The story of this NFL offseason was teams spending money to build around effective quarterbacks on rookie deals. The Philadelphia Eagles, of course, won the Super Bowl after surrounding Carson Wentz with talent. The Rams loaded up with stars on both sides of the ball to help Jared Goff. The Bears spent big in free agency and then traded for Khalil Mack. The Buccaneers, Chiefs and Titans all handed out big contracts as they built rosters around their young quarterbacks.
One team was noticeably absent from the fray. Despite the fact that they have the cheapest starter in the league in former fourth-round pick Dak Prescott, the Dallas Cowboys mostly sat out free agency and didn't go after many veteran additions this offseason. Their most significant addition was former Jaguars wideout Allen Hurns on a two-year, $12 million deal, but even Hurns serves as a replacement for Dez Bryant, who will have a larger cap hit ($8 million) than any Cowboys wideout in 2018 despite being released by Dallas in the spring.
They will devote just $1.8 million of their cap to quarterbacks this season, comfortably the smallest total in football and less than 10 percent of the league average of $18.3 million. In a league in which every other team is investing in talent for their young quarterbacks, the Cowboys are lining up what is probably the worst set of receivers in the league for Prescott, who will be due for an extension next offseason.
The Cowboys are wasting one of the most valuable assets in all of football, and they have nobody to blame but themselves.
The Dak deal, and what's around him
Even when you compare him to other rookie-contract quarterbacks, Prescott is a bargain. Wentz's initial rookie contract is fully guaranteed for four years and $26.7 million, for an average of just under $6.7 million per season. Deshaun Watson, taken a year later in the middle of the first round, picked up a four-year, $13.8 million deal, which puts him at $3.5 million per season. Prescott's entire four-year contract pays him only a total of $2.7 million, and most of that wasn't even guaranteed.
Assuming that the Cowboys rip up the final year of that deal and hand Prescott an extension before the 2020 campaign, they will end up paying Prescott a shade over $2 million for three years as their starting quarterback. Jimmy Garoppolo will make more than $2.6 million per game this season. Prescott will pocket an additional $950,000 or so via the league's performance-based pay system, but that doesn't touch the Cowboys' cap.
And yet, curiously, the Cowboys have essentially sat out free agency since Prescott emerged during the 2016 season. Their biggest signing during the 2017 offseason was the three-year, $10 million deal they handed cornerback Nolan Carroll, who was released after 81 defensive snaps. Hurns is the only player they added this offseason at a cap hit or average annual salary of more than $3 million.
You might argue that Dallas is sitting out free agency to generate compensatory picks, and that could be part of the equation. After failing to accrue a 2017 compensatory pick, the Cowboys racked up four this past offseason, although none of them were third-round selections. (They turned one of those picks into veterans Tavon Austin and Jamize Olawale via trade.) Dallas also isn't projected to pick up any compensatory picks in 2019, as it canceled out the mid-round pick it might have earned for Anthony Hitchens by signing swing tackle Cameron Fleming. If the Cowboys wanted to protect comp picks, they could have signed free agents who were cut by their teams and therefore wouldn't count against the compensatory equation, which was the case with Hurns.
In reality, though, they aren't spending because they find themselves in a difficult cap situation, even with the benefit of Prescott's minuscule salary. For years now, they've operated with a unique strategy designed to pay their top stars market-value contracts while simultaneously keeping their cap hits relatively team-friendly. It might sound like a great plan, and it is when everyone stays healthy and effective.
The downside is that when those players become ineffective or are otherwise unable to play, teams end up paying the price. While most teams can move on from veteran deals without incurring significant costs, the Cowboys have been stuck paying uncomfortable amounts of dead money. After Prescott's breakout season in 2016, the Cowboys have devoted more than $54 million of their cap space to dead money. Only the Bills, Browns and 49ers -- all teams that have undergone regime changes in the middle of rebuilding their rosters -- have paid more. The median team has paid just over $23 million over that same time frame. Instead of surrounding its young quarterback with game-breakers, Dallas has been stuck giving $27 million per season to ghosts.
How dead money works, and how Dallas got here
To understand why this has happened, let's look at Prescott's predecessor. Tony Romo was once an undrafted free agent who took over for Drew Bledsoe and emerged as a franchise quarterback for pennies on the dollar. Romo signed a six-year, $67.5 million extension during the 2007 season and then signed a six-year, $108 million extension with a $25 million signing bonus and $40 million guaranteed in 2013.
