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Cowboys Organizational Report Card, Part II: Managing The Cap

How does the Cowboys front office operate in the key areas that determine NFL success? Specifically, how well do they manage the salary cap? Today, Ol' Rabble looks at different aspects of cap management and assigns the team a grade in each.

Steve Dykes/Getty Images

As I mentioned in the initial offering of this series, it was inspired in large part by a fascinating conversation on the use of analytics in football during the 2013 MIT Sloan Sports Analytics Conference. The discussion, moderated by ESPN reporter Andrea Kramer, included three NFL front office insiders: 49ers President Paraag Marathe; former Patriots and Chiefs GM Scott Pioli; Kevin Demoff, the Rams' Executive Vice President of Football Operations & Chief Operating Officer. They were joined by the ultimate outsider, Football Outsiders' Aaron Schatz.

Over the course of an hour, the foursome, with assistance from Kramer, offered a multitude of thoughtful informational bits about the way organizations approach free agency, the draft, gamedays and the salary cap. As it turned out, at the same time I was listening to and transcribing the conversation, I stumbled across an interview with the Eagles then-GM Howie Roseman, in which he addresses many of the same issues. I decided to use all their words to articulate or to support a set of organizational behaviors that suggest on-field success, and then offer the Cowboys a grade for each of these behaviors.

In part one of the four-part series, I looked at overall organizational philosophy; today, we'll examine the way the team has managed the cap; in part three, we'll look at free agency; the final post will examine the team's behavior in the draft. Here we go...

Part II. Managing The Cap

Don't Pay Age: The smarter terams reserve their big contracts for their top performers, as they come off their rookie contracts. The idea, as Roseman says, is to invest in "homegrown guys" - the players who a franchise thought enough of to draft and then spent countless hours developing, teaching, and bringing into the team's specific culture.

And, in the last decade, the Cowboys have done a superb job of this, offering second contracts to a wide array of homegrown talents, from Tony Romo to Bradie James and from Flozell Adams to DeMarcus Ware. This is good business. On many levels, it's smarter to reward the guys other players see working their tails off on the practice field and film room than to spend big bucks on "independent contractors," the equivalent of football mercenaries.

The bad news for the Cowboys used to be what happens after the second contract. Let's say a player is drafted at the age of 21, and received a five-year rookie deal. If the team re-ups him before he can hit the free agent market (which is what the Jonses typically have done), that means he'll be signing his second contract after about four years, putting him at about 25 when he inks the second deal. That deal should get him to about 29 - and that's where the the Cowboys too often got in a bind in the past.

29 appears to be a magic age for NFL players; that's when the vast majority begin their decline. Sure, there are exceptions, but for the most part, any player who signs a long-term, big-money third contract with a sizable signing bonus simply will not be playing up to the level of that contract in the final couple of years. That's why the smartest teams offer only one-year "prove it" type deals to players who have completed their second contracts.

In the past, for myriad reasons, the Cowboys tended to overpay to secure their own aging with imprudent, and lucrative, second contracts. Think back to the 2008 offseason, when the Cowboys gave big-money deals to 27-year-old safety Ken Hamlin (a six-year deal in 2008, with $15 million guaranteed)  and gave Marion Barber and his high-tread-wear running style a seven-year, $45 million deal, with $16 million guaranteed. At the time, neither contract was likely to be productive by - or even to see - the end of his contact.

In addition, they too often overspent to secure other teams' free agents. Recall the recent big free agent paydays: 2005, when they ponied up 29 million (Jones call it "the most expensive day in Cowboys history") to secure free agents Anthony Henry, Jason Ferguson and Marco Rivera as well as big hauls in 2006 (Akin Ayodele; Rocky Boiman; Jason Fabini; Ryan Hannam; Kyle Kosier; Mike Vanderjagt) and 2012 (Brandon Carr, Kyle Orton, Dan Connor, Brodney Pool, Lawrence Vickers, Mackenzy Bernadeau, Nate Livings). The Cowboys have received very little bang per free agency buck on the vast majority of these deals.

More recently, we have seen the worm turn. When I wrote last year's version of this post, the Cowboys had not yet released DeMarcus Ware, and I noted that his would be an interesting test case, given Jerry Jones's propensity to allow sentiment to enter into the negotiations? I cited a snippet from an article by the great Bob Sturm:

If Jerry is guilty of anything, it is loyalty and falling in love with his most decorated soldiers. He seldom ever does the 49ers tradition of saying goodbye a year too soon rather than a year too late. Jerry always says goodbye a year too late and rides his investment all the way down to zero...

...As one Cowboys official told me, we never are able to say goodbye to our favorites before it is too late.

As it turns out, the Cowboys released Ware and followed that up this offseason by refusing to get handcuffed by a Murray contract as they had by Barber's. As much as it hurts to see core contributors like that leave the fold, its better to bid them farewell than it is to pay for declining performance in two years' time.

Such behavior requires fiscal and emotional discipline - something the Cowboys have had in much greater abundance of late after having them in short supply for many years. The arrow is pointing up. Way up.

2014 Grade: C
2015 Grade: A


Avoid Paying Dead Money Like the Plague: When a team pays older players, it almost always results in dead money on the cap, since they are usually released before the end of the contract. In a parity-driven league, that's equivalent to cutting a player or losing a draft pick. Dead money does two things, both bad: it limits a team's competitiveness in the present (they can't spend as much as other teams) or, if they want to remain competitive, forces them to push money into future caps, mortgaging a larger part of the future for some measure of present gain.

