FanPost

Cowboys Capology & the Art of Restructuring

Every year, it appears that the Cowboys are up against the cap and every offseason they manage to spend big money on someone in free agency. The Brandon Carr signing, the Anthony Spencer franchise tag, to name the most recent. And it now seems a Cowboys tradition to restructure deals for team veterans to work the cap numbers in their favor. Of course, this comes with risks and concerns. You will frequently hear the term "mortgaging the future" while discussing the Cowboys use of pro-rated signing bonuses (future cap hits) to lower the immediate cap hits of particular players.

Seemingly making matters only worse is that the lengths of contracts for some veteran players go out into 2017. While Jerry Jones is talking about a closing window, he has 30+ year-old players on contracts that go on for another 2 to 4 years. However, I think Jerry was actually speaking the truth. The Cowboys team with the core group of players like Ware, Witten, Ratliff, Austin, Romo and Spencer is facing a closing ‘financial' window. While the players were under long-term contracts, the team had made the '13 - '15 seasons the final window in the old Cowboys team. All these key veterans would come up to a serious (uncomfortable?) decision in these years.

As is evident, Romo and Spencer are the first to reach the window, and may also be caught in the tail-end of it. Both are players the team is keen to keep for longer, and both are debatably at the pinnacle of their prime, so it makes sense they are currently locked-up. No matter what the team decides to do with their contracts, both Romo and Spencer are on the team in '13 and on the books for the cap. The Cowboys now have the upper hand in negotiations because they have the ultimate decision in being able to do nothing new. They can adapt and negotiate with both players as the landscape around them changes, instead of having to force something before other questions can be solved.

To be able to do this, the Cowboys renegotiated/restructured contracts with those veteran leaders mentioned earlier. As a result, many fans are worried that the Cowboys have now invested a lot of long-term money on players that are sure to reach their decline before their contract's end. It seems the investments extend past the ‘closing window' and will only hurt the future of the team. In 2014 Sean Lee will need a new contract, and by 2015, the Cowboys will have to negotiate deals with Dez Bryant, Tyron Smith, Bruce Carter, and Demarco Murray.

However, it simply isn't true that the Cowboys are locked-in and must keep these veterans. If you look at the contracts in detail, it seems the Cowboys front office and the Tao of Stephen Jones are well aware of the closing window.

The following chart shows the age, cap hit, and remaining signing bonus of some veteran players that got restructured contracts in the past year or two. It extends out to year 2015.

Player 2013 2014 2015
D. Free 29 30 31
10M 11M 11M
~7 ~4
J. Ratliff 31 32 33
4.1M 8.2M 9.7M
~6.8 ~4.1
J. Witten 30 31 32
4.3M 8.4M 8.5M
~8.6M ~5.2
D. Ware 30 31 32
8.1M 16M 17.5M
~9 ~5
M. Austin 28 29 30
3.6M 8.2M 9.6M
~7.8 ~5.1
O. Scandrick 26 27 28
2.8M 5.6M 7M
~5.7 ~3.6
N. Livings 31 32 33
1.7M 4.3M 5.3M
~2.7 ~1.8

The most important thing to realize is that the Cowboys are looking at the cap numbers in the future with more knowledge than we can find available. The most useful resource I have found is Spotrac.com and I use some other sights just to double check contracts. Spotrac makes following Dallas' contracts easier because they have two columns in bonus money, so you can track the flow of both the old and new signing bonuses handed out during these restructured deals.

Clearly, as these players head into the '14 and '15 seasons their cap hits are bigger than their remaining pro-rated bonus money. In 2015, the Cowboys currently have about 104M in cap money registered. That is only 20M under the 2013 cap, and they will have new rookies AND all those guys needing new contracts. However, the Cowboys could conceivable cut Free, Ratliff, Witten, Ware, Austin, Scandrick, and Livings prior to the '15 season, and actually free up over 25M in cap space...even more if they are designated June 1st cuts.

Yes, the Cowboys have pushed pro-rated signing bonuses into 2014, 2015, and in some cases even 2017. And yet, the Cowboys can still reduce their future expected cap space by cutting those players well before the end of their contracts. It allows the Cowboys to plan for a future with their veteran leaders playing at a high level and guaranteed to play in Dallas, but they do still retain the ability to release those players to create cap space. The key to weathering this kind of closing window is, of course, depending on rookies and young players to take the spots of the veterans.

For example, in 2014 Jay Ratliff is scheduled to make (against the cap) $8.2M. But the Cowboys could let him go and shave off 1.4M from their projected cap (8.2 minus the remaining pro-rated bonus 6.8). That money would easily cover the cap hit for a rookie or second year DT on the roster. It would also reduce the 104M expected '15 cap by almost 10M.

The chart also leads me to believe DeMarcus Ware will be looking at a restructured deal in 2014. First, let me clarify. Spotrac shows a column they entitle ‘deadmoney.' It appears to show discrepancies in the signing bonuses. While adding up Ware's remaining bonus money in '14,it appears he has 9.4M in pro-rated bonus money over the rest of his contract, but Spotrac shows only 8.7M in ‘deadmoney.' I think they use this column (which isn't always filled) to show some kind of discrepancies or carry over that doesn't show in the regular bonus columns. In any case, I split the difference.

Ware is scheduled to make (against the cap) 16M in '14 but only has about 9M in remaining bonus over four years. The Cowboys could look to increase that bonus money in future cap years, and actually reduce his '14 cap hit and still make it possible to cut Ware in future years and create cap space.

Yes, the Cowboys will be "paying" for veteran players they release. However, this is capology. That money is already spent and simply an accounting burden in cap terms. Since the Cowboys are calculating their expected cap hits for future years already, they can make sure that cap space is still created (in the crazy cap universe) even if the signing bonuses paid in real-life years ago, have to be paid out in cap terms that year. While this isn't the perfect way of sustaining a franchise long term, it certainly is a very clever way to stay competitive and extend a closing window, but also come out the other end rebuilt through the draft and with ‘new' veteran leaders that are re-signed after their rookie contracts are up.

Another user-created commentary provided by a BTB reader.

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