Note: Much of this explanation is a re-post from last year, except that the figures have been updated to reflect the Browns' situation one year later.
Now that the year 2016 is here, we can provide a more complete digest of how the 89% cash spending rule works, and where the Cleveland Browns fall. It was a hot topic of conversation in previous years, but not so much in 2016 as most fans understood their team was in compliance.
Requirements: 89% in Cash Spending from 2013-2016
The 89% rule does not apply to a single season, but rather a span of four years. Therefore, it doesn't matter that the Browns spent less than 89% in 2013, or if they spent less than 89% in 2014. By the end of the 2016 season, though, the cumulative spending from 2013-2016 must be at least 89%. Therefore, if the Browns spent very little in 2013 and 2014, in order to meet the requirement in 2016, they would have been basically forced to spend a lot of money in 2015 and 2016.
It's important to understand the difference between a cap hit and a cash spend. The 89% rule applies to cash spends, not cap hits. For a full, in-depth understanding between the two, read this article over at Cincy Jungle from last year. I will present a simple example below that should convey the difference well enough, using OLB Paul Kruger as an example.
Difference Between Cap Hit vs. Cash Spend
Three years ago, former Browns CEO Joe Banner signed OLB Paul Kruger to a 5-year, $40.5 million deal. Most of you should be familiar with cap hits, because they are the numbers we typically talk about.
|Paul Kruger's Contract, Cap Hits Per Year|
|Year||Base Salary||Signing Bonus||Roster Bonus||Cap Hit|
The table above represents Kruger's cap hits per year. Kruger's contract included $12.285 million in bonuses, with $6 million allocated to a signing bonus and $6.285 million allocated to a roster bonus. What is the difference between a signing bonus and a roster bonus when talking about cap hits? Roster bonuses are paid in the full amount for a specific year if a player is on the roster by a certain date. Signing bonuses are fully guaranteed, but divided by the number of years of the contract to create an equal signing bonus allocation per year against the cap.
|Contract, Cash Spends Per Year|
|Year||Base Salary||Signing Bonus||Roster Bonus||Cash Spend|
The table above represents the cash spends per year on Kruger. While the Browns are able to divide Kruger's signing bonus over five years for salary cap purposes, the fact is that they physically paid Kruger $6 million, straight up, in 2013. The total cap hit and cash spend numbers are always going to be the same, but the per year numbers are different.
Why is it important to understand this? Let's say the Browns are currently under the 89% spending requirement by a good amount, but still want to be in decent cap shape for the future. Signing a player to a $12 million signing bonus on a 3-year deal (through 2016, for example) would be pro-rated to $4 million per year for cap hits, but the immediate cash spend in 2014 would be at a much higher clip -- the full $12 million -- which can help a team "catch up quicker" to the spending requirement if they need to.
What is the Projection for the 89% Rule?
The minimum spending requirement says that teams must spend, in cash, at least 89% of the total salary cap from 2013-2016. To determine the 89% minimum cash spending requirement, the sums of the salary caps are multiplied by 89%. This is the first year we know the official floor over the 4-year span, since the league salary caps from 2013-2016 have been confirmed.
|Total Salary Cap||$554.55 million|
|89% Floor (Minimum Spending)||$493.55 million|
Since the total salary cap from 2013-2016 is $554.55 million, then every NFL team, including the Browns, must have a cash spend of at least 89% of that by the end of the 2016 league year, which is $493.55 million.
Do the Browns Need to Start Spending More?
The short answer is "No." Any spending that occurs up to March 9th, 2016 before 4:00 PM goes on the 2015 league year for cash spends. For example, if Tank Carder received any bonus money, that cash spend should go to 2015. After that, they count toward the 2016 league year.
The table below outlines the Browns' cash spending for the years 2013-2016. 2013-2014 data comes from Tom Pelissero of the USA Today, while 2015-2016 data are estimates from OverTheCap. The picture is accurate enough to be close to reality. If you are confused by what the table means, I explain it below.
|Year||Cash Spend||% of Cap Spent
|2013||$107.096 million||87.07%||On pace for 77.2% (1-year avg)
|2014||$148.730 million||111.83%||On pace for 92.3% (2-year avg)
|2015||$144.457 million||100.82%||On pace for 96.2% (3-year avg)
|2016||$109.376 million||70.44%||Browns already over requirement
|Total Cash Spent||$509.659 million|
|Amount Above 89% Requirement||$16.109 million|
The % of Cap Spent is calculated by taking the Cash Spend / That Year's Salary Cap. In 2013, the Browns only spent 87.07% of the cap, which is below the 89% requirement. That is fine, though, because they still had three more years to go.
As you can see, because the Browns spent a lot in 2014 and 2015, they are already above the minimum spending requirement. They have already reached 91.9% without free agency even starting for the 2016 league year; that is the equivalent of being $16.109 million over the requirement.
How Does This Effect the Team's Cap Space?
The Browns don't have to worry too much about this requirement heading in to free agency and they will still be cap compliant.
During my research into this topic two years ago, Sander Philipse of Bucs Nation reminded us of the repercussions of not meeting the 89% requirement:
It's also important to note that the penalty for not reaching the 89% spend over 2013-2016 is you have to give the money you're short by to your own players (via NFLPA-determined distribution). Which means there's no real penalty to not spending to the floor. Obviously you'd prefer to spend the money where you saw fit instead of being forced to adopt the NFLPA's distribution key, but there's no point to handing out idiotic contracts just to hit the floor.
If you don't reach the amount, is it better to basically distribute slight bonuses to your current players, with the backlash of knowing you could have used that money instead toward a better-fitting player? Teams should be motivated to spend on players they feel can improve their team, rather than spending a certain amount on someone just for the sake of meeting the requirement. It's all about the general managers of the league planning in advance, and Cleveland is in good shape right now to do so.