Chargers salary cap breakdown: Why they are positioned for an aggressive offseason

The Los Angeles Chargers are positioned for an aggressive offseason in Year 2 of coach Jim Harbaugh and general manager Joe Hortiz.

They have cap space to use, and they have needs to fill.

Last year, the Chargers were operating under considerable salary cap constraints. As such, they largely went bargain-hunting in free agency. This year, no such constraints exist. They already have the flexibility to attack the top of the market at multiple positions, and they have mechanisms to create even more cap space in the coming weeks before the start of free agency. The negotiating window opens March 10.

Hortiz noted earlier this month that the process will not change. “You always stay responsible with your spending on the salary cap,” he said. “If you get reckless, you pay the piper eventually. So we’re going to be responsible, we’re going to be clinical in our approach, and there’s going to be a plan to it.”

Still, the same process should produce different results simply because of the increase in cap space. The Chargers did a commendable job last offseason of adding impact talent through free agency. This offseason, they will have opportunities they did not have in 2024, including shopping in price brackets that were untenable last year.

We provided a brief overview of the Chargers’ cap situation in last week’s offseason handbook. Now let’s dive into the granular details and what it all means for the Chargers’ approach.

All salary cap figures courtesy of Over the Cap unless otherwise noted.

Calculating space

The league has not yet announced the salary cap for 2025. That will be coming sometime in the next few weeks. Teams will typically get some guidance from the league so they can operate off a ballpark figure. But the cap is not set in stone until the league officially declares it. Until then, we will be working off a projection of $272.5 million from Over the Cap.

This is subject to change. Last offseason, for example, Over the Cap projected the cap at $242 million. The league announced on Feb. 23 that the cap would be $255.4 million. This created $13.4 million in additional space for the Chargers, compared to what we initially forecasted. And they needed it to get under the cap and make some of those bargain moves on the open market.

Team-specific caps are then calculated based off the league-wide cap. Teams can roll over unused cap space from the previous season. Team-specific caps are also adjusted before the new league year begins for items like incentives.

For cap-accounting purposes, incentives in players’ contracts are deemed either Likely To Be Earned (LTBE) or Not Likely To Be Earned (NLTBE). Initially, only incentives that are LTBE count against the cap.

If a player does not earn an incentive that was deemed LTBE, that space is given back to the team during the adjustment period. The opposite also can happen. If a player earns an incentive that was deemed NLTBE, that charge gets added to the team cap during the adjustment period.

A team-specific cap is equal to the league-wide cap + carryover space +/- adjustments.

The Chargers had $4.893 million in unused space from 2024. They roll that over into 2025. Adjustments have not come in yet, so those will be factored in later this offseason. The Chargers’ projected team-specific is $277.393 million: $272.5 million + $4.893 million.

The Chargers have 45 players currently rostered. Each player has a cap hit for the 2025 season, which is what he counts against the cap for the year. Cap hits combine base salary and any bonuses. Certain bonuses, like signing bonuses and option bonuses, can be prorated — divided evenly — over a maximum of five years. Add up all the 2025 cap hits. Add in $3.349 million in dead money, which comes from unaccounted for bonuses for players no longer on the roster. And you get the Chargers’ total cap liabilities: $214.343 million. Subtract the cap liabilities from the team-specific cap and you get the cap space: $63.05 million.

We have to go a bit deeper to calculate the actual amount of space the Chargers have to spend. There are certain charges baked into the offseason for which the Chargers must account.

They will have to pay their draft picks. The cap hits for draft picks are predetermined by slot. The Chargers are projected to have 10 picks. The first three are set: No. 22 in the first round, No. 55 in the second round and No. 86 in the third round. The final seven picks will not be officially slotted until the league awards compensatory picks ahead of the draft. But we can project those picks as: No. 123 in the fourth round, No. 158 and 176 in the fifth round, No. 182, 200 and 214 in the sixth round and No. 252 in the seventh round.

Add up all the 2025 cap hits for those 10 picks and you get a total rookie pool of $11.599 million.

Only the top 51 cap hits count against the cap during the offseason. That changes on cut-down day at the end of the preseason, when all 53 players on the active roster count against the cap.

The Chargers are at 45 players right now. By the time the draft comes in April, they will be above 51. And so each of the draft picks will replace an existing salary in the top 51. As such, the cap space needed to pay draft picks is not equal to the total rookie pool. It is equal to the total rookie pool minus the salaries that will be replaced in the top 51. The minimum salary for rookies in 2025 is $840,000. Ten draft picks will effectively replace 10 minimum salaries. The space needed to pay draft picks is equal to $11.599 million – (10 x $840,000). That comes out to $3.198 million in space to pay draft picks.

The Chargers will also be adding at least six more players to get to the 51 players counting against the cap. Each of those six players will be counting at least $840,000 against the cap. Six players x $840,000 equals $5.04 million in space to get to 51 players.

Take the cap space of $63.05 million. Subtract $3.198 million in space for draft picks. Subtract $5.04 million in space to get to 51 players. That gives you the Chargers’ effective space: $54.812 million.

The Chargers will then need to budget for in-season charges. They will have to account for their practice squad. Players on the practice squad count against the cap based on weekly salaries. Players with no more than two accrued seasons earn $13,000 weekly for 2025. All other practice squad players can earn between $17,500 and $22,000 weekly, as negotiated between the player and team. Practice squads have a maximum of 16 players, not counting any international pathway players. The overall space needed for the practice squad is roughly between $2.5 million and $3 million. For all charges such as these, I budget $8 million for in-season moves. This includes practice squad, injury settlements, trades, street free agents, etc.