Here's what the cap hits looked like for Romo's 2013 extension at the time of signing. I'm also going to include what it would have cost the Cowboys to move on from Romo by cutting or trading their star quarterback:
Remember that they drafted Prescott in 2016 and were forced to turn to him while Romo was out because of a back injury. If the Cowboys had stuck to this original contract without making any changes, they would have been able to move on from their former starter while owing just $5 million in dead money in 2017 and nothing in 2018. Keep that in mind.
Notice the "Option Bonus" and "Restructure" columns? Those are remnants of Romo's previous deal. The option bonus is a $8.175 million payout Romo earned in 2012 and the Cowboys spread over the next five years of their cap. The restructures are the issue to be concerned about here. They restructured Romo's first deal three times to create cap space, pushing more than $20 million of his cap hits into the future.
When a team restructures a contract, it's typically taking a base salary for a player it will keep around, and converting the vast majority of it into a bonus. For the player, there's no loss; they get what would have been their salary up front in one big lump sum as opposed to waiting for game checks on a week-to-week basis. The team, meanwhile, gets to spread that base salary across as many as five future seasons for cap purposes.
To use round numbers, let's say a player has a base salary of $11 million in 2018 and his team needs cap space. The organization can convert $10 million of that base salary into a bonus, leaving him with a $1 million salary and a $10 million bonus, all of which the player actually takes home during the 2018 campaign. The bonus gets charged to the cap at the cost of $2 million per season, so our player's 2018 cap hit would fall from $11 million to $3 million, representing his $1 million base salary and the prorated $2 million of the signing bonus. Our team suddenly has $8 million in cap space to burn without losing anybody off its roster.
While a player is on the roster, teams can continue to pay the prorated bonuses on an annual basis. Once the team decides to move on from a player, though, the bonuses accelerate onto its current cap. Let's say that this same organization decided to cut this player after one season under that contract. Instead of paying $2 million per year for the next four seasons, all the cap charges accelerate onto the current year of the cap, resulting in a $8 million cap charge for a player who isn't even on the roster. The $8 million amounts to what's commonly known as dead money.
The Cowboys have operated this way for years. During Romo's first contract, they restructured his deal three times to re-sign draftees such as Marion Barber and Jay Ratliff, and retain imports such as Terrell Owens and Ken Hamlin. In many cases, these extensions became albatrosses, leading them to restructure more contracts to both absorb the dead money of the players they were cutting while maintaining a competitive roster. The organization hoped to use the uncapped 2010 campaign to absorb some of the contract costs, but the league deemed this to be an unfair advantage and controversially docked it $10 million in cap space.
Unsurprisingly, the Cowboys structured Romo's deal with the expectation that they would convert more of his base salaries into signing bonuses. By giving Romo a six-year deal, they maximized the amount of space they would have for spreading out the bonuses. They would restructure Romo's deal twice, reducing his base salary in 2014 and 2015 to $1 million while converting $28.5 million of combined base salaries to bonuses. The 2015 restructure, notably, probably allowed them to sign Greg Hardy.
Romo missed 12 games during the 2015 season and underwent collarbone surgery, which probably discouraged them from restructuring his deal again before the 2016 season. By then, though, the cap damage was done. Here's how Romo's deal ended up looking before the Cowboys released him during the 2017 offseason:
Under Romo's original extension, the Cowboys could have cut Romo and paid just $5 million in dead money. Because they repeatedly restructured Romo's deal, though, they instead owed $19.6 million in accounting charges. Dallas used the post-June 1 exception to spread those charges over two years, paying $10.7 million in 2017 and $8.9 million this season. Romo has played four games over the past three seasons, and the Cowboys will have paid him more than $40 million in cap charges. If Prescott stays healthy this season, he'll play 48 games over that same time frame and cost a fraction over $2 million.
The Cowboys' other cap issues
Romo wasn't the only player responsible for dead money on the Cowboys' cap. While he cost $10.7 million in 2017, Dallas also devoted an additional $15.9 million in dead money to a bevy of other players. The most notable deals were to free-agent missteps Cedric Thornton ($3.5 million) and Carroll ($2 million) as well as longtime Cowboys Brandon Carr ($2.7 million) and Doug Free ($2.5 million). Both Carr and Free had restructured their contracts once to create cap space; by 2017, Carr was on the Ravens, and Free had retired.
This year, Romo's $8.9 million hold amounts to less than one-third of the dead money on Dallas' books. The Cowboys are responsible for $8 million after cutting Bryant, which represents one of the rare Dallas extensions that didn't involve any restructuring. The $8 million amounts to two years of accelerated signing bonus. Thornton and Carroll are back for a combined $4.5 million. Deonte Thompson, who signed a deal with a $1 million signing bonus in March, was cut before the season before re-signing. Benson Mayowa is also on the books for $1.1 million in dead money.
