Entering the offseason, they are currently one of 14 teams who are over the projected 2023 salary cap. Dallas has also been a team that maximizes their annual cap space, choosing to spend as close to the ceiling as possible to try and put the best product on the field.
But not all of that cap space is spent on players who are helping the team in that season. No, due to releases, trades and void years, some of the cap space being used is from players who didn’t actually work for the team that season. Dead money refers to space used on the cap for actual cash given to a player in a prior season, and Dallas is using over $8.6 million of their 2023 cap space in this manner.
Big money, short list
Dallas currently has just two players on their 2023 dead money list, and one is taking up 97% of that figure. Last offseason, Dallas released right tackle La’el Collins. Collins had rubbed many in the organization the wrong way over several seasons. The player who Jerry Jones wooed as an undrafted free agent had questionable injury concerns and the final straw was when he was suspended for trying to bribe an NFL urine-sample collector.
Not only that, but he then tried to challenge a two-game suspension that was pushed to five games. Collins was replaced by Terrence Steele and after Dallas failed to find a trade partner, they cut Collins loose.
The result, $4.9 million of dead money on the 2022 ledger and a whopping $8.4 million on the 2023 ledger.
The only other person listed is 2022 fifth-round pick John Ridgeway. Ridgeway didn’t make the initial 53-man roster and was placed on the practice squad. He was the only draft pick not to make the roster and was eventually poached by the Washington Commanders.
Ridgeway adds another $181,000 to the dead money total.
The dead money totals are the unamortized amount of the signing bonus the players made when the deal was signed.
How bonuses and voids work
NFL accounting is funny money. Two of the many tricks organizations do to circumvent the hard salary cap are using by using bonuses and void years to spread out the cap hit from money paid up front.
Here’s how that works.
When a deal is signed, a team can give a player a bonus on top of the annual base salary amounts. The bonus is paid in the first year of the deal, but the bylaws allow teams to spread the hit from the bonus across the life of the deal, up to five seasons.
Say a team signs a player to a 5-year deal for $120 million. Just for the ease of example, that player makes $20 million per season and receives a $20 million bonus at the time of signing.
Instead of his first-year cap hit being $40 million and the remaining four years being $20 million, the signing bonus is spread evenly, making each year’s cap hit $25 million.
Say none of the base salary years are guaranteed and the team cuts the player after Year 3. There’s still two years left of unamortized bonus at $5 million each, creating a $10 million dead cap hit.
Void years are done for the explicit purpose of pushing that bonus allocation into a season when the player is out of contract.
A four-year deal (like Dak Prescott’s) is structured with void years so that the signing bonus hit is spread out over five seasons and then the second-year base salary can be turned into a restructure bonus and also be allocated over five seaons (years 2 through 6).
Dead money number will undoubtedly go up
The Cowboys’ dead money list is just two deep at the moment, but it’s unlikely to stay that way. As the new league year approaches, the Cowboys are more than likely going to part ways with at least one player who is currently under contract and with bonus allocation remaining on their deal.
When that happens, Dallas will be gaining cap space but also adding to the total space being used by players not on the roster.
Is it worth it?
Cowboys fans, fans of every team really, tend to complain when their team’s utilize the bonus process and void years in order to create or save cap space in the current. “Kicking the can down the road” is the most common description of this, implying a negative connotation to how they view the technique.
However, it doesn’t necessarily have to be a bad thing. In fact, one could call it savvy.
There’s no question that having cap space go to a player that isn’t helping a team isn’t ideal, but that’s forgetting the primary component. That saved space is then spent on another player; a player they would not have been able to afford otherwise.
Of course, those signings have to be worth it. Using the cap savings on a bunch of special teamers eliminates the positives. Still though, most fans forget about the help the extra space normally affordeds.
In addition, restructures have implicit savings if one looks at the salary cap over several years instead of individually because there’s no interest rate.
Say a player is set to cost $21 million against this year’s cap of $224.8 million in base salary. That’s 9.3% of the cap; but the team restructures them down to $1 million in base salary and a $20 million bonus spread over five cap years. That’s $1 million base plus $4 million allocation for a total of $5 million cap hit, or just 2.2% of this year’s cap.
The other $16 million, or 7.1% of the cap can be used on other players.
Not only that, but when that $4 million hit strikes next year’s cap, and the ceiling is $235 million, it’s now only 1.7% of next year’s cap. The following year’s $4 million is 1.63% of $245 million, the following year is 1.56% and the final year is 1.5% of $265 million.
There’s a reason teams make these moves.