Edit: After publishing this I had a league source reach out to me to clarify that this is a unique situation and that there should be no dead money for Witten due to the structure of the bonus payment. We will officially know the answer after he is placed on the retirement list but Dallas should get a full credit in 2018 on the cap.
Cowboys star tight end Jason Witten is apparently going to retire from the NFL and head to ESPN to work as a lead announcer on Monday Night Football, a position that was rumored to be headed to another tight end, Greg Olsen, a few days ago before Olsen received a new contract from the Panthers. I had a few questions on Twitter about Witten’s contract so I wanted to share my opinions on what will happen now.
Witten had signed a contract extension with the Cowboys last March. Given his long time status with the Cowboys it was a pretty moderate extension that contained no guarantees and no signing bonus, basically giving Dallas plenty of flexibility in the event Witten retired. However with the Cowboys in a salary cap crunch this offseason prior to the release of Dez Bryant, they went and restructured Witten’s contract for cap relief. The restructure converted $4.7 million of Witten’s salary to a bonus that would prorate over the final four years of the deal, creating $3.525 million in 2018 cap room.
Unless Dallas did something crazy with the contract and 100% protected the money from payback due to retirement they will get their $4.7 million back from Witten (assuming any of it was even paid yet) but from a salary cap perspective they will likely take a hit this year because of the restructure. A retirement, once processed by the team, acts just like a cut. So if he is placed on the retired list prior to June 1, Dallas will take a $4.7 million cap charge for Witten in 2018 rather than the $0 cap charge they would have taken if he had retired before they restructured the contract. The Cowboys will end up carrying $1.75 million more in cap charges for Witten with him retiring than if he was still on the roster. That kind of leads me to think that Dallas never considered Witten retiring this year.
Now the Cowboys will get that money back on the salary cap, but it should come as a cap credit in 2019, not 2018. Technically repayments are due each year which could mean getting credits in each of the next three years, but I believe if it is all paid back now the Cowboys would get the credit all in 2019. Given that they released Bryant they should be ok with losing about $2.25M in cap room once Witten is off the books but I doubt that this is what they were expecting to happen.
The other option for Dallas is to hold off on making his retirement official until June 2. If they did that they would only take on a $1.175 million cap hit for Witten this year and defer the balance to 2019, which would be offset by the cap credit for the bonus payback. Rather than losing cap space they would gain around $1.3M in net cap space. Thats is probably the better way to handle it and would be closer to what things would have been like had he retired in early March.
Because the only bonus money at stake here is from this year I would not expect a “cut” drama to unfold the way it sort of did with Tony Romo last year. Romo had millions of old bonus money that he could have been forced to pay back to Dallas if he retired which would not have been fair for Romo. By cutting him he was relieved of that obligation. Witten doesnt have that old money to be concerned with so moving to the “reserve/retired” list should be perfectly fine for both sides.
Jason is the founder of OTC and has been studying NFL contracts and the salary cap for over 15 years. Jason has co-authored two books about the NFL, Crunching Numbers and the Drafting Stage, which are widely circulated in the industry and hosts the OTC Podcast. Jason’s work has been featured in various publications including the Sporting News, Sports Illustrated, NFL Network and more. OTC is widely considered the leading authority on contract matters in the NFL.