Are NFL execs cheating the salary cap with insurance policies?

The 2024-25 NFL season is only two weeks old and the league has already seen a score of star players get injured.

Some of them signed multi-million dollar contracts and won't be playing for several weeks, if not the rest of the year. Smart agents get their clients guaranteed money so that not all is lost in the event of a snapped Achilles or a torn ACL.

But what about the teams? What assurances do they have when they sign deals with exorbitant amounts of guaranteed cash?

Well, on Wednesday, ESPN's Kayln Kahler reported the words of former club executives and current professionals who detailed a "loophole" teams utilize to recoup lost money and legally circumvent the salary cap at the same time.

According to ESPN, the NFL collective bargaining agreement from 2020 includes a provision that classifies contract insurance proceeds as a "refund from the player" which then qualifies as a salary-cap credit for the following season.

In short, teams are creating extra cap space out of thin air for the next year when a player gets hurt and it recoups a significant portion of the contract payout through an insurance policy.

"That's the crux of the loophole," a former club executive told ESPN. "You effectively can use cash to create cap space from scratch. In a closed system, that is one of the few ways to buy cap space."

So, are teams cheating by doing this?

The short answer: no. It's part of the CBA and therefore legal under NFL rules, but it came into the public eye after Sportico reported last October that the New York Jets had not bought an insurance policy for quarterback Aaron Rodgers' $40 million contract after trading for him from Green Bay.

We all saw how poorly that decision panned out for the organization in 2023.

That being said, here's what the insurance loophole could mean for teams facing significant injuries this year.

Los Angeles Rams: The team has lost 12 players to injured reserve in just the first two weeks, but the most costly are wide receivers Cooper Kupp and Puka Nacua. While neither is out for the season, they have a combined cap hit of over $30.7 million this year. If the team insured both contracts, it could recoup a significant portion of that dead money and apply it to next year's cap. Kupp and Nacua's contracts represent roughly 12 percent of this year's cap hits, per Spotrac.

San Francisco 49ers: While star players Christian McCaffrey and Deebo Samuel aren't out for the year (yet?), both represent nearly eight percent of the team's 2024 cap hit with nearly $19 million combined. Insurance policies on both would give San Francisco significant flexibility going into 2025, especially having just re-signed wideout Brandon Aiyuk and offensive lineman Trent Williams to expensive extensions and quarterback Brock Purdy due for a significant raise.