Explaining the 89% cash spending floor’s impact on Super Bowl Champs Patriots

Miguel Benzan

8 years ago at 10:36 pm ET

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Posted Under: overview

On February 17 USAToday.Com’s Tom Pelissero reported that “According to numbers compiled last week by the NFL Players Association, nearly one-third of the league’s clubs are below the minimum cash spending floor for the four-year window from 2013 to ’16”. Pelissero’s report named the Super Bowl Champions New England Patriots as one of those teams. On the 18th of February Boston.Com based a story on the USAToday’s report. That story has a very misleading headline – “Patriots Have Far More Salary Cap Room Than You Think”. The Boston.Com story understandably has caused confusion among Patriots fans since the Patriots were at the time of story were over the 2015 projected cap and as of March 3rd over $12 million over their adjusted cap number. In late February the NFLPA emailed the media a detailed report that showed that the New England Patriots spent 82.68 percent of the cap in cash over the last two years.

The NFLPA report in late February led to several stories that contained misinformation. I am hoping that this second rendition does a better job of clarifying the facts than did the first version of this blog.

Background – In the new CBA (Article 12, Section 9) there is a Minimum Cash Requirement – “For each of the following four-League Year periods, 2013–2016 and 2017–2020, there shall be a guaranteed Minimum Team Cash Spending of 89% of the Salary Caps for such periods (e.g., if the Salary Caps for the 2013–16 and 2017–2020 are $100, 120, 130, and 150 million, respectively, each Club shall have a Minimum Team Cash Spending for that period of $445 million (89% of $500 million)). Cash Spending is defined as:

1. Salary
2. Signing bonuses (in one story it was contended that signing bonus installments count against the year that they are paid in).  The CBA states “Cash Spending in a League Year shall consist of the sum of…”signing bonus amounts earned or paid or committed to be paid to players (including amounts treated as signing bonus) without regard to proration”. Because of this Brady’s $30 million signing bonus counts as 2012 cash even though it was paid in 4 installments. The first installment was paid to Tom Brady during the 2012 League Year. Brady’s $30 million signing bonus for the purposes of cap was prorated over 5 years (2013/2014/2015/2016/2017) but for cash purposes counts against the 2012 League Year.
3. Incentives
4. Roster bonuses
5. Reporting bonuses
6. Offseason workout bonuses
7. Weight bonuses
8. Grievances settled and grievance awards
9. Injury settlements
10. Paragraph 5 Salary advances

Per the CBA – “Any shortfall in the League-Wide Cash Spending at the end of a period in which it applies (e.g., at the end of the 2011, 2012, 2016 or 2020 League Years) shall be paid on or before the first September 15 after the end of such League Year directly to the players who were on a Club roster at any time during the season(s), pursuant to reasonable allocation instructions of the NFLPA.

The League Cap was $123 million and $133 million in 2013 and in 2014  respectively. On March 2nd the 2015 League Cap was announced to be $143,280,000. Let’s say that the 2016 League is $153,720 million. As you can see in the below table the total for the 4 years (2013-2016) would then be $552,000,000. 89% of the $552,000,000 total is $491,280,000. The Patriots have already spent $$211,657,748. In order to reach the $491,280,000 total the Patriots would have to spend in cash $279,622,252 ($491,280,000 minus $211,657,748) before the end of the 2016 League Year which will take place sometime in early March of 2016. That $279.6 million figure would be close to $68 million more than the Pats spent in cash in 2013/2014. The $279,622,252 cash spending is 94.47% of the 2015 cap ($143.28 million) and the projected 2016 cap of ($153.72 million).

As noted above the 2015 League Cap is $143.28 million. The 2015 Patriots adjusted cap number is $144,578,554 (League Cap of $143.28 million plus prior year carryover of $5,258,054 plus $1.184 million Aaron Hernandez salary grievance credit minus LTBE/NLBE adjustment of (-$5,143,970). After projecting that the Patriots will tender their 5 ERFAs (James Develin, Sealver Siliga, Brian Tyms, James Morris, and Greg Orton) I have the Patriots total cap commitments as $156,579,147.

