The Dallas Cowboys getting a deal done with Dak Prescott even before the franchise tag deadline was a move that opens up possibilities for the offseason. The team has their starting quarterback locked up now, and he is getting the money he richly (pun intended) deserves. And also very importantly, his cap hit has been greatly reduced from what it would have been under the franchise tag, making the impending free agency period much more manageable.
Of course, the downside of that is that those cap costs have now been pushed into the latter years of the contract. As pointed out in an analysis of the deal by Mike Florio of Pro Football Talk, the projected hits are $33.2 million in 2022, $44.2 million in 2023, and $47.2 million for the final real year of the contract in 2024. There are two voidable years tacked on to stretch the bonus money accounting as well.
So the piper will be presenting his bill starting next season. Except, as Florio noted, maybe not.
However, the deal (we’re told) gives the Cowboys the ability to convert pay to a signing bonus at any time. Next year’s $20 million base salary likely will be flipped to a signing bonus, with the 2022 minimum salary of $1.12 million and the $18.88 million balance spread over the five remaining years, reducing the 2022 cap charge from $33.2 million to $18 million.
Yep, you read that right. After the new contract knocked the cap hit down by $15.5 million this year, there is a lever that the team can apply at will to take it down more next season. It’s a lever that is basically built into every big contact they do, allowing the team to seeming conjure up more space season after season.
In 2022, the Cowboys can create upward of $15 million in salary-cap space by lowering his $20 million base salary to a little more than $1 million and turning the difference into signing bonus for accounting purposes. That is the benefit of the extra voidable years on the contract to spread out the restructure over five remaining years, but such a move would add about $3.8 million to the cap figures in 2023-24.
But wait, you say. It just kicks the can down the road, to pull up a golden oldie phrase from years ago. Well, here’s the thing. With the anticipated ballooning revenues the NFL is negotiating, down the road is exactly where you want that can to be.
Those dollars eventually will hit the cap, but they aren’t subject to inflation. As the cap grows and grows, the relative impact of those cap charges shrinks.
The key here is not to focus on the dollar values, but what percent of the overall cap they represent. Let’s construct a completely hypothetical case here, because we don’t know for sure what the cap will be this year. It is still being worked out, and there are reports that the owners may choose to “borrow” against future seasons to get it closer to last year’s $198.2 million. But for now, let’s assume that the cap comes in at $180 million this year, and then goes up to $200 million next year.
That means that the relative cost of any given contract would be 10% less costly. And if the cap continues to grow, as it is expected to, then that cost just declines.
Still, at some point, it all has to be accounted for. If they do flip that switch next season, then the 2024 cap hit for Prescott becomes rather substantial, something over $50 million. That can’t be avoided, right?
Wrong. There is a simple way to get that hit down. Just negotiate an extension after 2023 and push those cap costs even further out. There is an expectation that the cap will hit $250 million in ten years or less. The mere thought of another negotiation so soon after the years long saga we just endured may induce a bit of PTSD for some, but both sides should have a better idea of just what has to be done, and what is deserved, by that point. There is also a no-tag clause in the new deal, so that is further incentive to get it done right.
At some point, Dallas would probably have to absorb some dead money. But this constant manipulation of the contract can both reduce that and land it in a year when it is not as significant a percentage of the cap. There is a risk in all this, but it really lies in failing to make the right call as to who gets awarded those mega deals.
QB Cap hits in 2021:— Tom Downey (@WhatGoingDowney) March 9, 2021
Carson Wentz (Eagles Dead Money): $33.82 million
Jared Goff (Lions): $28.15 million
Carson Wentz (Colts): $25.4 million
Jared Goff (Rams Dead Money): $22.2 million
Dak Prescott (Cowboys): $22.2 million
Think about that for a moment. Wentz and Goff are each costing TWO DIFFERENT TEAMS as much as or more in cap space than Prescott is the Cowboys.
Still, that bill has to come due at some point. A team cannot just dodge crippling cap hits forever. Look at the New Orleans Saints, who clearly are unable to do anything in free agency as they currently sit at minus $58.7 million in cap space.
The cap is convoluted and arcane. But so far, there seems to be a way to get whatever has to be done accomplished. Cap hell may or not be a myth. Not being able to pay your best players because of it certainly is.