The financial model in OOTP doesn't make for easy answers. Basically you have two dimensions to the model which work together in a way that's not very transparent to us gamers: 1) a cash-flow or cash balance system and 2) a budget system. The first just tracks cash coming into the team and cash going out, and keeps track of the resulting balance, which is carried forward each year up to the "cash maximum". The latter has no real world analog (unless it's the owner taking a cash draw from time to time), but it limits the amount of cash in the team's checkbook at the start of a year.
The budget is set by the team owner. It limits how much you can spend during the current year and, to some extent, commit for the next year, for everything except free agents who are willing to accept 1-year contracts. The methodology by which the game engine decides what the budgets should be, and how that methodology takes account of cash flow and cash balance, is frankly a mystery to me, but others may have a good guess to offer on that one.
Hope that helps.