The Dallas Cowboys have handed out several large contracts over the last two offseasons. They will likely soon hand out another, whenever they agree to the length of quarterback Dak Prescott’s deal. Many wonder annually how a team can afford to sign so many big deals, thinking the money – or more specifically the cap space – will eventually run out.
It won’t, because the salary cap is set to explode and the team is in a great position to walk away from several deals should the player no longer live up to the money they were signed for.
Over the past two seasons, the Cowboys have agreed to terms of at least $10 million-per-season averages with five different players: DE DeMarcus Lawrence, LB Jaylon Smith, RB Ezekiel Elliott, RT La’el Collins and WR Amari Cooper. All of these deals have been for at least five seasons and there is always concern when signing a player that they will not be able to perform through the length of their deal.
Rest assured, the NFL and the Dallas Cowboys are prepared for that.
The primary thing to remember is that unlike the NBA and MLB, NFL contracts are not guaranteed. There’s a lot of window dressing attached to press announcements of new deals; years that essentially serve as team options. A player might sign a six-year deal, but if the guaranteed money runs out after the third year, then it’s a three-year deal with three one-year team options.
It’s very rare a deal is written in such a way that a player has guaranteed money tied into a fourth season, and it’s hard to recall any deal that had guarantees into the fifth season.
This is the reason why Prescott and the Cowboys haven’t been able to finalize his new deal. Prescott wants a short deal, made mostly of guaranteed money; the club wants a longer deal which will include team options at the current market price and not the price those years will cost once the cap explodes; more on that in a minute.
Let’s look at the big deals and how soon Dallas could conceivably cut ties with the player.
DE DeMarcus Lawrence, New Deal
5-yr, $105 million | $48M fully guaranteed | $65M total guaranteed
Escape Season: 2022
Lawrence received a $25 million signing bonus and a $4.6 million roster bonus in 2019, in addition to his $1.5 million base salary. His $16.9 million salary for 2020 was also guaranteed and as of the third day of this current league year (March 15), his 2021 salary of $17 million was guaranteed as well.
Lawrence will have two more years on his deal after that, base salaries of $19 million and $21 million in 2022 and 2023, respectively.
The Cowboys won’t have to pay those if they don’t want to, and can release Lawrence as early as the 2022 offseason if they feel he isn’t worth it.
Because of proration of that $25 million signing bonus that Lawrence received already, only $5 million hits the cap in each of the five seasons of his deal. There’d be $10 million remaining of cap hits ($5 million for 2022, $5 million for 2023) that the club would have to account for (not pay him, he already got the money). This is called dead money.
Dead Money Tutorial
The term is dark, the reality is much different.
Dead money refers to amounts that take up cap space for a player even though the player is no longer on the team. It sounds dire, but when looked at from an overview it’s not as bad as it’s made out to be.
The cap goes up every year, and due to accounting magic, teams are able to pay their players market value, but not have to deal with the full impact of money they’ve given out.
If the Cowboys had to absorb Lawrence’s entire signing bonus the year they paid it, the $10 million they have to account for in the previous scenario would have been 5.3% of the 2019 cap.
If the cap is at $230 million in 2022, that $10 million will be just 4.3% of that year’s cap.
WR Amari Cooper, New Deal
5-yr, $100 million | $40M fully guaranteed | $60M total guaranteed
Escape Season: 2022
All of Cooper’s fully guaranteed money is tied into his first two seasons of the new deal ($10 million signing bonus, $10 million and $20 million base salaries), and his 2022 guarantees don’t trigger until a few days into the 2022 free agency period.
Coming in with the exact contract predicted here on Cowboys Wire, Cooper’s deal is a perfect marriage. The deal is escapable after just two seasons, so the team can theoretically choose between him and Michael Gallup, who will be a free agent in 2022. It’s one of the reasons why Dallas will likely look for a big receiver in the draft instead of just a slot guy. There’s only $6 million of dead money remaining after 2021, and it can be split 33/66 over the 2022 and 2023 seasons.
Continue…
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