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Jul 16

Today and Tomorrow: The Cowboys Salary Cap Woes

I had a question/request from Scott last week in regards to the Dallas Cowboys. I planned to do a podcast on the topic but just didn’t have time to do it so instead we’ll write this out and examine some of the harsh criticism I have and others have for the Cowboys handling of their salary cap. I’ll break it up into two parts, one of which deals with a cap violation and the other of which deals with future cap issues.

The Cap Penalties

First of all I should state that I don’t think either team really deserved the penalties that they received. There were plenty of teams that took advantage of the uncapped year in ways that may not have been exactly “within the spirit” of the rules, but the Cowboys and Redskins I believe got singled out because of who their owners are. It should be noted that two other teams received semi-penalties- the Saints and the Raiders. While their cap was not adjusted downward they did not receive any of the prize of the Cowboy/Redskins troubles. The Saints many of us always felt was because of the use of something called a completion bonus and the Raiders due to their handling of JaMarcus Russell, plus the fact that the league I think was done with Al Davis at that point. In hindsight I now question whether or not this was the first slap on the wrist for the bounty scandal in New Orleans, but that’s another topic.

The question here was why I often discuss the Redskins penalty, but rarely discuss the Cowboys one as a reason for the cap issues.  The basic reason I discuss the penalty for the Redskins is because the number itself was so high that it has a material impact on any cap planning that a team can do. The Redskins never tried to “band aid” the team together to deal with the penalties, at least not to the extent the Cowboys have, but really it just comes down to overall cost. An $18 million downward adjustment kills your team. A $5 million one doesn’t come close to that. That said the actual penalties themselves were overblown for both organizations. Had the NFL done the right thing and not allowed the deals to be accepted, the actual cap charges would be very close to the penalty amounts.  The penalties kind of brought the salary caps back to where they should have been had no violation occurred.

The damage that happened to both teams was not the penalty itself but the fact that they never could have planned on receiving them. The league allowed the contracts in question to be approved and then waited a full season before hurting both teams. That is not right. If the league informed the teams in 2011 that they would be taking action against them they could have planned accordingly, but instead they were blindsided by the decision.

Playing the “what if” game we can see how the penalties are not so severe in reality had they been able to plan for the penalties. The Redskins most likely never would have traded Albert Hayesworth if the league had not allowed them to make the change in his contract. IMO, the Redskins would have voided his guarantees in 2011 and designated him a June 1 cut.

 

No Contract Change

Actual Charges

Gain/(Loss)

2011

$5,200,000

$0

$5,200,000

2012

$14,600,000

$10,500,000

$4,100,000

2013

$0

$10,500,000

($10,500,000)

2014

$0

$0

$0

Total

$19,800,000

$21,000,000

($1,200,000)

 

All in all the Redskins only lost about $1.2 million in cap room due to the penalties, assuming that his guarantees would have voided due to his personal conduct. Had they been aware of this in 2011 it would not have been nearly as tough a blow.

DeAngelo Hall likely would have been a June 1 cut this year or at the very least would see his prorations charged that way since he ended up back with Washington on a minimum salary deal. Here are the differences with his deal:

 

No Contract Change

Actual Charges

Gain/(Loss)

2011

$8,300,000

$5,000,000

$3,300,000

2012

$9,800,000

$14,000,000

($4,200,000)

2013

$3,300,000

$7,500,000

($4,200,000)

2014

$3,000,000

$0

$3,000,000

Total

$24,400,000

$27,400,000

($2,100,000)

 

Again the actual loss is not as great as people believe, but these charges greatly impacted the way the Redskins could plan for the cap taking far more losses in 2012 and 2013 than they would have had the void provisions not be accepted by the NFL. In this respect the penalty for Hall was much more severe than the one for Haynesworth despite Haynesworth’s deal being larger.

The Cowboys were assessed a $10 million dollar penalty, which I would assume was the determination of what past history said they should have paid Miles Austin in a signing bonus.  Going back to his original untouched contract you would get the following cap changes.

 

No Contract ChangeActual ChargesGain/(Loss)

2011

$10,540,000

$8,540,000

$2,000,000

2012

$3,150,000

$6,150,000

($3,000,000)

2013

$8,732,000

$11,732,000

($3,000,000)

2014

$2,000,000

$0

$2,000,000

Total

$24,422,000

$26,422,000

($2,000,000)

 

Its actually more of a penalty than the Haynesworth deal and pretty close to the Hall one. It is not as bad on the front end as the Hall penalty, specifically in 2013, but the overall impact is close.

All told the effect of the penalties is actually small on both teams, with the disclaimer being that they had some idea of them coming in 2011. The Redskins have made noticeable changes in their contracts and negotiations due to the penalties in order to be cap compliant. The Cowboys have not, which is another reason why I often avoid the Dallas penalty effect.

Overblown Cap Problems

Scott also pointed me to a link over at Blogging the Boys, going over the Cowboys salary cap. It’s a good article and worth a read so please read it if you get an opportunity. That said one of the difficulties in working with the salary cap is thinking short term. Decisions made in 2013 and 2014 impact you years down the line. The Cowboys 2014 salary cap is a problem but not as much of a problem as the 2015 one. Really when I talk about “paying the piper” or “bills coming due” that is the period of time we should be looking at, not the immediate future.