$156,579,147 minus $144,578,554 equals $12,000,063 overage. You can see my numbers at https://www.patscap.com. How do I reconcile my $12 million overage with “Patriots Have Far More Salary Cap Room Than You Think”? The article does not support the headline. The article seems to equate the fact that the Patriots can spend a great deal of cash in 2015/2016 as having more salary cap room. Let’s say that the Patriots had reached the 89% cash spending limit for the 2013/2014 years. There is nothing in the CBA that would prevent them from spending more than 100% of the cap in 2015/2016.

The article claims “But the money is there” but does not say where the money is coming from or how the money being there equates to having more salary cap room. The article also claims that the New England’s current 2015 cap hit of $155.4 million leaves it with plenty of room for 2016 but does not explain how. The article total of $155.4 million is not taking into account the Top 51 rule which only includes the salaries of the players with the 51st highest cap numbers.

The author opines “the underlying fact here is that there is money on the table for Revis, McCourty, Wilfork, Gostkowski and who[m]ever else the Patriots choose to keep.” That is his opinion that he fails to make a strong case with. For example, Malcolm Butler was paid $420,000, not $460,000 last year. See Page 146 of the CBA for a listing of a player’s minimum salaries. He claims that “in a perfect Belichickian world, every player would make a Super Bowl-winning play while earning the league minimum” while ignoring that the Patriots history of paying top players top money for their position (Milloy, Mankins, Adam, Gostkowski, Brady, Mayo, Paxton, Koppen, Moss, Adalius Thomas, etc.). His claim that “the [Patriots] don’t want to spend the money” is simply not supported by the facts. As you can see in this article by ESPNBoston.Com’s Mike Reiss the Patriots spent more than 100% of the cap in cash for 2 straight years (2011,2012)

According to the author – “The Patriots can afford to keep Wilfork and his current deal in force, paying him $8.9 million next season. The question is: Do they want to pay him that much?. I simply do not accept his premise. First of all, Wilfork is not due $8.9 million in cash. He is due $8.5 million in cash as long as he reaches all of his incentives. His cap number is $8.9 million. The question is not whether the Patriots want to pay Wilfork $8.5 million in cash. The question is whether Wilfork is worth a $8.9 million cap hit in 2015.

The Patriots will indeed have to spend a great deal of cash the next two years to meet the 89% cash spending floor but I see no reason to completely change the Patriots way. The Patriots can reach the 89% cash spending floor by spending the money on their core players while front-loading cash payments into the 2015/2016 years. Here’s one example. Instead of having Revis play the 2015 season at his $25 million cap hit while paying him $20 million in cash, reach a long term deal with him paying him $26.5 million in cash while lowering his cap number from $25 million to $15 million.

Some stories about the 89% cash spending floor contend that since the Patriots have to spend more than 89% the rest of the way that it gives the Patriots an advantage over those who have spent over 89%. There are several holes in this theory:

1. The 2014 League Year has not ended. Any deals made with players before 4PM, March 9th will count against 2014 spending.
2. Some teams have adopted a pay as you go feature where the player’s cash number is their cap number because team did not give them a signing bonus which would be prorated over the life of the contract but instead a roster bonus which is not prorated. These teams have no reason to lower their cash spending as the structure of their contracts leaves very little dead money on the cap.
3. The CBA states “Nothing contained herein shall preclude a Team from having Cash Spending in excess of the Minimum Team Cash Spending, provided that the Team complies with the accounting rules of the Salary Cap set forth in Article 13”. In other words, there is no cash ceiling. With no cash ceiling, teams can spend in cash over 89% each year without penalty. Teams that spend more than the Patriots can continue to spend more or as much as the Patriots.

