Today and Tomorrow: The Cowboys Salary Cap Woes

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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 Change Actual Charges Gain/(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.

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Recapping Todays NFC Salary Cap News

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Today was quite the day of activity as teams look to gain as much cap space as possible before the beginning of free agency tomorrow. I am going to break things down by conference in two posts to keep things from getting too long. As for the salary cap charts please note that I will be doing my best to keep them updated and current over the next week but I’ll be playing catchup on some days so bear with me on it. Also the league has made more adjustments to the cap that I am unaware of for most teams so if you have any information please email me.

Dallas Cowboys– The cap disaster that is the Cowboys did make their way under the cap today with more restructures and the release of LB Dan Connor. The release of Connor saved the team $3 million. Dallas’ decision to restructure the contract of 32 year old Jay Ratliff is probably one of the worst decisions of the season, showing the severity of the Cowboys cap and their mishandling of the situation. Most of the offseason Dallas management complained about Ratliff an Ratliff had all kinds of problems both on and off the field. While I don’t know the exact specifics yet this will more or less assure Ratliff of a roster spot in 2014 whose dead money will now be over $5 million.

Washington Redskins– The Redskins released CB DeAngelo Hall creating $8 million in cap room in the process.   Hall had been at the center of the cap penalties against the Redskins when they used void clauses to accelerate all the prorated money from his 6 year, $54 million dollar contract into the uncapped season. His release at least offsets some of that.  The Redskins also reworked the contract of always injured Adam Carriker and placed some incentives into the deal to help reduce his cap hit but give him the chance to earn back money by remaining on the field.

Minnesota Vikings– The Vikings got the heist of the century when they traded disgruntled WR Percy Harvin to the Seattle Seahawks for a 1st round pick plus some mid round selections. To get that kind of price for a player that is essentially no different than a Restricted Free Agent is unheard of. The Vikings will save $2,782,500 in cap with Harvin’s trade.

Arizona Cardinals- The Cardinals released RB Beanie Wells clearing $1,457,500 in cap room.

San Francisco 49’ers– The 49’ers traded a late round pick for Anquan Boldin from the Ravens. The 49’ers will take on Boldin’s $6 million dollar salary and cap charge. Boldin who works the sidelines well and is a good blocker should be a fit in the style of offense that the 49’ers run. If the trade goes through I would think it would spell the end of Mario Manningham as a 49’erReleasing Manningham would free up close to $4 million in cap almost offsetting the acquisition of Boldin.

Seattle Seahawks– This was the team on the other end of the Harvin deal which has really left me scratching my head. Supposedly the Seahawks are about to lock him up for upwards of $12 million a year which is an absolute market changer. Harvin is a slot receiver who primarily catches short little passes.  Harvin has never had a 1000 yard season or a double digit TD season. I know some will argue that he is a triple threat (receiving, running, and returns) but it’s just wasted money, IMO.  They already had a good return player in Leon Washington who will likely be released now and for the most part players don’t return once they are established as offensive weapons. Seattle was a terrific team last year and probably would have won the Super Bowl if they escaped Atlanta and maybe this puts them over the top, but this reeks of a move that will be a contract albatross 2 or 3 years down the line.As a Jets fan I sure wish the Seahawks needed a disgruntled cornerback.

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Twitter & More Q&A- February 20

I thought rather than answering questions directly on Twitter I would do a feature every now and then where I look at some of the questions asked over the last day or two so there is a record of it for all to see and not limit the answers to 140 characters or to have it buried in the comments section. And of course I want to preface all of this by saying that these answers related to contract questions are based on data that I believe to be reasonably accurate, but I cant say with 100% certainty is correct.

From @SGininger:  Is it true that the Skins cap penalty allows them to cut Hall without any dead money counting against them?

Yes that should be accurate. The Redskins signed DeAngelo Hall to a 6 year contract in 2009 that called for an option bonus of $15 million to be paid in 2010, which was the uncapped year. When it came time to pay the bonus the Redskins changed the terms a bit by giving Hall the ability to void the final 4 years of his contract by paying the Redskins back the money he earned in 2009 and 2010. Under the CBA, void seasons where the player has the sole control of voiding the contract can not be used for the purposes of prorating bonuses. What that meant was rather than prorating $15 million dollars at $3 million per season all $15 million counted on the 2010 salary cap books. In addition his prior signing bonus money all accelerated into 2010 thus leaving no dead money on the books for future years. In all the Redskins dumped $19.7 million  into the uncapped year for Hall when his normal charge would have been $3.8 million. So if Hall is released there is no dead money left on the books with his name on it, though part of the penalty is, in essence, what his dead money should have been if released this year.

From @Donkey_Kang: How does the SD Chargers’ cap situation look like? Besides Antonio Garay, who else is likely to be cut?

I wanted to go over all the teams this offseason but I sadly will not be able to do that due to time constraints, but I can do a quick overview here. I would not expect the Chargers to be much in the way of players this offseason. I currently have them around $5.9 million in cap room on a $121.1 million cap limit, but they only have 47 players under contract which mean most of their rookie class will see the full dollar value hit the cap. When you consider their rookies should cost around $5.2 million it leaves almost no spending room between now and July.

Beyond cutting Garay there are only minimal savings deals on the team. Takeo Spikes saves the team $3 million and backup Charlie Whitehurst a bit over $2 million if released. Releasing WR Eddie Royal would save $1.5 million. I think the big decision is what the team wants to do with Phillip Rivers who was bad last season. He has a $17.11 million dollar cap hit this year and they could bring that lower if they extend him. With almost no dead money on the books in 2014 for him this seems to essentially be a contract year for him.

From Guest in comments: What gives with the change in Kevin Boss’ dead money charge?

Like I have mentioned before we arent perfect and while we strive to do our best to compile the figures we definitely make mistakes in calculations and/or assumptions, and sometimes just get bad information. Boss’ deal was one with conflicting numbers and I was wrong. Luckily for us someone I greatly trust was able to correct the error so we have it right. While our analysis I believe is top notch and the site among the best cap resources you will find there are others who are going to be better connected  when it comes to getting perfect data on contracts. We come close but cant be right all the time. So anytime anyone sees a mistake or has a tip, no matter how small, trust me it helps if you shoot me an email or a DM so we can get it fixed.

From @BobbyMaz They (Green Bay) have to restructure Finley. Are they going to keep him at 8.75 this year?

When you see teams sign what are “premier” players to two year contracts most often they doing it because they have no intention of keeping them for too long. Green Bay’s intention was never to hold onto Finley and I would guess that he will be released to create more cap space. I’d be surprised if they extended him.

From @NickSpano Whoa! Jason from @nyjetscap and now @Jason_OTC has a face!? Same person!?

LOL. I already answered Nick who has been a great follower of my work for sometime but yes for those unsure of it I am also the founder and editor of www.nyjetscap.com, a site primarily devoted to tracking the Jets salary cap. Ill post some links to that site every now and then or double post on the two sites, but nyjetscap is really where I learned about the cap and became pretty good and the analytic end of it. OTC is a much more in depth venture and unlike nyjetscap, which was always just me, Ill be getting some help here. More to come on that in the coming weeks but I think you will really enjoy reading our teams thoughts and cap analysis. There are some great “amateur capologists” out there and we definitely will have some of the best posting at OTC and helping keep this massive database as accurate as possible.

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