The most prudent teams have figured this out, and rigorously refuse to dole out long-term deals with guaranteed money to 28-32 year old veterans - even productive homegrown guys. In recent years, thanks to the bevy of ill-advised contracts given to aging or under-performing veterans, the Cowboys have not been one of these teams, although they have been working to become one of them.

Under the Jason Garrett administration, they have taken repeated cap hits to dispense with aging, under-performing vets (and malcontents who were not down with the RHG's program). As a result, they have suffered cap hits of more than a million dollars (and in several cases, several millions) from Jay Ratliff, Marion Barber, Roy Williams (WR), Leonard Davis, Igor Olshansky, Terrence Newman, Andre Gurode, Patrick Crayton, DeMarcus Ware, Miles Austin, Nate Livings, Marcus Spears, Sean Lissemore and Kyle Orton. As a consequence, Dallas they has annually hovered at or near the league leaders in dead money. To wit:

Year Dead Money NFL Rank Adjusted Cap Percentage
2011 13,992,181 3rd 137,515,000 10.2
2012 22,440,927 3rd 120,600,000 18.6
2013 17,292,512 5th 120,599,156 14.3
2014 27,450,732 1st 133,874,928 20.5
2015 12,935,215 10th 148,578,313 8.7

As we can see from this, from 2011-14, the Cowboys were in the top five in the league in dead money every season. And this had a significant impact on their cap; in 2012 and 2014 (the two years that saw the most radical salary purges), dead money totaled about one-fifth of total expenditures. That's what we call a self-inflicted competitive disadvantage.

But 2015 tells a different story. Certainly more veterans may be released between now and next March, the end of the league year but, as of this moment, the situation is much improved. Although Dallas is still paying for the sins of the past, with substantial cap hits still on the books for Miles Austin and Kyle Orton (as well as Doug Free, thanks to signing bonus money still owed him from his previous contract), but they have fallen to tenth in dead money, with their lowest total since 2011, and the percentage of dead money on the cap is currently less than ten percent.

And we should expect is to be much less in 2016. One reason is that they will have finally cleared all the old veterans off the rolls. Another is that the veteran they did sign have all been inked to team-friendly deals that cost the Cowboys little to nothing when and if they want to cut the player loose. By my count, the Cowboys signed thirteen free agents this offseason. Six of them (Greg Hardy, Jasper Brinkley, Corey White, Tyler Clutts, A.J. Jenkins, and Ray Agnew) will cost nothing to release; two others (Keith Rivers, Danny McCray) will cost a mere $80,000; Darren McFadden will cost $200,000, Nick Hayden will add $280,000 in dead money, and Rolando McClain will add $500,000. Only two recent signees would cost more than one million were they to be released: Andrew Gatchkar ($1.2 million) and Doug Free ($6 million).

If the Cowboys wish to remain competitive as this young team comes of age and it becomes time to dole out second contracts, nothing will be more important to that success than ridding the cap of as much dead money as possible. Although there is still more work to do (and we may see a substantial dead money hit if Dallas releases the last of their free agency blunders by cutting Brandon Carr), it looks like the Cowboys may not be out of the woods, but they are on the pathway that will lead them to a sunlit meadow.

2014 Grade: F
2015 Grade: A-/ B+


Spend near the limit: On the other side of the dead money coin can be found teams that are too financially prudent - so much so that they are typically nearer the cap floor than its ceiling. If you think about it further, however, what teams like the Jaguars - who, according to Spotrac, were more than $17 million under the cap last year - are doing is not much different that the Cowboys, in terms of real dollars spent. In a league that, in all its aspects, is constructed to level the playing field, teams that don't spend all of their cap money are missing out on an opportunity to maximize their potential, in much the same way they would be if they decided not to use one of their third-round draft picks.

The best teams, then, carefully tread the narrow path between spending up to the cap limit (but with a bit of wiggle room to take advantage of deals as they come, or to re-sign one of your own guys mid-season) and staunchly avoiding dead money by spending wisely on second contracts that are more likely to correlate to on-field performance.

This has never been a problem in Dallas. For as long as I can remember, the Cowboys have numbered among the teams with the least available cap space when the numbers come out around this time every year, and Jerry Jones has been willing to pony up big money to try to field a winner. This isn't likely to change any time soon; Jerry the Elder continues to be on record that the team will always have tight salary caps because of their policy of spending aggressively.

The key difference is how it will be spend. Rather than buying pricey free agents or re-upping old veterans, the Cowboys now spend their money wisely, on second contracts for productive, homegrown players (the most recent example is Tyrone Crawford). The Jones-led Cowboys will spend their money shrewdly, but spend it they will.

2014 Grade: A
2015 Grade: A


Overall Salary Cap Assessment: As the above grades attest, Dallas salary cap situation has been a work in progress for some time now, but good times are on the horizon. The team is increasingly spending its available monies on keeping its "homegrown" stars, DeMarco Murray excepted. And, because they are drafting better, there are more of this type of player to whom they might reasonably offer a second contract. What that suggests is that they are moving away, ever so slowly, from the old habit of spending crazy money to keep their late-20-something veterans in the fold.

The only thing that keeps this from being a straight-A grade is that they still have residual dead monies on the books from the "bad" contracts inked during the Wade Phillips administration. So, the generally good news is tempered slightly by this continuing reality. My final grade therefore reflects this enduring fact but also recognizes a steadily upward-pointing arrow in recognition of the Cowboys' increasing economy, prudence, and discipline in cap matters.

2014 Grade: C+
2015 Grade: A-

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