So since I’m not as familiar with the Cowboys roster as I am the teams of say the AFC East, I decided to use the BTB articles roster decisions to look ahead at Dallas’ salary cap for the upcoming years. Based on the projections made the Cowboys should enter the 2013 season with around $10.5 million in cap room. You would need to adjust for the Practice Squad ($1 million) and some misc costs ($1 million) to come up with the final cap total which we can guess to be $8.5 million if they avoid the injury bug.

While the original article mentioned signing Sean Lee we’ll just leave that be for the time being. In 2014 the suggestion was to cut Mackenzy Bernadeau and Justin Durant so I did that.  We would then restructure Tony Romo’s and DeMarcus Ware’s contracts. I just assumed a reduction to a minimal type salary of $1 million with $12.5 million being prorated over 5 years for Romo and $11.25 million over 4 years for Ware. That creates $18.4 million in cap room. All of those savings now become potential dead money in future seasons. Assuming the cap rises to $124 million and they carry over the $8.5 million, the Cowboys will have around $18 million in cap room going into the 2014 League Year.

That assumes Dallas signs no futures contract players as the $18 million is for a 41 man roster. The team needs to get to 53. If we earmark a rookie class of 7 that counts for around $4.5 million (right about the Cowboys total this season) and take into account the workout bonus money the Cowboys are looking at spending $13 million for 3 players to reach the 51 man limit. I’m not sure what Lee would cost (7 mil or so a year with a low year 1 cap?) but he will eat into that total a bit. Still I would call that a workable number after going further in on Romo (which is planned) and Ware (which likely is not).

The problem is as we turn into 2015. In 2015 Doug Free and Kyle Orton will have their contracts void, immediately jumping into the dead money pool. I also made the assumption that the team will cut Jay Ratliff. If we throw the 7 rookies in the mix from the year before and assume they all stick at $5.5 million we have a roster with a $122.4 million dollar payroll with only 29 players under contract.  The Cowboys would likely be about $10 million below the cap limit after the 2014 carryover and need to sign 24 players with that money. The minimum salary in 2015 is $435,000, meaning they would not even have enough to sign 24 undrafted free agents to complete the roster.

Those totals don’t include Lee or WR Dez Bryant, who would be a free agent in 2015. It also doesn’t include the Cowboys 2011 first round pick who will either be on an option season or need to be re-signed. You can go to a 35 year old Romo for more cap relief (again his deal is designed that way) but where else are you going?  A 33 year old Ware?  Doubtful, though through all the restructures you are now at a $20.3 million dollar hit so maybe it’s a must. You can cut Austin and Orlando Scandrick to save $8 million. That’s still not enough to do anything but at least you can begin to field a team. Most likely the team is stuck reworking Romo’s deal again to free up $12.8 million or so. That gives you $30 million, give or take a little, to sign 26 players to the team. With at least three big free agents not counted in that figure that is a tall order to overcome.

The one constant in all of this is that there is never a point where I can look at Dallas thru 2015 and simply say “they can leave things alone”. Every season it’s reworking contracts for stars or deciding players that can save some money by being released. Even all the way out into 2016 the base roster would still have $72 million in cap charges for just 14 players. Throw in a Bryant and Lee and you may be looking $87 million for just 16. The 2014 and 2015 rookie classes can bring that up 28 players for $102 million. It is just not that much to work with.

There are few, if any teams, that have these issues year after year. Usually every team has a breakdown year. One year where you see a number of players come off the books with little or no dead money. The average dead money per club this year is $9 million. Just in our base assumptions that number is a starting point in three of the next four seasons just to “get by”.  That is going to put the Cowboys at a competitive disadvantage relative to the NFL each year. The lack of money to spend doesn’t allow them to get much better via any mechanism besides the draft. They will only be getting older on the top.

Maybe that’s not as bad as it sounds since successful drafting teams will be better than the teams built thru free agency, but it is often nice to be able to add some parts to complete the puzzle. I cant see ways for Dallas to do that.

That’s not to say Dallas is the only team in a bad cap position- the Panthers, Saints, and Lions are all a mess for various reasons as well- but Dallas is consistently in the worst position. They have also been a team that had various ways to avoid some of these charges. Franchising Anthony Spencer will cost Dallas over $10 million in cap that they could have put to better use. Signing Orton to a contract nobody in the NFL would have signed him to adds to the problems.  Adding void years onto players contracts with no regard for the future have led to unnecessary excessive cap charges. Overpaying Austin as a one year wonder and extending an old defensive tackle to a league high contract when he had two years remaining on an existing deal are typical of the Cowboys woes.Did the cap penalties hurt the team?  Sure but almost any other team would have made choices to take that into account. Dallas just kept on going as if nothing happened.

It might be one thing if this strategy ever worked, but the last time Dallas truly had a successful season Wade Phillips was the head coach. The last time people regarded Dallas as a legit threat for a title Terrell Owens was catching passes from a 27 year old QB with great potential. That 27 year old QB is now looked at as an overpriced failure more in part because of the Cowboys poor cap management and failure to surround him with a cohesive team than anything he has done to deserve that label.

If Dallas wins this year, and barring a game changing home run in the draft this to me is the year they have the best chance, it’s going to be in spite of the way they run their franchise. It’s not a sustainable business model and I’m not sure you could find one NFL executive outside of Dallas that would recommend running the franchise this way. Right now they are either on the path to having a Raiders like implosion in a few years or fielding the oldest team in the NFL.