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Minimum Salary Floor explanation for the salary cap

Optimus-NY : 2/20/2013 12:46 pm
Click on the podcast linked below (the 2nd link for a good listen). The first link below is an informative article about the whole issue. Listed below the two links are important points about it. Hope this information helps to clear up a lot of misconceptions surrounding this rule that is part of the new CBA, which goes into effect beginning this coming season. Enjoy.


1.) Minimum Cash Spending: Does It Mean Anything?

2.) Podcast from Jason Fitzgerald, who runs overthecap.com and nyjetscap.com about salary cap floors and various other things (tune in from about a third of the way in to the middle for the salary floor section of the podcast


SUMMARY

• There used to be a salary cap floor in the old CBA that has since been changed in the new CBA.
• Teams in the old system found ways round it.
• Teams used to have to spend a certain percentage of the salary cap each year (I think that the number was 84% in 2006).
• In order to get around this, teams used to use incentives during the course of the season, which were termed “likely to be earned”, which in turn were added the salary cap total. This accomplished two things.


• One thing was that certain teams used to use these incentives from previous years in order to carry over cap space over to the next year while reaching the minimum threshold for the salary cap in a given year (e.g., the Eagles and the Jets).
• Another thing that certain other cheapskate teams used to do (e.g., the Bengals), in order to avoid paying players, while remaining cap compliant, was to give an unreachable bonus to a player that counted towards the salary cap for that year.
• With the new CBA, this is no longer the case.


• Teams now have cash spending limits instead now so as to keep teams from doing what the Bengals did.
• As a result of the new CBA, there is a salary floor, not a cap floor.
• Most people, including myself, misunderstand/misunderstood this initially.


• This DOES NOT mean that teams have to spend X amount of dollars—specifically 89% of their cap—this coming 2013 season.
• Here is what it does mean: what is happening now with this rule is that teams don’t have to “blow their wad” so to speak all in one year in 2013 to spend the requisite money to reach the cash spending salary floor.
• The NFL has decided to split these cash spending limits into 4-year periods.


• This is done over a 4-year period, or “bucket”—2013 to 2016 is the cycle, or “bucket”, that is being started now in the league.
• For example, teams can spend below the salary cap this year, but still make it up in cash payments in 2014, 2015, or 2016.


• Teams need to meet 89% of the cap during this 4-year cycle, or “bucket”—it doesn’t matter what year or years they spend this money in, as long as they spend it by the end of the cycle, or “bucket”, in 2016.
• Bonuses count differently in this instance: rather than counting towards the cap, they simply count for a given year (e.g., A bonus of $15 million dollars signed over 3 years will count as $5 million in Cap dollars, but will count in one year as $15 million in actual cash spending—basically bonus payments count in one year).


• Teams can reach the minimum numbers by signing a couple of high priced players per year with large bonus money—be they their own, or from other clubs.
• This was a win for the NFLPA, in a CBA that they otherwise caved in to towards the owners.
• If teams don’t meet the salary floor over a 4-year cycle, or “bucket”, the penalty will not be anything that affects teams in the cap.


• What will happen is that if a team fails to meet the cash spending floor, they’ll simply have to pay out the remaining sum (e.g., $30 million) to the players who played for the team over that 4-year span—being evenly distributed.
• This is advantageous because under the old system teams used to be able to horde this cash money that they saved.
• Under the new CBA this is not the case: teams can’t keep that cash money, anyway that you slice it. It MUST go to the players.


• In summation, teams like the Bengals, Colts, and Browns DON’T have to spend the money this year to reach the salary floor linked to cash spending.
• These teams don’t have to spend a dime this year, but at some point before 2016 they will have to make moves to meet that cash spending minimum—it’s not a set year-by-year number that must be strictly adhered to.

Very informative, thanks  
Big Blue '56 : 2/20/2013 12:53 pm : link
Yeah, I'm one who totally misunderstood the 89% floor
Just wanted to say thanks, Optimus  
Giantology : 2/20/2013 1:02 pm : link
Your salary threads are always on point and clear. Keep up the good work!
So now I know what Snyder will do  
mrvax : 2/20/2013 1:15 pm : link
2013-2015 he keeps the Skins about $20 million under the floor. Year 2017, he quickly buys every big name free agent he can for a 1 year deal spending an extra $80 million dollars ensuring the Skins an unreal pre-season Superbowl winner!
It's going to be one of the more interesting  
Sneakers O'toole : 2/20/2013 3:01 pm : link
things in the offseason to see how teams approach this.
This is essentially why  
Enoch : 2/20/2013 3:57 pm : link
I don't think this offseason (or the next one) is going to be particularly kind to the Giants in free agency. They (and other high-salary teams) won't have any meaningful changes to their buying power, but there will be a lot of additional money out there chasing the available free agents.
lol mrvax  
Optimus-NY : 2/20/2013 4:34 pm : link
you mean 2016 is when Napoleon Snyder is going to unveil his master splurging plan.

Giantology - No problem. I'm learning myself as I go, so it's informative and enjoyable for me.

BB'56 - You're not the only one. I misunderstood the floor too.



Check out overthecap.com by the way fellas. I have nothing to do with it, but the guy who runs it (Jason Fitzgerald)does a great job--even though the poor devil is a Jests fan--and is really on point.

He does a fantastic job with the whole thing. A couple of other websites are notable, but nowhere near as good (spotrac.com & askthecommish.com).
Enoch - I hear you  
Optimus-NY : 2/20/2013 4:46 pm : link
That's why I'm all for dipping into the draft and "retooling", so to speak. The Giants have got to build a new core around Eli and JPP primarily, and then secondarily around players like Nicks and/or Cruz (depending on what they can do with those 2 WRs salary wise to get them to fit under the cap).

The Giants will be fortunate to re-sign their own key free agents, and then go dumpster diving in free agency to fill some holes. Te draft will be the main means towards enhancing the talent on the roster next season.
I made the point the other day  
Sneakers O'toole : 2/20/2013 4:50 pm : link
that spending in free agency may be more than some are expecting because of this salary floor. It's going to be interesting to see how teams go about it.
Sneakers - I love that Redskins and Cowboys got fucked by the rest of  
Optimus-NY : 2/20/2013 5:22 pm : link
the league w/respect to the cap. I know how you feel about it, based on previous threads on the punishment meted out by the rest of the owners, but is sure is fun to see those 2 scummy franchises struggle to deal with the cap. Increases the Giants' chances next year against them by more than what people anticipated.
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