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A possible NFL salary cap reduction and what it means for the Dallas Cowboys

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It’s no time to panic.

NFL: Dallas Cowboys-Coach Mike McCarthy Press Conference Matthew Emmons-USA TODAY Sports

In a normal world, the NFL regular season would be just a few short months away. Of course, 2020 has been anything but normal and with the recent coronavirus pandemic, there is some uncertainty as to what the future holds when it comes to the game of football. Will there be a season? If so, when will it begin?

The eyes of Cowboys fans are sparkling with anticipation as there are many reasons to be excited about a huge year for this team. A new coaching staff, another star-caliber player on an already talented offense, and some nice free agent defensive additions have all pushed the Cowboys on an upward trajectory this upcoming season. As we mentioned yesterday, Dallas is tied with the fourth-best odds to win Super Bowl 55.

While the pandemic could bring about some delays, there’s another element of this crisis that could hurt the Cowboys - money. It should surprise no one that Jerry Jones’ team is the most profitable team in the league. Their $950 million in revenue last season is more than 50% higher than what the next highest team, the New England Patriots, earned last season.

It is estimated that $621 million of that comes from money made from fan attendance. This includes not only ticket sales, but parking, concessions, and local sponsorship money. Teams also get a cut of the merchandise profits; however, the Cowboys have their own licensing deals (Jerry = marketing stud). Ultimately, fewer fans showing up at games will mean fewer jerseys and paraphernalia bought at AT&T Stadium. Even though the Cowboys earn the most money, they also stand the most to lose with the absence of fans filling the stadiums.

The lack of revenue also means that the salary cap number used to budget player’s salaries is in jeopardy. Rumors are circulating that we could end up seeing a possible reduction of $40 million in cap space for the 2021 season. And while the Cowboys as an organization will lose substantially more money than other teams, the effect to the cap will be equal across the board. All teams will operate with that same disadvantage.

What this really means is that those teams that are more financially constrained next season will have greater challenges to make the necessary adjustments. For example, the Philadelphia Eagles currently have $264 million allocated for salaries in 2021, so they will be in a big hole regardless. But with a possible cap reduction that could go from $200 M to $160 M, that means the Eagles will need to find a way to clear out over $100 million in cap space. That’s a big problem.

In contrast, a team like the Washington Redskins is only on the hook for $140 million, so they have a lot more breathing room. They also have a lot of bad players. They’re in rebuild mode with a lot of players on rookie deals, so while they’re sitting in good shape financially, nobody is expecting them to be competitive any time soon.

The Cowboys sit more in the middle with $172 million allocated to players salaries in 2021. While that doesn’t seem too difficult to work with if they need to get under a reduced cap, keep in mind that doesn’t take into account Dak Prescott’s soon to be new contract. Dallas, like many teams, will have their work cut out for them.

All teams will have to make changes, but one thing the Cowboys can hang their hat on is that they make great use of the salary cap. Staying within budget is obligatory, but they do so while staying competitive. When you look closely at the cap, you have to ask yourself two very important financial questions, #1 - are the players they’re paying quality players? and #2 - are they limiting waste with minimal dead money hits? The answer to those questions when it comes to the Cowboys are yes, and yes.

The Cowboys have a roster full of great talent. It’s not like they’re overpaying a bunch of under-performers. Dallas has eight players averaging at least $10 million per season and none of them are over the age of 30. Not only that, every one of them with the exception of La’el Collins is a Pro Bowler, and to be honest - even that might change soon with how LC keeps improving.

Not only are the players great, but the Cowboys have done a good job of keeping the dead money hits low. They have the eighth lowest amount in the league this season with $7.6 million, but nearly five million of that came as a result of Travis Frederick’s unexpected retirement. If you were to remove that figure, the Cowboys would have just $2.7 million in dead money, the third-lowest total in the league.

In comparison, check out their NFC East counterparts:

Giants - seventh with $11 M dead money, thanks largely to overpriced free agent investments of Janoris Jenkins and Alec Ogletree.

Redskins - 21st with $14.2 M dead money. Similar to New York, free agent purchases such as Josh Norman and Paul Richardson have hurt them. They’ve also recently parted ways with Trent Williams, Jordan Reed, and Quinton Dunbar which add to their dead money totals.

Eagles - 22nd with $15.3 M dead money. Malcolm Jenkins, Ronald Darby, and Nigel Bradham make up their biggest hits.

Philadelphia’s situation doesn’t get any better going forward. Because of their constant decisions to back-load deals, they find themselves financially hindered by DeSean Jackson, Alshon Jeffrey, and Malik Jackson. If/when they get released, expect more sizable dead money hits to come their way, but even worse - if they keep them, their cap hits are:

  • DeSean Jackson - $8.6 M (2020) and $10.9 M (2021)
  • Alshon Jeffrey - $15.4 M (2020) and $18.5 M (2021)
  • Malik Jefferson - $13.6 M (2021), $13.6 M (2022), and $13.6 M (2022)

Either way you swing it, the Eagles are throwing large amounts of money away.

For the Cowboys, there is no reason to panic or start convincing themselves that they cannot afford to give Prescott the deal he deserves. The Cowboys can make the necessary adjustments just like other teams will have to do. As long as their money is going for good players and they don’t find themselves absorbing large dead money hits, this team will be just fine.