Special thanks on this article to OverTheCap.com and specifically @Jason_OTC, with whom I consulted to make sure my details were correct.
On Twitter, where I spend much of my free time these days (follow me @AsherMathews), I get a lot of questions about one of the additions to the newest Collective Bargaining Agreement (CBA), the spending requirement that each team agreed to make, known as the salary floor.
NFL teams have long used the salary cap to equalize spending – the owners did not wish for the NFL to become like the MLB, where the bigger market teams can over-spend to out-buy the smaller market teams almost every year – but they have not until recently had any rules against underspending.
In the latest CBA, the NFL Players Association (NFLPA) pushed for, and was able to get, a league-wide salary floor. This provision was intended to prevent teams from using the popularity of the NFL to simply turn a profit without appropriately paying players.
The NFLPA and the NFL agreed that each team would use a minimum percentage of the total available salary cap, starting in 2013. The number that was agreed upon was 89% of the salary cap.
But it’s not so simple as taking the salary cap number for the year, taking 89% of that salary cap, and making sure each team was spending more than that number each year. Instead, the CBA breaks the spending requirement into sections. The first such section runs starting from the beginning of the 2013 season and through the 2016 season.
Put more plainly, each NFL team must spend 89% of the total salary cap over those four seasons or they will suffer the specified penalty. We will go over more on the applicable penalty in part two.
So, how much money does each team have to spend, on average, each year? The answer is that no one knows, yet. The salary cap isn’t determined until right before the season starts and it is dependent on the NFL’s revenues.
The idea is that as the NFL grows in popularity – and it just keeps getting more and more popular – the league will continue to get more revenue and will then turn around and spend that revenue, in part, on the players who are partners with the owners.
The salary cap’s movement isn’t consistent or predictable. In2012, the salary cap was $120.6 million. In 2013, the cap moved only $2.4 million to $123 million. However, the salary cap was recently announced to be $133 million in 2014, a $10 million increase that no one saw coming.
While no one knows where the salary cap will go in 2014 and 2014, ESPN’s Adam Schefter, who is as connected to the league as anyone in the media and more than most, recently tweeted that at least one league source told him the cap is expected to increase to over $140 million in 2015 and over $150 million in 2016:
There is another small but important detail that we need to discuss before we look at how this all impacts the Raiders: only money that was actually spent in the season counts towards this equation, so much of the dead money a team may carry does not.
Let’s use the 2013 Raiders as an example to explain. First, we’ll quickly go over what dead money means.
Frequently, when players sign a contract with a team, they are given a signing bonus. FB Marcel Reece, for example, was re-signed to a 3 year extension last offseason and was given a little over $3.5 million in a signing bonus for doing so.
The signing bonus is paid to the player when they sign, in its entirety. But for the purposes of the salary cap, that signing bonus is spread out equally over all of the years of the contract. Because Reece’s contract was for 3 years, you would take the signing bonus amount of $3,523,000 and split it up equally over each year. So, Reece’s signing bonus counts against the cap just shy of $1.175 million in each of 2013, 2014 and 2015.
When a player is cut before his contract expires, any money that is guaranteed on the roster accelerates into the current year (there is an exception to this but we won’t get into it for this article).
For example, in February of 2013, the Raiders voided the rest of DE/DT Richard Seymour’s contract instead of paying him his $19 million salary. Seymour was only through one year of a 5 year extension that he signed in 2012 and when the team chose to void his contract, all of the remaining guaranteed money, $13,714,000, counted against the Raiders salary cap in 2013.
That means that the Raiders could not use that money to sign another player. By cutting Richard Seymour and having the almost $14 million salary cap hit that that entailed, the Raiders reduced the amount of money they could use to sign free agents. This is what is termed as dead money – money that is being paid to a player that is no longer on the team.
The Raiders had a historic amount of dead money last year – slightly over $56 million dollars as estimated by Over The Cap. That was almost half of the $123 million salary cap!
Some dead money does count in the “spent money” category in calculating the salary floor, however. For example, in 2013, the Raiders traded for Matt Flynn and then restructured his contract, making all of 2013’s salary guaranteed. When the Raiders cut Flynn, he counted as $6.5 million in dead money against the cap. But because all of that money was paid out in 2013 itself, it all counted as “money spent.”
Over The Cap also has this page, which estimates that the Raiders spent slightly over $79 million on salaries, signing bonuses (that were paid out that season), roster bonuses (contracted amount paid to a player for being on the team, still, at a certain date) and workout bonuses (usually a player being at the team facility for a certain percentage of team-structured workout sessions) in 2013.
As you can see if you use that link, Over The Cap has calculated another approximately $9.2 million dollars in dead money that does apply to the “spent money” calculation for 2013. This brings the total amount of money that the Raiders “spent” per this calculation in 2013 to just over $88.5 million.
Remember, the salary cap in 2013 was $123 million. The Raiders spending $88.5 million of the $123 million cap, puts their “spent money” at only 72% of the cap, well below the 89% minimum.
But also remember that the 89% minimum is not a year to year mandate – it’s over 4 seasons. In this case, 2013 was just the first of those four years. What it means, however, is that the Raiders will have to spend more than 89%, on average, of each of the next three seasons to make up the difference.
Want more specifics? Absolutely! We will look at specific numbers for the Raiders in part 2, coming soon!