The NFL owners put together a fairly solid deal for themselves when they worked out the current collective bargaining agreement back in 2011. Players are starting to see some more benefits with the cap increasing at a sizable rate this year, and expected to continue growing over the next couple years.
When the CBA was agreed to, players took a cut in their piece of the pie, but one thing they got back from the owners was a minimum cash spend requirement. This requirement states that for the periods of 2013-2016 and 2017-2020, NFL clubs must each spend at least 89 percent of the salary caps for those periods. If there is a shortfall, at the end of 2016 and/or 2020, it will be paid by the team having such a shortfall, directly to the players who were on the team's roster at any time during the applicable seasons. There is also a league-wide 95 percent requirement, but we won't discuss that since it requires breaking down cash spending for all teams.
"Cap Hit" vs. "Cash Spend"
I think we've done a good job helping people understand how the salary cap works, and it's many intricacies, but before we get in to where the 49ers stand on the minimum cash spend requirement, let's go back through some salary cap basics. Big thanks to Dawgs By Nature, who came up with this post ideas. The Internet is great for idea theft!
When discussing player salaries, we talk about base salaries, signing bonuses, bonuses, incentives, dead money and cap hits, among many other things. Let's use an example to sort through how a contract can differ in terms of cap hits and cash spending. Last year, the 49ers signed linebacker Dan Skuta to a two-year contract. It's a fairly simply contract, but falls entirely within the 2013-2016 period of the minimum spending requirement.
|Dan Skuta's Contract, Cap Hits Per Year|
|Year||Base Salary||Signing Bonus||Roster Bonus||Workout Bonus||Cap Hit|
|Dan Skuta's Contract, Cash Spends Per Year|
|Year||Base Salary||Signing Bonus||Roster Bonus||Workout Bonus||Cash Spend|
We've got Skuta's contract broken down twice. The first breakdown is how it impacts the salary cap, while the second is how it involves cash spending. It's a simple contract, but no need to get super complicated. This deal shows the main difference: the signing bonus. For purposes of the salary cap, a signing bonus is pro-rated five years, or over the life of the contract, whichever is shorter.
In this case, Skuta received a $300,000 signing bonus. It was paid at one time in 2013. For purposes of the salary cap, it shows up as $150,000 in 2013 and $150,000 in 2014. The ability to split up bonuses in this manner makes them valuable for cap purposes. Of course, it also means the team is betting on the player lasting the life of the contract, or at least most of it. If the player leaves the team before the end of the contract, that remaining $150,000 still counts against the cap as "dead money". The 49ers of the early '00s had to basically blow up the team because of the volume of dead money from '90s players.
On the other hand, for the cash spending requirement, the entire $300,000 counted as part of the 2013 "cash" spending. That means that a team could in a given year spend more cash than they have cap space available. Let's look at some estimates of the 49ers cash spending and what it means for this minimum requirement. Huge thanks to Over The Cap for working to compile the cash-spending data.
49ers cash spending 2013, 2014, 2015, 2016
|Year||Salary Cap||Year||Cash Spending||% of cap|
The 2013 salary cap was $123 million, and the 2014 salary cap was announced at $133 million. We don't know the official cap number each season until just before the start of the league year, so I've posted some estimates for 2015 and 2016. Adam Schefter tweeted that it could get up over $140 million in 2015 and up over $150 million in 2016. I've heard some talk of $10 million increases, so I was a bit aggressive with my estimates. I'd imagine the 49ers would rather under-estimate for cap purposes, and over-estimate for the cash spending requirement. The former would be just a little bit more important than the latter.
In this case, Over The Cap estimated the 49ers had spent almost $130 million in cash in 2013. That accounted for 105.53 percent of the 2013 salary cap. That is possible because as we said, signing bonuses impact the cap over the life of the contract, and not just in the first year. If any of that confuses you, let me know in the comments and we can discuss further.
The 49ers cash estimate for 2014 is tentatively "only" at 73.69 percent of the 2014 salary cap. I don't know if this number includes Daniel Kilgore's contract at this point, but whether it does or does not, the 49ers will see this number only go up. They have free agents to sign and draft picks to select (I don't believe OTC's estimates include the rookie pool money), so the cash spending will only increase.
What does this mean for the 49ers?
The 49ers need to spend some more money to meet the requirement, but it's important to note that it's 89 percent for the length of the four years, NOT 89 percent each year. The most important number for this cash spend requirement is that current estimated total of $491,280,000. That's the number the 49ers need to reach by 2016. By OTC's estimates, they have spent 63.69 percent of that total.
The team is in solid cap shape, which means they should be able to get more of their young players extended. Considering they have Colin Kaepernick, Michael Crabtree, Aldon Smith, Mike Iupati and others coming due, that's likely going to be a whole lot of up-front cash. If they get even just a couple of those guys extended this year or next year, that gives them a big boost.
Cap vs. Cash importance
The minimum cash spending requirement was introduced because prior to 2011, there were several teams that had no qualms spending considerably below the salary cap. There was no salary floor, so there was nothing to stop an owner from going cheap and pocketing the money if they weren't overly concerned about winning.
For a team like the 49ers that has shown a commitment to winning, this cash spending requirement should never really be an issue. They are smart with their money, but they reward their own players. Prior to the offseason, there were some concerns about the long-term future for several of the younger players, but in light of the sizable increase in the cap, the situation is looking better. The influx of new television money should only help the 49ers retain some of their young talent, without crippling themselves from a cap perspective.
This post really is about education, as opposing to raising any red flags about the 49ers situation. They should be able to meet this requirement with ease. If you have any questions, feel free to drop them in the comments. And if you're particularly bored, you can download the entire CBA at NFLPlayers.com.