Understanding the Denver Broncos' salary cap situation

It’s officially the offseason in Denver, and that means it’s time for a salary cap refresher.

Maybe you don’t know how the NFL salary cap works. Maybe you need a refresher. Maybe you already understand the cap and don’t need to read any of this.

Regardless, here are answers to some of the questions Broncos fans might be asking this offseason.

(All of the numbers below come from Spotrac, OverTheCap or the NFLPA.)

How much salary cap space do the Broncos have?

-$30 million.

The number isn’t set in stone quite yet. Sometime in the next two months, the NFL will announce the official salary cap for the 2024 season. Most projections expect the cap to be about $242.5 million, which is up from $224.8 million in 2023.

The Broncos currently have about $273 million in salary cap liabilities for 2024. They’ll roll over their $1 million in unused salary cap space from 2023. That will leave them about $30 million over the expected salary cap, which places them in the bottom five of the NFL in cap space.

In other leagues, going over the salary cap can be allowed. For example, MLB has a luxury tax, or a tax on all spending past the limit.

The NFL has a hard cap, though. There’s no exceeding the limit.

Why don’t the Broncos have salary cap space?

These are the 10 biggest earners for the Broncos in 2024, by salary cap hit:

1. Russell Wilson ($35.4 million)
2. Garett Bolles ($20 million)
3. Zach Allen ($19 million)
4. Mike McGlinchey ($18.5 million)
5. Justin Simmons ($18.25 million)
6. Courtland Sutton ($17.3 million)
7. Tim Patrick ($15.57 million)
8. Ben Powers ($15.25 million)
9. Jerry Jeudy ($12.99 million)
10. DJ Jones ($12.96 million)

These 10 players take up $185 million in cap space, or about 76% of the salary cap.

Can NFL teams spend cash instead of salary cap?

No. Every dollar a team spends on players must be accounted for in the salary cap.

However, when teams account for that money is flexible, especially with excess cash.

NFL contracts can provide players money in various ways, but the two most common ways are through salaries and signing bonuses. Salaries must be accounted for in the year the team gives the player the money, but signing bonus money is split evenly across each year of the contract.

For example, imagine the Broncos sign a new player to a five-year contract this offseason. If they give him a $10 million salary in 2024, that will add $10 million to the Broncos’ salary cap spending in 2024.

But if they give him a $10 million signing bonus, the cap hit is split over all five years of the deal. In salary cap dollars, the bonus would cost the Broncos $2 million in 2024, $2 million in 2025, $2 million in 2026, $2 million in 2027 and $2 million in 2028.

By spending cash up front—a signing bonus—the team gets to push some of the salary cap implications down the road.

Every dollar the team spends on players must be accounted for in the salary cap, but cash signing bonuses can push that accounting to future years.

How will the Broncos get under the salary cap?

The Broncos have two primary ways they can reduce their salary cap liabilities.

1. Trade or release players.
2. Restructure contracts.

The first option is clear. If somebody has a $15 million non-guaranteed salary in 2024 and the Broncos decide to release him, they would gain $15 million in 2024 salary cap space.

The second option is more complicated. 

A contract restructure means the team and the player agree to change the contract. This can be adding incentive, reducing pay, or any number of other things.

The most common type of restructure is a “simple restructure.” In this case, the player’s salary is converted to a signing bonus, which (as explained above) spreads his salary cap hit of the remainder of his contract.

Let’s look at Mike McGlinchey’s contract, for example.

McGlinchey has four years remaining on his deal. In 2024, his salary is $15 million. If McGlinchey and the Broncos agree to a simple restructure, they would reduce the salary to the minimum veteran salary (about $1.5 million) and convert the rest ($13.5 million) to a bonus. That bonus would be split over all four remaining seasons for salary cap purposes.

Instead of accounting for the entire $15 million that McGlinchey is due in 2024, the Broncos could reduce his cap hit to $4.875 million (the $1.5 million minimum salary plus one-fourth of the $13.5 million bonus). 

The downside is that the Broncos’ salary cap bill for McGlinchey will increase in each of the other three remaining seasons by $3.375 million, one-fourth of the bonus.

For the Broncos, pushing some of the salary cap money down the road could make sense.

For McGlinchey, accepting the restructure makes even more sense. Instead of waiting until football season to get paid his $15 million in weekly installments, he gets the bulk of the money right away.

Who could the Broncos trade to clear salary cap space?

