Dallas Cowboys Salary Cap: How Claims Of "Kicking The Can Down The Road" Were Wrong All Along

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"The Cowboys' annual game of kick the can has begun in earnest". That is how a post on Pro Football Talk (by an author with a consistent anti-Dallas bias) that was posted on Monday begins. The Dallas Cowboys just restructured the contracts of Travis Frederick and Tyron Smith, and of course there are many out there who present that as the team having screwed up the present, and so it needs to rob Peter (the future) to pay Paul (the present).

NFL Business As Usual

The first thing to understand about contract restructuring is that it is a common practice. More specifically, it is a common practice by winning teams. Before you laugh at that notion, keep in mind that I'm not talking about the ultimate prize, or even some playoff success. I am talking about aiming to be competitive.

The Dallas Cowboys have aimed to compete for the playoffs, or better, since first bringing Bill Parcells aboard. If you consider his first year to be a "getting the house in order" one (though Dallas did actually make the playoffs that season), Dallas has entered the last 13 straight seasons expecting to be in the hunt for the playoffs. Successful or not, the honest attempt was there, especially once Romo emerged and gave Dallas a clear leg up at football's most important position.

But this comes at a price. If you always aim to compete, you aim to retain talent and, at times, add it, and this means you have to stretch your cap. The only way out besides some major luck is to punt one or more seasons to allow some contracts to move on while not adding to the ledger. Dallas hasn't had that opportunity. If you'd like to see another team that restructures frequently for this same reason, look to the Pittsburgh Steelers (last time coming off the lowered expectations of consecutive losing seasons: 2000). So the first myth of Dallas's restructuring is that it is somehow uncommon and a sign of a lack of discipline. Nonsense. It is a sign of a team that works to compete annually.

To Make Matters Worse

Unfortunately, there are three reasons the cap has been tighter than desired over the past five-ish seasons. The first is that Dallas built a terrific team in 2007 that then aged out rather fast while simultaneously seeing a lot of its core dry up. The 2007 team had a number of strong veteran contributors, especially on the OL, and those mean dealing with declining production and dead cap space due to cuts. This was exacerbated when the likes of Marion Barber, Ken Hamlin, and Roy Williams aged out faster than expected. To top it off, a coinciding bad stretch of drafting (2006, 2007, and especially the infamous 2009 draft) left the team with a gap in the cycle of young, cost-reduced core contributors.

However, Dallas was still prepared to make this work until repairs could come into effect. It understood the way the cap works, and it crafted a budget that likely would have held up pretty well. That is, until Roger Goodell and John Mara came to call. The NFL allowed for an uncapped season in 2010, but colluded with teams to try and force them all to not take advantage of the situation anyway (which is illegal). Not only did the NFL get away with this collusion, but it also allowed a committee headed by the owner of an NFC East team to bring the hammer down on two other NFC East teams, including the Cowboys. Just like that, $5M of cap space vanished both in 2012 and 2013 due to contracts that had complied with the CBA as it stood at the time and had been approved by the league office.

Dallas hadn't budgeted for this. It had to restructure up to an extra $5M of cap space immediately, and with a second cap hit in 2013 and the carryover of the extra restructured deals that meant the team took a hit of up to $10M in 2013. It doesn't quite work this way, of course - Dallas had the ability to spread its restructures and also implement some signing austerity, so the per-season hit could have been reduced to $2M or less - but that extra strain on an already tight budget just made things worse.

And all this led to the final issue: Tony Romo's extension. Dallas gave Romo a handsome new contract after 2012, and set it up in a way to immediately help the cap situation in 2013. This, of course, wouldn't have been as needed if not for some team-building mistakes and the garbage cap penalty. Add all this together - a team trying to compete without enough young/cheap contributors, extra money moved to the future due to the penalty, and a big salary that also was used to help deal with these first two issues - and Dallas was now in a less-than-ideal cap position, while still firmly intending to compete.

A Winning Gameplan

All tomfoolery about Jerry Jones not knowing what he is doing aside, Jones clearly has put together a capable salary cap team in his front office, as Dallas has successfully managed this situation ever since without punting a season or even stepping back all that much from trying as best as possible to win. A player or two extra might have been lost to free agency (or never signed), but it has managed to work all this time.

