A Cowboys’ Offseason Plan, Part 5: Freeing Up Money For Free Agent Signings

In part one of this 10-part series, we set the ground rules by discussing the Cowboys’ team-building philosophy. In parts two, three, and four, we looked at where the Cowboys are strong, okay, and weak. In this article, before we see how the Cowboys might improve, we have to address the salary cap.

The Cowboys are currently estimated to be about $10.5 million over the salary cap. Spotrac has the Cowboys’ 2017 numbers here.

How is this calculated? You start with the estimated salary cap. For each NFL team, this is currently estimated at $168 million. That number is projected, and will not be final until next month. To the $168 million, you add in any rollover cap from 2016 that was unused. For Dallas, this is $2.4 million. Thus, Dallas starts with a cap of $170.4 million.

On the cost side, you look at the top 51 players, because these will be the only players to count against the cap when the season begins. For now, that total is $181,059,438, barring any cuts of players under contract, so Dallas has a deficit of $10,657,885 that they need to erase before the league year starts on March 9 at 4 pm. For practical purposes, Dallas will need to make it’s cap-shedding moves before then if it wants to re-sign any of its own free-agents before they hit the market, and wants to be ready to sign other free agents starting on the 9th.

How is Dallas going to erase this $10.5 million deficit and give itself some spending money? Dallas has a lot of choices. Many have been discussed by BTB’s own Jim Scott, and by Todd Archer of ESPN. We’re going to provide some extra detail and put Dallas’s moves into three categories - likely, possible, and unlikely.

But before we get there, let’s talk briefly about how Dallas can raise cap money. There are two main ways:

1. Converting player salary into restructured bonus money. Because bonus money can be paid to players in year one, but be spread out over a period of up to five years for cap purposes, teams often write contracts with high salaries after year one they expect to stretch out in this way. The Cowboys do it all the time. It allows them to pay their best players each year, but postpone the biggest cap hit until several years down the line.
2. Cutting or trading a player, or having them retire. This is the approach taken most often by teams to reduce salary cap hits. When this happens, however, the team still has to take a cap hit for all of the original bonus money that hasn’t been used up by cap years, and all of the restructured bonus money that remains. This is known as a dead cap hit. Cutting a player may or may not free up money, depending on how big the dead cap hit is.

With those ground rules in place, let’s turn to where Dallas is going to free up money.

Likely Moves

Travis Frederick

Signed to an extension last offseason, Frederick’s contract had a very low cap hit in 2016.

This was a six-year, $56.4 million contract, which only had a $2.185 million cap hit in the first year. We’ve used this contract as an example of how Tony Romo’s cap savings, which will be relatively small this year, and balloon in 2018 and 2019, can be used to sign Zack Martin or others.

In this article, we’re focused on how the Cowboys are going to convert Frederick’s contract to free up cap space for 2017. Notice that the signing bonus for Frederick was fairly small - $3.25 million. So Dallas is carrying only $650,000 a year in signing bonus. Notice also how Frederick is signed for more than five years. This means that for at least the next two years, Dallas can convert his salary into restructured bonus and spread it out over five years.

Dallas is very likely to convert as much as $13.2 million of Frederick’s 2017 salary into restructured bonus and spread it out at $2.64 million per year. His 2017 salary will be $1 million, and one year of the restructured bonus will be due, but the savings will be $14.2 million - $3.64 million = $10.56 million. That’s almost exactly how much Dallas is currently over the cap. So in one move — restructuring Travis Frederick’s contract — Dallas will be almost even with the cap, and would be under if the cap goes up to $170 million.

Tyron Smith

Now that you have the picture, we won’t embed a screen shot of Smith’s contract, but the idea is the same. Smith is signed for more than five more years, so his salary can be converted to restructured bonus stretched out over those years. His 2017 salary is $10 million, which can be converted into $1 million salary and $9 million restructured bonus, or $1.8 million per year. $10 million - $2.8 million = $7.2 million savings.

A note about Smith. He already has $3.8 million in restructured bonus in his cap hit for the next several years. Adding $1.8 million to that will bring it up to $5.6 million. And his base salary remains at essentially $10 million per year until 2021. So this may be the last year Dallas will restructure his contract.

With these two moves, Dallas will have $7.2 million available to spend on re-signing its own free agents, or dabbling in the market. That’s not enough.

Tony Romo

We’ve already discussed Romo’s contract at length here. If he’s traded or released or he decides to retire, the Cowboys will gain $5.1 million on the 2017 cap, $25.2 million in 2018, and $23.7 million in 2019, for a total of $54 million over three years.

As we previously explained, there’s no real reason to stretch this out by designating him as a post June 1 trade or release, as Dallas can just structure other contracts to move money into 2018 and 2019.

Adding in $5.1 million for Romo, Dallas would have $12.3 million to use this year, and extra space for the next two years. Is that enough? Probably not.

Side Note: What did Dallas spend last year?

Here are most of the in-house and outside free agents Dallas signed last year, and their cap hits for 2016, to get some idea about what Dallas might need this year going into March 9th.

• Cedric Thornton - $2.25 million
• Mark Sanchez - $2 million
• Benson Mayowa - $1.8 million
• James Hanna - $1.75 million
• Kyle Wilber - $1.5 million
• Jeff Heath - $1.35 million
• Alfred Morris - $1.3 million
• Justin Durant - $987,000
• Lance Dunbar - $965,000
• Joe Looney - $825,000
• Total: $14.7 million.

(Note: Travis Frederick is not included because his new contract actually reduced his cap hit from what it would have been had he played under his fifth-year option.)

