Extreme Makeover: Salary Cap Edition – Los Angeles Chargers

This is the second article in a six-part series looking at the teams who are currently projected to be $20 million or more in the red in cap space for 2024, and the path forward for them to get under the cap. 

The first team we covered was the New Orleans Saints, and they’re linked below. The full list of teams includes: 

• New Orleans Saints: -$98.7 million
• Los Angeles Chargers: -$57.3 million
• Buffalo Bills: -$52.7 million
• Miami Dolphins: -$51.3 million
• Denver Broncos: -$26.8 million 
• Dallas Cowboys: -$21.4 million

While we don’t have a formal projection for the 2024 cap yet, it’s safe to say that number will end up north of $240 million, growing by more than $16 million for the second consecutive year.

Before we dive into the Chargers, here are some quick salary cap-related notes and definitions, as this can be a complicated subject. 

• Salary cap: The cap is the maximum any NFL team can spend on player salaries. Essentially, every team gets the same pie and can choose how to split it up, with various accounting mechanisms to manipulate how much cap space is available in any given year. 
• Dead Money: A term for money that has already been paid to a player and will count against a team’s salary cap no matter what. Most of the time this comes from signing bonuses, either from when a deal is initially signed or from restructures. When a player is cut, all the dead money remaining on their contract accelerates to the current year. 
• Restructure: An accounting trick teams can use to manage the cap in a given year. Signing bonus money is always prorated (spread equally) over the remaining years of a contract. That means teams can convert all but the minimum of a player’s base salary to a signing bonus and reduce the cap hit at the expense of increasing dead money in future years. 
• June 1 designation: Another accounting trick for teams — after June 1 when a player is cut the dead money is split over two years instead of all accelerating to the current year. Teams can designate two players per year as “June 1 cuts” and cut them before that date without the dead money hit, although they don’t get the resulting cap savings until after that date either. 
• Void years: Essentially “dummy” years that are added onto a deal, usually to help spread out the cap hits with restructures. They are not actual contract years that teams or players are required to fulfill. 

If you’re a visual learner like me, Over The Cap’s team cap calculator is a handy little tool to play around with and get a sense of how all of these terms and numbers shake out in real life. I leaned on it heavily when breaking down the cap situations and path forward for these teams. 

With the homework out of the way, let’s get into it…

Los Angeles Chargers: -$57.3 million

The Chargers were on this list last year, too, and that was before signing QB Justin Herbert to an enormous contract. Every team dreams of the flexibility afforded by having a star quarterback on a rookie contract, and Los Angeles has now officially wasted that window of Herbert’s career. They are old, expensive and bad — the dreaded trifecta of front-office mismanagement.

It’s a big reason why the 63-21 loss to the Raiders sealed the fate of HC Brandon Staley and GM Tom Telesco last week. A new head coach and general manager will have to chart a way forward, and the silver lining is the hardest part is done with Herbert locked up. There’s still a lot of work to do, however, and it starts with making some hard decisions about some big-name veterans on the roster. 

Changing Of The Guard

Four Chargers players have cap hits well above $30 million in 2024, including OLBs Joey Bosa and Khalil Mack and WRs Keenan Allen and Mike Williams. All four are getting up there in years; Bosa is the youngest at 29 in 2024, Williams turns 30 next season, Allen will be 32 and Mack will be 33. The Chargers have to do something with those four contracts to get under the cap next year and have money to work with. 

Los Angeles has four options. They can cut each player outright, and there are significant savings available with that route: 

• Mack: $15.3 million dead money, $23.25 million in savings
• Bosa: $22.2 million dead, $14.4 million in savings
• Allen: $11.7 million dead, $23.1 million in savings
• Williams: $12.5 million dead, $20 million in savings

It would admittedly sting to just cut all four. This group has been the better part of the team’s core over the past few seasons and longer in some cases. Allen and Mack are still playing well and when Bosa and Williams were on the field this season, they looked pretty good. But both are currently out with injuries, and that has to be part of the equation too. Williams tore his ACL after just three games and Bosa hasn’t made it through a full season since 2021. 

