Colts free agency primer: Breaking down the salary-cap situation and what it means

The Colts approach 2024 free agency armed with over $50 million in cap space but they have
high expectations for next season and a lot of work to do
Houston Texans v Indianapolis Colts
Houston Texans v Indianapolis Colts / Michael Hickey/GettyImages
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The 2023-24 NFL season has come to a close, and that means the offseason has now officially begun. Starting this week, all teams (though most already have) will be shifting their attention to roster construction for next season. On February 20, NFL franchises can start handing out Franchise and Transition Tags. On February 27, the NFL combine kicks off at Lucas Oil Stadium. Then comes one of the most important offseason dates: March 13, a.k.a. the start of NFL free agency.

As they try to build on the momentum generated from this past year, the Colts have plenty of room for improvement and free agency remains one of the best ways to add talent. Indianapolis GM Chris Ballard has never been known for being a big spender, though that might change as the team expects to contend in a rapidly improving division and stacked conference. The Colts can afford to be aggressive this offseason, but only time will tell what the front office decides to do.

How much cap space do the Colts actually have?

Salary cap space in the NFL is always a tricky subject that can easily become very complicated. Here’s my attempt at a simple breakdown. First and foremost, the salary cap — the maximum amount any team can spend on their players annually — is expected to be more than $240 million in 2024. While the official number has not been released yet, it will certainly be a big jump from the 2023 cap of $224.8 million.

Next, we have to consider the Colts’ liabilities in 2024 which, in other words, is the money Indianapolis is already on the hook for. That includes about $181 million in active cap spending for the players that will return to the roster next season.

By the way, almost half of that is attributed to just five Colts: Quenton Nelson, DeForest Buckner, Braden Smith, Ryan Kelly, and Jonathan Taylor. Additionally, Indianapolis will have a dead cap hit (fully guaranteed money owed to players no longer on the team) of over $8 million due to the decision to release Shaquille Leonard.

We just went through a whole bunch of numbers but here comes the most important one. After subtracting their current liabilities from the total cap, the Colts will have an estimated $54.7 million in effective cap space in 2024, per Over the Cap. This is how much money Indianapolis can truly spend this offseason to improve the roster.

$54.7 million is definitely a large chunk of change. In fact, the Colts are projected to have the fourth-most effective cap space in the entire NFL. Indianapolis, however, has a long to-do list — including re-signing key players and addressing areas of need — that will quickly eat into their cap space.