(Second note: Not all signings cut into available cap space, because the cap counts only the highest-paid 51 players. If you sign someone and push someone off the bottom receiving $500,000 or so, the cap hit for the new player is the difference: $XX - $500,000.)

This amount is larger than $12.3 million, and it also doesn’t include cap space needed to sign draft picks, so Dallas will need to do more than restructure Frederick and Smith and trade or cut Romo.

Possible Moves

Dez Bryant

Other than Travis Frederick and Tony Romo, Dez has the highest salary on the team in 2017 of $13 million. That’s a ripe target for restructuring, and the Cowboys don’t even need to tap all of it. For example, if they reduced his salary by $6 million and spread it over the three years remaining on his deal, they would gain $4 million in 2017 cap space. That $4 million would be pushed into 2018 and 2019, but those are the two years when Dallas gains the most from trading Tony Romo. If Dallas converted $9 million of his salary to restructured bonus, it would gain $6 million to use this year. If they converted $12 million, it would gain $8 million.

Tyrone Crawford

Crawford has a salary of $7.25 million, and he’s signed until 2020, so Dallas would have four years over which to spread any restructure bonus. Converting all but $1 million to bonus would free $6.25 million in 2017, minus the restructured bonus of $1.55 million per year. Total savings in 2017 could be $4.65 million.

One reason some don’t mention Crawford for restructuring is that his production hasn’t been up to par, so Dallas may be looking for an out sooner rather than later. Yet even if you increase his structured bonus, he’s not worth cutting until 2019, and wouldn’t save Dallas a lot until 2020. Plus, it’s not as if restructuring costs the Cowboys anything. All it does is push money from one year into subsequent years, and when Tony Romo comes off the books, Dallas will have cap space to absorb those shifts.

Alfred Morris

Once Darren McFadden returned, Alfred Morris didn’t see the light of day, except in the Philadelphia game when Zeke was rested. Will Dallas cut ties with Morris after only one season? If they do, it would save them $1.64 million, which they could use towards re-signing McFadden.

• With these three moves, Dallas could gain between $10.3 and $14.3 million more, for a total of $22.6 to $26.6 million. That is likely to be enough.

Unlikely Moves

Jason Witten

Both Jim Scott and Todd Archer suggest Dallas will address Jason Witten’s contract. I’m not so sure. Witten’s cap hit is $12.2 million, with $7.4 million in salary, and $4.8 million in already restructured bonus created by re-doing his contract several times. The problem with trying it again is that Witten is signed only through 2017. There is nowhere to push his money unless Dallas decides to extend him. Yet, as we wrote yesterday, Witten may be thinking of retiring after this season.

If the Cowboys added two years, extending him until he is 37 years old, they can convert about $6.4 million of his salary into restructured bonus. Divided over three years, that would gain the Cowboys $4.2 million this season, but add $2.1 million to the next two seasons, and if Witten decided to retire after this year, all $4.2 million would come due next year. To do that, however, Dallas would have to extend Witten’s contract in other respects, and neither side may be ready to do that.

Doug Free

Doug Free is set to make $5 million in salary and count $7.5 million against the cap, with a dead cap hit of $2.5 million if he’s released or traded. He’s 33 years old. While it’s possible Free could be extended and his salary converted to bonus, or cut to save $5 million, the more likely scenario is that Dallas puts itself in the position of moving on from Free next offseason with no cap hit at all. At the moment, the Cowboys don’t have a reliable right tackle who can take Free’s spot this year.

Cedric Thornton

He had a disappointing season for sure, but if Dallas were to cut him it would add $3.75 million to their dead cap, and save only $500,000 in cap space in 2017. More likely Dallas will give him another chance to play like he did in Philadelphia.

Final note: Dallas will certainly churn the bottom of the roster. For example, Leon McFadden and his $750,000 contract may not remain for 2017. But most of these moves will just trade one cheap contract for another and have little cap effect.

Conclusion

To recap:

• Dallas is $10.5 million over the cap if the final cap is $168 million.

Likely Dallas moves:

• Restructuring Travis Frederick could gain Dallas $10.5 million.
• Restructuring Tyron Smith could gain Dallas $7.2 million.
• Trading or cutting Tony Romo could gain $5.1 million.
• Total gains: Dallas could be +$12.3 million under the cap

Possible Dallas moves:

• Restructuring Dez Bryant could gain Dallas $4, $6, or $8 million.
• Restructuring Tyrone Crawford could gain Dallas $4.65 million
• Cutting Alfred Morris could gain Dallas $1.64 million.
• Total gains: Dallas could add another $14.3 million and be $26.6 million under the cap.

Unlikely Dallas moves:

• Restructuring and extending Jason Witten could gain Dallas $4.2 million.
• Cutting Doug Free could gain Dallas $5 million.
• Cutting Cedric Thornton could gain Dallas $500,000.
• Total gains: Dallas could add $9.7 million and be $36.29 million under the cap.

Just remember that any restructure just pushes money into future years, so if Dallas moves $10.5 million for Frederick, $7.2 million for Smith, $4-8 million for Bryant, $4.65 million for Crawford, and $4.2 million for Witten, that could add as much as $34.55 million to future years. Trading Tony Romo would free up more than that - $48.9 million over 2018 and 2019 - so if Dallas wants to be super aggressive, they could be. But if they want to keep flexibility, they are unlikely to.

Part 1: What Is Dallas’s Team Building Philosophy?

Part 2: Where is Dallas Strong?

Part 3: Where is Dallas Just Okay?

Part 4: Where is Dallas Weakest?

Next - Part 6: In-house Free Agents