The challenge is the Chargers will have a hard time trading any of these four players for anything of substance. Bosa is due $22 million in cash, Mack and Allen are due more than $23 million, and Williams is due $20 million. Those are huge numbers that will cause most teams to shy away from giving up anything more than a late-round pick. Even getting a fifth-round pick for one of these players would likely require the Chargers to eat a significant chunk of their salary.

While all four are bonafide stars with a history of past production, the NFL cares more about future production. There are legitimate questions for all four due to age, injury, or both. Being expensive makes them an even bigger risk. 

The third option aside from cutting or trading these players is restructuring their contracts. However, there are logistical obstacles that make this unlikely. Williams, Allen and Mack are all in contract years and their deals don’t contain void years. Plenty of teams have incorporated those into their cap strategy but that was not Telesco’s philosophy. To get cap savings from the Williams, Allen or Mack contracts, the next GM will need to do a renegotiation, which requires buy-in from the agent, as opposed to a restructure which 99 percent of the time teams can do at their discretion. 

There would still be major questions about the wisdom of restructuring any of these four players and increasing the dead money hit in future seasons. The Chargers could restructure Bosa and save $10 million as opposed to $14 million by releasing him. But it would add $10 million in dead money to his 2025 cap hit. Should they decide to move on at that point, he would still count over $17 million on their books. If the Chargers cut him now, he’s off their books completely. 

Los Angeles restructured all four of these players this past offseason because they believed they had a chance to contend in 2023 coming off a playoff appearance last year. But at this point the results speak for themselves. If the Chargers are opting for a fresh start with the front office and coaching staff, it makes sense to extend that approach to the roster. 

Potential Pay Cut?

The last option for the Chargers is to try and negotiate a pay cut with this group, which would be an attempt to have it both ways and keep the players while getting the needed cap savings. It’s a strategy teams will often attempt.

The way it would work is the Chargers would approach the player’s agent and tell them one way or another we are not keeping this player at his current salary. We can either cut him and you guys can take your chances on the open market with a new team, or we will give you this reduced amount we’re comfortable with for you to stay another season.

From there, the player and agent have to evaluate their options. Can they beat that salary in free agency? Is it worth changing teams and everything that entails, like moving your family to a new city and adjusting to new coaches, teammates and a new system? The money is important but there are a lot of factors besides money that players have to consider. Teams can also try and tilt things in their favor further with timing, like waiting until late in the offseason or during the summer when there is less money or fewer job openings available on the market. 

In the case of the Chargers, they’re less likely to play hardball in this fashion because they need to get under the cap by the start of the league year in March and they can’t do that without addressing all or most of these contracts. But what will help the Chargers’ case is a lot of players want to play in Los Angeles and a lot of players will want to play with Herbert, the receivers especially. 

Ultimately it will come down to how much the Chargers want to slash from their budget, what Mack, Bosa, Allen and Williams are willing to accept and how much a new head coach/GM want to keep these four versus starting clean. 

Other Business

A new GM will have plenty of other things to handle besides those four big-name players. Decisions have to be made on other notable players — starting C Corey Linsley has played just three games this season due to a heart issue and his future is uncertain. He’s 32 and carries a $14.1 million cap hit next year, $8.9 million of which could be saved if he’s released. His health is the biggest consideration here and he’s another strong candidate for a pay cut if he returns to the field. 

Other potential cap casualties include DT Sebastian Joseph-Day ($7.5 million cap savings), LB Eric Kendricks ($6.5 million) and DL Morgan Fox ($3.5 million). There are also several notable pending free agents like RB Austin Ekeler, TE Gerald Everett, LB Kenneth Murray and CB Michael Davis. With the arrival of a new regime, it feels more likely than not most of them will be allowed to leave. 

But the Chargers’ decision with Bosa, Mack, Allen and Williams is ultimately what is going to define their offseason and the direction of the team going forward.