How? Well, the biggest reason is because the team achieved the two-part Holy Grail of successful NFL team-building: it found an effective draft strategy, and it discovered free agency discipline (not that it had been undisciplined before, but in recent years it has been taken to a new level). Every year, more and more of the team has been carried by younger, less expensive players, and Dallas has avoided FA land mines.

However, the team still needed one more tool to navigate the waters. Dallas didn't want to lose its key pieces, veteran (Romo, Witten) or otherwise, but it also didn't want to hand out big extensions that would lock down the cap. So it has actually taken restructuring to another level by planning on restructures ahead of time. The team would give larger base salaries early in contracts, and then be able to restructure the deal to convert as much base salary as needed into signing bonus, which could/would then be spread out into the future. In other words, when Dallas restructured these kinds of deals, it wasn't "kicking the can down the road"; it crafted these contracts expecting to restructure them. The difference is, by waiting to restructure, the team would retain flexibility in terms of when and how much it shifted around.

Frederick, Smith, and Romo

And so we arrive at the moment the Dallas front office has been looking forward to. The Cowboys had entered a cycle of starting an offseason too close to the cap that would be followed up by some restructuring to create whatever space was needed, rinse and repeat. What the critics have missed, however, is the clear end-game that Dallas has had in its sights all this time.

Tony Romo. He and his contract were the keys. As long as Romo stuck around, the Cowboys would be able to continue to restructure these deals, at no practical future expense. Sure, restructures added more of a hit to the future, but the team had intentionally frontloaded deals (making the early years more expensive than they would end up being), and there was no limit for how long this could be done. More importantly, it wouldn't have to be forever. Once the time came for Romo to move on, that would mean a cool $20M+ of cap space freed up, essentially ending the restructure cycle.

And here we are! The end-game is nearly upon us, and ahead of schedule! Dallas is essentially certain to move on from Romo this offseason, meaning that all Dallas needs to do is manage his cap number (in this case, a dead cap number) one final time. Once the Romo contract is completely off the books - ideally, by next season - the huge amount of free space will allow the team move out from underneath the money shifted to the future and do a partial reset.

And you can truly see how much this has been planned by examining the state of the two contracts that have just been re-done:

Travis Frederick - Frederick had been set to make more than $14M in base salary this season, a huge number that was never going to stay put (his 2018 base salary is $10M, and his 2019 is $6M). Clearly, the team was always going to clear out a good amount of that base salary. It is true that Frederick's future cap numbers have grown by $2.6M through 2020 due to this recent restructure, but if Dallas hadn't set up such a large base salary for 2017 it would have just added to the future base salary numbers from the start instead. It was all rather arbitrary. But now Frederick is set for his biggest cap number to count for 2018 ($13.2M). It shrinks to $9.2M the following season, and sticks around there the rest of the way.

Clearly, the high base salaries for 2017 and 2018 were meant to help the team tide over Romo, and just as clearly Dallas expected Romo's hit to be gone or close to gone by 2019. It just turns out that Dak Prescott has allowed the team to execute the plan a year or so early, and now it has the option of keeping Frederick's 2018 contract untouched, which could render the later years of his contract a great bargain.

Tyron Smith - Smith's extension isn't quite as nicely planned, because the Romo timeline wasn't clear pre-2014, but he sees steady base salary numbers ($10M) through 2021, so the team was ready to rework as needed then. Now, his cap number also maxes in 2018, and by 2020 (when he will still only be 29) he will only have a cap number of $13.5M. So the team was always planning on using Smith's contract to massage the it still might, if it wishes.

So now you have the full truth. Admittedly, Dallas hasn't been in the best situation, and some of that was its own making (keep in mind, all long-time competitive teams have "down" stretches for the roster and cap), but everything has been under control. This latest example of "kicking the can" was anything but, and best of all it turns out that the cycle of restructures that the front office had planned seeing through until 2018 or 2019 (when Romo was expected to move on) will now get to end even earlier, while making cap numbers for the foreseeable future even lighter because of it.

If Romo is traded or cut outright (no June-1st designation), the team is currently set to have only $122.5M of cap filled in 2018. Surely, 2017 draftee contracts, FA signings, and in-team extensions will reduce that to a point, but as of now it would have $45.5M of space with room for a little restructuring here and there to do as it likes.

The cycle is about to terminate...just as Dallas has projected for some time now. Or, to put it another way: it's all according to plan after all!

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