Putting T.J. Watt’s new contract in perspective

When the Pittsburgh Steelers were able to come to terms on a new contract with T.J. Watt ahead of 2025 training camp, there was a big, collective sigh out of a large portion of Steelers’ Nation. Rather than being on “T.J. Watt watch” all throughout camp and having the national media constantly going on about it, the potential distraction was no longer an issue. On the other hand, there were also some fans who were so caught up in the “$41 million to a non-quarterback” that the fact the deal was done early meant nothing. It was simply too much money.

While it is a large chunk of money, it’s not nearly as much relative to the salary cap as what it used to be.

The bottom line is, is T.J. Watt’s contract an unthinkable amount, or is it simply just the progression of contracts over the years now taking the next step with the Steelers?

Being the number cruncher that I am, the numbers are the only way I’m going to look at it.

The best way to look at any NFL contract is by the average per year (APY) of a player when they sign their deal. That number is the best way to compare it to the salary cap each season, not just the player’s cap hit for that particular season as it can be finagled each year to give teams more room. Even though “cash paid” each season is another way to see it, those numbers are greatly impacted by the signing bonus and if/how often a contract is restructured. The APY is a number that does not change (outside of any incentives that could be in the contract) and counts each year equally throughout the contract.

When T.J. Watt signed his first extension in 2021, his $28 million APY in “new money” came to 15.3% of the salary cap in 2021, which was $182.5 million. This year, Watt’s $41 million APY is 14.7% of the $279.2 million cap. So Watt is actually a lower rate of the cap at the time of signing now than he was with his previous deal. So don’t be scared of the $41 million number. In fact, when using the same percentage of Watt’s first extension, he would need to make $42.8 million APY.

But as we learned when T.J. Watt’s deal came out, there is more than one way to spin it:

T.J. Watt’s contract can be spun 2 different ways. He was due $21.05 million for 2025. If called a contract extension, it’s 3 years, $123 million, which is $41 million per year. If called a new deal, it’s 4 years, $144.05 million and just over $36 million per year. #Steelers

— Dave Schofield (@STLRSuperFanDad) July 17, 2025

So does it change the number significantly if looking at the contract as a new deal rather than an extension starting the next year? This lowers the APY in both circumstances. For 2021, if looking at T.J. Watt’s contract as a new five-year deal rather than a four-year extension beyond the fifth year option the Steelers picked up, his APY was $24.42 million which came to 13.4% of the 2021 salary cap. As explained in the post above, the APY for Watt looking at it being a new four-year deal came in just over $36 million which equated to 12.9% of the 2025 salary cap. Once again, using this metric, his new deal is taking up a smaller portion of the salary cap than his last one.

Also, if looking at the first scenario of the deals being extensions and not new contracts, there is yet another way to look at things. When looking at the year when the new money “kicked in” for each extension, meaning the following year from when the contract was signed, Watt’s $28 million would have been 13.4% of the $208.2 million cap in 2022. Obviously we don’t know what the salary cap is going to be in 2026, so this will be an interesting discussion when the time rolls around. But if Watt’s $41 million ended up once again being 13.4% of the salary cap like his $28 million was in 2022, that would be the case if the salary cap is $304.9 million for 2026. If the salary cap is more than that, then $41 million would once again be a lower percentage.

So what will the 2026 NFL salary cap possibly look like?

While some places have the estimated salary cap sitting around $295 million next year, I think that’s actually a low estimate. After the salary cap took a jump of $30.6 million from 2023 to 2024, it’s settled down a little bit from 2024 to 2025 and jumped $23.8 million. The large jump in 2024 was a reaction to a smaller jump from 2022 to 2023 that was only $16.6 million. With 2021 to 2022 having a jump of $25.7 million, one can get a better idea of about how much it goes up each year as the average over those four increments is $24.175 million, slightly higher than last year’s jump.

Going back more than four years brings in the dropping salary cap due to the 2020 Covid season, which skews the numbers too much. Actually, the numbers through 2024 were affected as the NFL “borrowed” from future seasons to keep the cap from dropping too low. The low jump going into 2023 followed by a high jump in 2024 was partially due to getting all those numbers worked out and they are no longer in the equation. So 2025 being around the average actually makes sense.

With all that said, if the salary cap were to go up the same dollar amount as what it did in 2025, it would be $303 million next year. If the salary cap is to go up the same percentage as it did last year, which was 9.32% and lower than the average of the last four years of 11.245%, that would put the 2026 salary cap at $305.2 million. If the cap goes up the average percentage over the last four seasons, it would be at $310.6 million, which is likely too high of an estimate based on the previous explanation. So just trying to look ahead to the numbers, the deal T.J. Watt received this year is likely going to end up as approximately the same percentage of the salary cap in the “kick in” year.

Perhaps those who felt that $41 million for a contract in 2025 was ridiculous also felt that $28 million in 2021 was the same. Whether or not it was is for everyone to decide. But to draw a fair conclusion, one must realize that both deals, from an APY perspective, are about the same when looking at the current salary cap with the new deal coming is slightly better.