Subtract the $8 million in-season budget from $54.812 million in effective space and you get what I call adjusted effective space: $46.812 million.

This a projection of what the Chargers can spend on 2025 cap hits.

Joey Bosa is scheduled to have cap hit in 2025 on $36.471 million. (Jayne Kamin-Oncea / Imagn Images)

How the Chargers can create more space

The Chargers have several avenues to add to this adjusted effective space total.

The first is by moving on from players under contract, either via cut or trade. Typically, these candidates are players with bloated cap hits who do not have fully guaranteed money remaining on their deal.

Two players fit this mold: edge rusher Joey Bosa and right guard Trey Pipkins.

Bosa has the highest 2025 cap hit of any edge rusher in the league at $36.471 million. He did not play like the best edge rusher in the league in 2024, as he battled through injury. The Chargers could keep Bosa at this number, but I do not think this would be sound process. The Chargers can create an additional $25.36 million in space by cutting or trading Bosa.

Pipkins signed a three-year deal before the 2023 season. At that point, he was a starting right tackle. Now, he is a starting right guard. Those positions have different markets. As such, Pipkins’ deal is inflated after making a move inside. What was a lower-market starting right tackle deal has become an upper-market starting right guard deal. His $9.25 million cap hit would rank 18th among starting right tackles in 2025. It ranks 12th among starting right guards. This is not a huge number to be paying a starting right guard. But can the Chargers pay the same amount for an upgrade? If they do upgrade, does it make sense to pay a backup offensive lineman starter-level money? The Chargers would save $6.75 million in space by cutting or trading Pipkins.

The Chargers can also create additional cap space through extensions and restructures.

The big potential extension looming is for left tackle Rashawn Slater. We wrote earlier this week about what that could look like. If the Chargers get a long-term deal done with Slater, they could be looking at roughly $10 million in savings.

A restructure typically means turning base salary into a signing bonus and then prorating it over the length of the deal. This creates short-term space, but the money still must be counted against the cap at some point. Think of it like taking a cash advance out on your credit card. You have cash up front to spend. But at some point, you’re going to have to find that money elsewhere to pay off the credit card charge. Restructures can be a valuable mechanism when teams are tight against the cap. But I would be surprised if the Chargers do any sort of substantial restructuring considering their healthy cap situation.

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What the Chargers can do with the space

Any additional space-saving measures would likely come at some point before the start of the league year. For now, we will be operating off that $46.812 million in adjusted effective space.

With that kind of spending space, all options are on the table.

The Chargers need an outside receiver to pair with star slot receiver Ladd McConkey. Cincinnati Bengals receiver Tee Higgins is a pending free agent. If Higgins hits the open market, he will be one of the most coveted free agents of the offseason. The Chargers have the space to be players in the sweepstakes if they want to. Higgins is an ideal fit for what the Chargers need at receiver.

Receiver Calvin Ridley hit the open market last offseason and signed with the Tennessee Titans for $23 million in average per year (APY). His 2025 cap hit was $10 million. Higgins will likely end up closer to $30 million in APY. But the point is Year 1 cap hits of lucrative long-term deals are almost always significantly lower than the APY. The 2025 cap hit is what will be subtracted from the $46.812 million.

The free-agent guard market is deep if the Chargers decide to upgrade over Pipkins. The Kansas City Chiefs’ Trey Smith, the Indianapolis Colts’ Will Fries, the Chicago Bears’ Teven Jenkins, the Philadelphia Eagles’ Mekhi Becton, the Baltimore Ravens’ Patrick Mekari and the San Francisco 49ers’ Aaron Banks are all under 28 years old and pending free agents. There are also veteran options like the Detroit Lions’ Kevin Zeitler, the Pittsburgh Steelers’ James Daniels and the Jacksonville Jaguars’ Brandon Scherff.

Carolina Panthers guard Robert Hunt signed a five-year deal in free agency last offseason at $20 million in APY. His 2025 cap hit was $6.45 million.

The Chargers could also attack the trade market. If they trade for Seattle Seahawks receiver DK Metcalf, for example, they would be taking on a 2025 cap hit of just over $18 million.

This should put in context what a big number $46.812 million is in adjusted effective space. The Chargers can inject a huge amount of top-end talent into their roster. They also have plenty of room to re-sign internal free agents, including edge rusher Khalil Mack, defensive lineman Poona Ford and safety Elijah Molden.

The last time the Chargers had this much space was in 2022. That January, I had them at $44.2 million in adjusted effective space. They brought back receiver Mike Williams on a three-year extension. Williams was a pending free agent. They traded for Mack, taking on his sizable veteran contract. They added four starters in free agency: cornerback J.C. Jackson, defensive lineman Sebastian Joseph-Day and Austin Johnson and tight end Gerald Everett.

This is the type of activity the Chargers are capable of this offseason.

Activity, though, does not mean production. Jackson played seven games for the Chargers after signing a five-year deal.

That, of course, was a different regime.

We saw Hortiz’s free agency approach pay off for the Chargers in 2024.

Now we will see what that approach looks like with far more cap space.

(Top photo: Candice Ward / Getty Images)