Trying to anticipate questions that the blog post may cause:
1.) Question:How can the Patriots get under the 2015 cap? Answer: See this blog post for my listing of ways.
2.) Question: How much cash do the Patriots have committed to the 2015 season? Answer: According to my numbers, $132,046,526 (92% of the 2015 cap). ( Of course, this number will be fluid throughout the year as the Patriots sign/cut players. For example, my numbers do not yet include the 2015 draft class.
3.) Question: What can the Patriots do to reach the 89% cash spending floor? Answer: Give more players signing bonuses. Give out larger signing bonuses. Draft up in the draft (higher draft picks have larger signing bonuses). Reach extensions with Solder, Chandler Jones and Hightower rather than have them play the fifth-year seasons at their option amounts. Give Brady a signing bonus in either 2015 or in 2016. Reach extensions with Jamie Collins, Bryan Stork, Sealver Siliga, Ryan Allen, or Malcolm Butler before the end of the 2016 League Year.
4.) Question:Does the 82.68% cash prove that the Patriots are cheap? Answer: Only if you believe that looking at a small sample of data is fair. Haters are going to hate. They were silent in 2012 when the Patriots was among the leaders in cash spending.
5.) Question: Please reconcile the 82.68% cash spending percentage with the $12 million cap overage. Answer: Saved the best question for last. Hopefully, I am up to the task:)

1. Cash is not cap. As I showed above with Tom Brady, the proration of signing bonus amounts creates a disconnect between cash and cap. Here’s another example. Logan Mankins will count $4 million against the 2015 cap. His cash amount will be zero.
2. The big leaps: Five contracts had huge salary-cap increases in 2015 — cornerback Darrelle Revis, left tackle Nate Solder, right tackle Sebastian Vollmer and tight end Rob Gronkowski. Revis’ cap cost went from $7 million this year to $25 million. Solder’s cap cost went $2,717,429 to $7,438,000. Vollmer’s cap cost went from $3,750,000 in 2014 to $7,020,833. Gronk’s cap cost went from $5,400,000 in 2014 to $8,650,000 in 2015.
3. Smaller bounces: The other cap jumps in 2015 were more modest. Vince Wilfork, Danny Amendola, Kyle Arrington, Rob Ninkovich, Julian Edelman and Brandon Browner are all scheduled for increases between $1 million and $3 million. Dennard’s cap number increased by $972,000. Chung’s increased by $945,000. Cannon’s increased by over $800,000. Blount’s increased by over $600,000. No one else on the roster is scheduled to go up by more than $500,000
4. Reached incentives in 2014 – A major reason for the first two reasons is that some players reached NLTBE (Not Likely To Be Earned) incentives in 2015 making them LTBE for 2015. Examples, Lafell’s receptions incentive now counts $300,000 against the 2015 cap. Edelman’s receptions incentives now counts $500,000. Wilfork’s playing-time incentive now counts $500,000. Vollmer’s playing-time incentive now counts $750,000. Wendell’s playing-time incentive now counts $850,000. In total, there are $3.5 million in LTBE incentives counting against the 2015 cap. There were $1.25 million in 2014.
5. Reached incentives in 2014 (Part 2) – Patriots like to include 46-man active roster bonuses in their contracts. The amount that counts against the cap is dependent on the games that the Patriot played in the prior season. Amendola, Wilfork, Chung, and Hoomanawanui all played in more games in 2014 than they did in 2013. Their 46-man active roster bonuses are now counting against the cap for all 16 games.
6. Players not signed past the 2015 season with large cap numbers. If the Patriots and Darrelle Revis can agree to a long-term deal that included a large signing bonus. They could lower his 2015 cap number significantly ($10 to $12 million) while also increasing his 2015 cash total from $20 million. Ditto for Nate Solder and Stephen Gostkowski. I blog about possible Darrelle Revis’s contracts in this blog post

Sources: CBA: