed until they are added to the active roster. Meaning they can be drafted, and an owner has their rights, prior to cap space being available. When roster cuts are made (the Tuesday following the third preseason game), owners will need to make roster adjustments to create space if rookies are to be added to the active roster.
  • Rookie cap numbers and contract length are determined by their draft position. If a rookie is added to the active roster, their cap number/contract length will be as follows:
    • First Round Picks will be signed to $2 M/ 4 year contracts
    • Second Round Picks will be signed to $1 M/ 3 year contracts
    • Third Round Picks will be signed to $500 K/ 3 year contracts
    • Fourth Round Picks will be signed to $500 K/ 2 year contracts
  • If a player is cut from an active roster while under contract, the owner will be charged a penalty against the salary cap for early termination. The penalty will be 30% of the player’s annual salary times the number of contract years the player is signed. (Example: Player signed to a $1 M/ 4 year contract. Early Termination is 30% of $1 M = $300 K x 4 years = $1.2 M in year 1, $300k x 3 years = $900 K in year 2, etc.) This rule is in place to encourage trading, and to also reinforce commitment to contracts.

Salary caps add to the off-season event calendar, creating restricted free agency. Much like the NFL, players in the final year of their contract become eligible for free agency. The owner has an opportunity to retain them, after their fair market value has been established through auction. This pool of veteran players adds to the rookie draft as a key event to the off-season. As owners review the list of players in the final year of their deals, they determine which players would be nice additions to their roster. Some will try to acquire expiring contracts to create cap space with hopes of bidding a player out of the grasp of their current owner. This keeps all owners active and interested, even as some are eliminated from playoff contention.

Restricted Free Agency Rules:

  • A “restricted free agent” is defined as any player that was on an active roster, but their contract has expired.
  • Restricted free agents will be eligible each off-season for auction. An auction will occur prior to the rookie draft where league owners will have an opportunity to bid on players whose contract expired the previous season.
  • If a player receives bids, the highest bid establishes the free agent value for the player. Bids must include an annual salary cap number and contract length; total contract value determines highest bid (maximum contract length is 4 years).
  • Winning bids will then be submitted to the original league owner to give a final opportunity to match the offer.
    • Should the original owner choose to match and retain the player, they must have adequate cap space to officially resign the player.
    • Should a winning bid be awarded the free agent, they must have adequate cap space to officially sign the free agent.
  • If a restricted free agent receives no bids, he becomes an unrestricted free agent.

For those who enjoy auction drafts, annual free agency bidding is a highly anticipated event. Unlike a redraft auction where every team has equal cap space available and equal roster spots to fill, owners approach free agency with varied cap space available and varied roster spots to fill. This event normally precedes the rookie draft, which also plays a part as owners anticipate positions of need to be addressed through both free agency and the draft. As you can imagine, this adds quite a bit of intrigue.

The NFL has done a tremendous job keeping fans engaged through the draft, free agency, training camp, the regular season, and playoffs. Salary caps add a valuable element to any dynasty League as they mirror the rules the NFL has in place. I hope you’ll consider adding this feature to your league, as it’s just another way owners can play the role of General Manager for their franchise, and keep their dynasty dreams alive throughout the league calendar year.