The two other veteran Cowboys on long-term deals who were released this offseason were Orlando Scandrick ($2.3 million in dead money) and Dan Bailey ($800,000). Scandrick has his deal restructured once to create cap space, and Bailey was on the sort of long-term deal that only Jerry Jones & Co. hand out. Dallas gave its kicker a seven-year, $22.5 million deal before his fourth season, remarkable in a league in which only two other kickers (Mason Crosby and Ryan Succop) are on five-year pacts. The deal looked great when Bailey was healthy and kicking at a high level, but the Cowboys paid $7.3 million over the past two seasons for declining play before cutting him and eating the $800,000 in dead money.
Bailey's deal was low stakes, but the Cowboys structure their contracts to go longer than anybody else in the league by a significant margin. The NFL has established a precedent of handing out extensions of six years or more to quarterbacks and pass-rushers, in part because their deals are so expensive. Just 11 players who don't suit up in one of those roles across the NFL were signed to extensions of six years or more. Four of those players -- Travis Frederick, Sean Lee, Zack Martin and Tyron Smith -- are on the Dallas roster. (Bailey was the fifth.) Of the 19 players under contract for the 2023 season, three are Cowboys.
Those four veterans are the most notable veteran Cowboys after Jason Witten retired this offseason to become a color commentator on Monday Night Football. Dallas has repeatedly restructured each of these deals outside of the Martin contract, which only came into existence this June. They probably plan to turn most of Martin's $10 million base salary in 2019 into a signing bonus. (Dallas was doing this with Witten's contract as recently as this past March, but the most recent restructure was made in such a way as to protect the organization from Witten's retirement without incurring dead money.)
Again, this strategy is great as long as the players stay healthy and productive. Asking any NFL player to stay healthy and productive for eight years is betting against history and randomness. Take Lee, who has the third-highest 2018 cap hit in the league among coverage linebackers at $11 million after restructuring his deal in 2014, 2016 and 2017. He is wildly productive when healthy, but he has missed an average of nearly six games per year during the first five years of his extension. The Cowboys have had no way to get out of his deal without paying a minimum of $9.8 million in dead money. They probably drafted Leighton Vander Esch to serve as a long-term replacement for Lee, and if Dallas does decide to move on after this season, it will owe $3.1 million in dead money.
Smith's eight-year, $97.6 million contract is excellent, in part because the left tackle market has exploded since he signed it and because Smith signed it after his third year in the league. At the same time, though, he also missed time because of various injuries last season. Perhaps owing to that, the Cowboys stopped restructuring Smith's deal after doing so in each of the previous three seasons, pushing $27.7 million into the future. While Smith should still be an excellent player, he's not a bargain in 2018. The Cowboys are responsible for a $17.6 million cap charge with Smith this year, making him the highest-paid left tackle in the league. (His cap charges go down in future years as some of those restructures begin to come off of the books.)
In the case of something unforeseen, as is the case with Frederick, the cap problems can become far more painful. Dallas' star center is fighting Guillain-Barré syndrome, an autoimmune disease, with no timetable for a return. The Cowboys already have restructured Frederick's deal in each of his first two seasons; if Frederick is forced to retire or his play diminishes to the point in which they want to move on, they would owe $16.4 million in dead money next year or $11.4 million in 2019.
We all hope that Frederick returns at his prior level of play, and there's no way that Dallas could have expected Frederick to suffer from a rare illness, but signing NFL players to deals with extra years for restructuring purposes ignores the attrition rate and randomness of the league. The Saints had to deal with this when they gave Junior Galette an irresponsible four-year, $41.5 million extension, restructured his deal, and then were forced to cut him for off-field concerns. They ended up eating more than $17.5 million in dead money over two seasons.
It's not just off-field problems. Hall of Famers like Calvin Johnson have retired earlier than expected, with the Lions paying $12.9 million in dead money for his deal in 2016. Young stars like Tyrann Mathieu haven't developed the way their teams would have hoped, which is why the Cardinals are paying $9.3 million in dead money this year. Teams even grow sick of key contributors like Ndamukong Suh, whose $9.1 million dead money hit this season makes him the seventh-highest-paid player on the Dolphins, even as he suits up for the Rams.
Handing out these sorts of contracts also creates the possibility of a situation in which a player's combined salary and cap accounting becomes too much to handle. That's what happened with DeMarcus Ware in 2014, when the Cowboys needed cap space and were set to pay a 32-year-old Ware a $12.3 million base salary. Dallas already had restructured Ware's deal in each of the three previous seasons to free up room, but in 2013, Ware missed a game for the first time in his career and saw his sack total fall to a career-low six.