The Broncos could save at least $45 million in salary cap space in 2024 by trading any of these players:

Garett Bolles — $16 million
Justin Simmons — $14.5 million
Jerry Jeudy: $12.99 million
DJ Jones — $9.97 million
Courtland Sutton — $9.65 million
Tim Patrick — $9.5 million
Zach Allen — $7.75 million
Jarrett Stidham — $6 million
Ben Powers — $5.5 million
Alex Singleton — $4.67 million
Mike McGlinchey — $4.5 million

Who could the Broncos release to clear salary cap space?

The Broncos could save at least $5 million in salary cap space in 2024 by releasing any of these players:

Garett Bolles — $16 million
Justin Simmons — $14.5 million
Courtland Sutton — $9.65 million
Tim Patrick — $9.5 million
DJ Jones — $9.97 million
Jarrett Stidham — $4.5 million

What is dead cap?

Dead cap is money that is accounted for in the salary cap for a player that is no longer on the team.

For example, Randy Gregory has a $7.1 million salary cap hit for the Broncos in 2024. That is “dead money” because Gregory is no longer on the team.

Dead cap is the remaining money that has been paid to a player, but hasn’t yet been accounted for in the salary cap. Gregory’s dead money comes from two places: 

1. His signing bonus.
2. A restructure. 

Gregory signed a 5-year, $70 million contract with the Broncos. His salaries in the first two years (2022 and 2023) were guaranteed.

Gregory got a $10 million signing bonus. For salary cap purposes, that bonus cost the Broncos $2 million in each of the five seasons. The Broncos traded Gregory in October, during his second season. That left three seasons of signing bonus—$6 million—to be accounted for. That’s $6 million of the $7.1 million of the dead cap hit the Broncos will take in 2024.

Even though the Broncos traded Gregory to the 49ers, Denver is still responsible for that dead cap hit, because they were the ones who gave him the cash. Whoever pays the cash must also pay the cap hit. 

The other $1.1 million of Gregory’s dead cap hit for Denver comes from a restructure that was done at the time of the trade to make the deal a little sweeter for the 49ers. We won’t dig into those numbers though. You get the point.

Can the Broncos cut Russell Wilson?

Yes.

The Broncos have two paths to release Russell Wilson:

1. Release him in the next two months.
2. Release him after two more seasons.

In theory, the Broncos could move on from him at a different time, but that would be financially reckless.

Here’s why: Wilson’s contract includes a guaranteed salary for 2025, but only if Wilson is still on the roster on March 17th, 2024. If the Broncos release Wilson before that date, they won’t owe him any of his $37 million 2025 salary. 

So, if the Broncos keep Wilson for the 2024 season, they might as well keep him for the 2025 season, too. They’ll be paying him either way.

If the Broncos move on from Wilson this offseason, his cap hits will look like this:

2024: $35.4 million
2025: $49.6 million
2026+: $0

If the Broncos keep Wilson for the next two seasons, his salary cap hits will look like this:

2024: $35.4 million
2025: $55.4 million
2026: $18.4 million
2027: $12.8 million
2028+: $0

In other words, the Broncos won’t save any salary cap space this season if they move on from Wilson, but they will save $37 million (Wilson’s 2025 salary) over the following three seasons. 

Will the Broncos be able to sign free agents?

Yes, but probably not like last year.

The Broncos were one of the NFL’s biggest spenders in free agency in 2023. They brought in Mike McGlinchey, Ben Powers and Zach Allen. All three players earn at least $10 million per year.

Broncos general manager George Paton gave his take on the situation at his end-of-season press conference.

“We won’t be in on the first wave of free agency like we were last year,” Paton said. “You can’t do that every year. We’ll be very strategic and very specific on what positions and what players we try to sign.”

If the Broncos wanted to get aggressive, they could find a way to get a top-10 free agent. But they would need to do some gymnastics to make the numbers work.

Most free-agent contracts include big signing bonuses and smaller first-year salaries. That means cap hits are generally low in Year 1.

For example, Mike McGlinchey’s average cap hit on his five-year deal is $17.5 million. But his Year 1 cap hit was $6 million.

While the Broncos probably won’t make any big moves in free agency, they can probably do more than you’d expect given their current situation. Most of the bills for new players will be paid down the line.

Which Broncos will be free agents?

Eight of Denver’s starters will be unrestricted free agents this offseason. 

• ILB Josey Jewell
• C Lloyd Cushenberry III
• CB Fabian Moreau
• TE Adam Trautman
• S PJ Locke
• DT Mike Purcell
• FB Michael Burton
• K Wil Lutz

The following reserves will also be unrestricted free agents:

• CB K’Waun Williams
• T Cameron Fleming
• DT Jonathan Harris
• LB Justin Strnad

Have more questions? Leave them in the comments below.