On Monday this week, the NFL hit the Cowboys with a $10 million cap penalty. Immediately, there were concerns that this could severely impact what the Cowboys would be able to do in free agency. One consequence of the penalty was that the Cowboys chose not to tender some of their restricted free agents like Kevin Ogletree and Tony Fiammetta. The Cowboys front office also restructured some contracts and released two players to create a little extra cap space.
But six free agent signings later, the Cowboys don't appear to be overly affected by the penalty.
"First of all, the No. 1 thing we always try to be in a position to do, regardless of the situation, is do the things we need to do to make us a better football team for the upcoming season,'' said Stephen Jones, the club's chief operating officer.
"Obviously, getting the cap hit, you have to deal with it and the ramifications of that but it's not going to stop us from being able to do the things we have to do to be a championship caliber football team in 2012.''
One of the reasons for this public display of nonchalance is the way the Cowboys have managed the contracts for their free agent acquisitions. The Cowboys' first five signings (minus Dan Connor, whose contract details are not available yet) will cost the Cowboys just $9.7 million against the salary cap in 2012. Yet they'll be paying their five new players $23.6 million in real money this year.
After the break, find out how the Cowboys turned $23.6 million in real money into $9.7 million of funny money, and what not-so-subtle message this sends to the penny-pinchers in the NFL.
ESPNDallas released the contract details of the Cowboys' first five free agent signings today, and assuming the numbers are accurate, we can now do a back-of-the-envelope calculation to figure out the approximate cap hit of the contracts in 2012.The best way to combat the salary cap is to circumvent it. And the best way to circumvent it is with a signing bonus, beacuse in the salary cap calculation, signing bonuses are prorated over the life of a players contract.
Let's say a player signs a five-year deal with a $5 million signing bonus. Because the signing bonus is prorated, those $5 million will be evenly distributed over each year of the contract. In this example, $1million of the signing bonus would count against the cap in each contract year.
Here are the signing bonuses we know of so far:
- Carr: $10.0 million
- Orton: $5.0 million
- Bernadeau: $3.25 million
- Vickers: $0.2 million
- Pool: $0.1 million
Now let's apply this principle to the contracts the Cowboys have signed so far, looking at the base salaries for each year and adding the prorated signing bonuses on top to get the cap hit for each year:
| Carr |
Orton | Bernadeau | Vickers | Pool | TOTAL | |||||||
| Base Salary | Cap Hit | Base Salary | Cap Hit | Base Salary | Cap Hit | Base Salary | Cap Hit | Base Salary | Cap Hit | Real Money |
Funny Money | |
| 2012 | 1.2 | 3.2 | 0.9 | 2.6 | 1.0 | 1.8 | 0.8 | 0.9 | 1.1 | 1.2 | 23.6 | 9.7 |
| 2013 | 14.3 | 16.3 | 1.35 | 3.0 | 1.75 | 2.6 | 1.2 | 1.3 | - - |
- - |
18.6 | 23.2 |
| 2014 | 7.5 | 9.5 | 3.25 | 4.9 | 2.25 | 3.1 | - - |
- - |
- - |
- - |
13.0 | 17.5 |
| 2015 | 8.0 | 10.0 | - - |
- - |
2.75 | 3.6 | - - |
- - |
- - |
- - |
10.8 | 13.6 |
| 2016 | 9.1 | 11.1 | - - |
- - |
- - |
- - |
- - |
- - |
- - |
- - | 9.1 | 11.1 |
Note that Bernadeau's contract contains some incentives that are not included in the table above, so the numbers are not entirely accurate, but they are directionally accurate.
The Cowboys are paying the new acquisitions about $23.6 in real money this year, but that money will only count for about $9.7 against this year's cap. Take that, Mr. Goodell.
The Cowboys look to have achieved their free agency targets despite the ridiculous and arbitrary penalty the NFL has saddled them with. In many ways the Cowboys' free agency activities this year are a direct slap in the face of the leagues' commissioner and the 28 other teams who were perfectly happy to gobble up the excess cap space the Cowboys and Redskins provided.
Earlier today, PFT reported that "a source with knowledge of the situation tells PFT that the Cowboys and Redskins are exploring all options for challenging the decision."
Stephen Jones was tight-lipped earlier today when asked about possible next steps.
Jones declined to answer whether or not the Cowboys will appeal or fight the ruling, saying, "that's about all I can say as it relates to the cap hit. That's about as good as I can address it.''
Despite the NFL penalty, the Cowboys still have more than $10 million in cap space available (excluding Connor's as yet unknown contract and more free agent signings) and can still create more room if needed.
For the Cowboys' finances, the NFL penalty is an inconvenience at best. For Jerry Jones, it is a personal insult. And trust me, inside the Cowboys' publicly displayed velvet glove awaits an iron fist.