In lieu of a $16 million cap charge for Ware, the Cowboys cut their star edge rusher and ate $8.6 million in dead money on their 2014 cap instead. Ware promptly went to the Broncos and posted a 10-sack season before winning the Super Bowl with a 3.5-sack, 12-knockdown postseason the following campaign. Dallas spent years searching for pass-rush help and whiffed on players such as Hardy and Randy Gregory before DeMarcus Lawrence's breakout campaign.
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The Cowboys will find themselves at a crossroads in 2019. They're currently ticketed to have $64 million in cap space. They could have more if they decide to move on from veterans such as Lee and Tyrone Crawford, although they'll incur dead money charges after previously restructuring their deals. It's not difficult to piece together a scenario in which the Cowboys could end up with $80 million in cap space.
Unfortunately, a good chunk of that space isn't going to last long. Lawrence will be a free agent, and while the Cowboys could try to franchise him for another season at $20.6 million, the Boise State product doesn't want to play on the tag for a second consecutive year. If Lawrence comes close to his 15-sack total from a year ago, the Cowboys probably will have to pay him something close to $20 million per season on a long-term deal.
There's Prescott, who is in line for an enormous raise. Unless the third-year passer totally falls on his face in 2018, Dallas will almost certainly have to top the five-year, $137.5 million extension the 49ers gave Garoppolo as Jimmy GQ finished the fourth year of his rookie deal. The Cowboys will get a bit of a cap discount by virtue of signing Prescott in advance of the final year of his contract, allowing them to spread the bonus over an extra season, but he's not going to be on the books for the $815,849 he's currently posted at for 2019.
And, just in case you were wondering, there's no strong case to be made against giving Prescott a significant contract extension. Few rookie passers have been more impressive through two seasons. By the adjusted net yards per attempt index (ANY/A+), which accounts for era, he is off to the fourth-best start to a career since the merger, trailing only Dan Marino, Jeff Garcia and Russell Wilson. (Garcia, who spent most of his 20s in the CFL before taking over in San Francisco, isn't even a good comparison.) That metric doesn't even take into account Prescott's impact as a runner, which has seen him rack up 658 yards and 12 rushing touchdowns over the past two seasons.
The knock on Prescott is that he struggled without his star teammates around, which makes him just like, oh, every other quarterback in the league. Prescott has posted an 89.7 passer rating and a 69.9 Total QBR with Ezekiel Elliott on the field, and with Zeke sidelined, his passer rating has dropped all the way down to ... 86.6. Prescott's Total QBR of 70.3 actually improved without the star running back. As a comparison, over that same time frame, Ben Roethlisberger has posted a 95.8 passer rating and a 64.5 Total QBR with Le'Veon Bell on the field. When Bell isn't alongside him, Roethlisberger has mustered an 80.6 passer rating and a Total QBR of 52.8.
Likewise, when Prescott has gone without Smith at left tackle, his numbers have declined, but not by an extraordinary margin. With Smith, Prescott has posted a passer rating of 98.4 and a Total QBR of 76.0. Without the left tackle, those marks fall to 82.3 and 70.1, respectively. Compare that to Wentz, who spent most of his rookie season without the NFC's best right tackle, Lane Johnson. With Johnson, Wentz posted a passer rating of 99.1 and a Total QBR of 73.6. Without Johnson? Those numbers fall to 74.9 and 47.7.
Following Lawrence and Prescott off the board is Elliott, who will be eligible for an extension after completing his third season. The Cowboys could wait to sign their star back to a new deal, but as we saw with the Rams and Todd Gurley, teams are trying to get ahead of whatever Bell is going to get as a true unrestricted free agent next March. It wouldn't be shocking to see the Cowboys try to get an Elliott deal done in February in a deal that could top Gurley's four-year, $60 million extension.
The Cowboys can use these deals to make a change. While other teams restructure deals out of desperation (the Ravens) or foolishly aggressive spending (the Saints before 2017), no team manages its cap like Dallas. At this point, what evidence do we have that the Cowboys are gaining some sort of significant benefit from this plan? This is an organization that hasn't made it out of the divisional round in 23 years. It has been paying too much in dead money for players like Roy Williams and Jay Ratliff, let alone stars like Romo. Dallas simply hasn't run its cap in a responsible manner.
This is the Cowboys' chance to start running their cap like the rest of the league. They can't redo those offensive line contracts, but they should start structuring the deals they're going to give Elliott, Lawrence and Prescott in a traditional fashion. They are costing themselves opportunities by either being too naive to think their long-term contracts might not work out or by being too shortsighted to imagine what the future might hold. It already has cost them an opportunity every other team in the league is desperately trying to create. No team has done less with a star quarterback making peanuts than the Cowboys have with Dak Prescott.