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Chargers’ salary cap woes in 2024 create ‘win now’ urgency

How important is success in 2023 given how leveraged the Chargers are in 2024?

Syndication: USA TODAY Corey Perrine / USA TODAY NETWORK

Quick 2023 Offseason Overview

Tom Telesco had multiple levers he could have pulled to achieve “cap compliance” by the start of the NFL’s new year. The Chargers’ GM chose to keep the band together for one more year, after assembling a remarkably talented roster in 2023 that was decimated by injuries. This decision has been widely criticized by pundits, who have given the Chargers average-at-best offseason grades since the majority of their resources went to retaining in-house talent. Their only notable free agent acquisition was Eric Kendricks, and their first two draft picks are expected to be rotational players in their first year.

However, these pundits overlook the incredible talent the team possessed in 2022 and the impact of retaining that talent in 2023. The Chargers of 2022 saw several players step up and perform admirably in starting roles when injuries struck. Players like Alohi Gilman, Jamaree Salyer, Kyle Van Noy, Michael Davis, and Morgan Fox exceeded expectations while filling in as starters.

The 2023 Chargers may not have as talented a roster as last year’s squad, as they have lost some key pieces such as Kyle Van Noy and Bryce Callahan. However, if the team experiences fewer injuries, they have the depth and talent at EDGE and cornerback positions to address these gaps. The biggest upgrade for the team is likely the hiring of Kellen Moore, who brings more credibility as a coordinator than Joe Lombardi ever did.

Expectations should be high for the Chargers in 2023, regardless of what the pundits say about their offseason gains and losses. However, it’s essential to consider how the team’s leverages against the 2024 salary cap may affect these expectations.

How do the 2023 restructures affect us moving forward?

By restructuring the contracts of Joey Bosa, Khalil Mack, Keenan Allen, and Mike Williams, the Chargers freed up $40,368,332 in cap space, giving them approximately $19 million to work with. However, this amount diminishes quickly, considering it doesn’t account for in-season budgets and rookie signings. Thus, the restructures were primarily aimed at retaining the Chargers’ current core rather than bringing in new established talent.

The immediate burden the Chargers will carry is $32,756,666 of the 2023 savings counting against the 2024 cap. The remaining $7,611,666 will be added to the 2025 cap figures.

The concerning aspect is that the Chargers were already in a compromised position regarding their 2024 cap. Assuming an 8% growth rate in the base salary cap, which was witnessed this year, it could reach $242,784,000. Prior to the restructures, the Chargers were projected to be considerably over the cap. When factoring in additional details such as $2 million in roll-over cap from this season, a $3 million budget for signing rookies, and a $7 million in-house budget, the estimate was around $45,000,000 over the cap before Justin Herbert’s fifth-year option was exercised. With the restructures, the addition of Eric Kendricks, and Morgan Fox, and Herbert’s fifth-year option, the team is currently projected to be $83,049,973 over the cap for 2024.

What levers can Telesco pull in 2024 to achieve cap compliance?

Tom Telesco has several options to address the team’s cap situation in the next offseason, but none come without consequences.

Cut/Trade candidates and savings

  • Khalil Mack - $23,250,000 saved.
  • Joey Bosa - $14,388,332 saved if cut/traded before June 1st, $22,000,000 if cut/traded after.
  • Mike Williams - $20,000,000 saved.
  • Keenan Allen - $23,100,000 saved.
  • Sebastian Joseph-Day - $7,500,000 saved.

Restructure Candidates

  • J.C. Jackson: $8,833,333 saved in a max-restructure without void years, increasing his following two years by approximately $4,416,665.
  • Corey Linsley: $5,145,000 could be saved in a max restructure without void years and would be applied directly to his 2025 cap hit.
  • Joey Bosa: $10,395,000 could be saved in a max restructure without void years and would be applied directly to his 2025 cap hit.
  • Derwin James: $7,750,000 could be saved in a max restructure, and would increase his following two years by $3,875,000.

Extension Candidates

  • Justin Herbert represents the biggest savings here, with his entire $29,504,000 allocated as base salary. Assuming a restructure similar to Lamar Jackson’s contract, albeit slightly more backloaded, a $20,000,000 cap saving is achievable, although it may be optimistic.
  • Keenan Allen, Mike Williams, and Joey Bosa could also potentially sign extensions. However, the savings would depend on leveraging against future years and would likely amount to $5-10 million per extension.

Outgoing 2024 Free Agents

The Chargers will have to fill more holes in 2024 than they did in 2023. In addition to creating approximately $83 million in cap space, the team will need to find replacements for starters such as Michael Davis, Austin Johnson, Austin Ekeler, Gerald Everett, Kenneth Murray, and Alohi Gilman.

Importance of 2023 Success

Tom Telesco faces a challenging battle in 2024 unless he is bailed out by a higher-than-expected growth in the base salary cap. The team is heavily leveraged against the 2024 cap, making it difficult to imagine Telesco being as aggressive in his push unless he feels the heat under his seat. The expectations for the team should be to reach the Super Bowl, and falling short of a conference championship visit would likely be considered a major disappointment, potentially justifying a new general manager leading us through this rebuild.