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Why drafting well is the best way to manage the salary cap in the NFL

The draft is the perfect vehicle for bringing in talented and cheap labor to replace old and expensive employees.

2021 NFL Draft Photo by Gregory Shamus/Getty Images

At the news conference in Oxnard on Tuesday, Stephen Jones mentioned Trevon Diggs, CeeDee Lamb, Micah Parsons, and Terence Steele by name when talking about young Cowboys players in need of a new deal.

We can now cross Trevon Diggs off that list after his $97 million, five-year extension, but we need to add a Dak Prescott extension (at around $55 million per year) and a reworked Zack Martin contract to that list.

One down, five to go.

Which has got to have you wondering about how many top-of-market contracts you can hand out on one team.

Two answer that, you first need to figure out which positions/players you want to pay first, and you’d likely start with your “Money 5” positions, or as Aditi Kinkhabwala of NFL Network once phrased it:

  • First you pay the guy who throws [QB]
  • Then the guy that chases the guy who throws [DE]
  • Then the guy who catches the ball thrown best [WR]
  • Then the guy who covers the guy catching the ball best [CB]
  • Then the guy who blocks for the guy throwing [LT]

If we build such a hypothetical roster, starting with the Money 5 and assign each player the 2023 franchise tag value, this is what you’d pay for your top 5 guys:

Position 2023 Franchise Tag
Quarterback $32.4 million
Defensive End $19.7 million
Wide Receiver $19.7 million
Cornerback $18.1 million
Offensive Lineman (LT) $18.2 million
Total "Money 5" $108.1 million

That subtotal of $108.1 million is almost half of this year’s $224.8 million salary cap. And if you factor in that the franchise tag is a lagging indicator (it’s calculated using the five largest salaries in the prior year), you’re probably going to spend about 50% of your cap on your top five players - if you’re paying competitive rates.

Let’s extend that to your top 10 players. If you’re a team like the Cowboys, with a focus on offense, you’re going to want some more offensive players in your top 10, so add a second offensive lineman and a second wide receiver, and - much to the chagrin of many - a running back. Two spots left, those will go to the defense. You’ve already got DE and CB covered, so add a DT and an LB. This is what your team now looks like, assuming you’re paying them all top dollar:

Position 2023 Franchise Tag
Quarterback $32.4 million
Defensive End $19.7 million
Wide Receiver $19.7 million
Cornerback $18.1 million
Offensive Lineman (LT) $18.2 million
Offensive Lineman II $18.2 million
Wide receiver II $19.7 million
Running back $10.1 million
Defensive Tackle $18.9 million
Linebacker $20.9 million
Top 10 $195.9 million

So you now have a team where the top 10 guys cost you $195.9 million out of a $224.8 million salary cap, or 87% of your cap. That leaves just enough money for about 30 additional players on the veteran minimum or on late-round draft pick contracts to fill out your roster, no practice squad, no injury replacements. That’s just not going to work.

But if you had four of those top 10 guys playing on their rookie contracts, at say $4 million each instead of the ~$20 franchise tag average, you’d be shaving about $60 million off your cap commitment for your top 10 guys.

That’s the value your top picks are expected to bring to your roster. Because while the draft is nominally all about talent acquisition, there’s no denying that it’s also an integral part of salary cap management. The draft is the perfect vehicle for bringing in talented and cheap labor to replace old and expensive employees.

And if your rookies fail to live up to expectations, you may have to replace them with much more expensive free agents (if you want to maintain the quality of your roster), which in turn will cut into your cap space and limit your options for the rest of the roster.

Here’s how the 2023 Cowboys currently match up against that Top 10 player template:

Position Franchise Tag Player 2023 Cap Hit AAV
Quarterback $32.4 million Dak Prescott $26.8 million $40.0 million
Defensive End $19.7 million Demarcus Lawrence $17.1 million $13.3 million
Wide Receiver $19.7 million CeeDee Lamb $4.5 million $3.5 million
Cornerback $18.1 million Trevon Diggs $4.8 million $2.3 million
Offensive Lineman (LT) $18.2 million Tyron Smth $8.0 million $12.2 million
Offensive Linemen $18.2 million Zack Martin $11.0 million $14.0 million
Wide receiver $19.7 million Michael Gallupp $6.8 million $11.5 million
Running back $10.1 million Tony Pollard $10.1 million $10.1 million
Defensive Tackle $18.9 million Mazi Smith $2.4 million $3.3 million
Linebacker $20.9 million Micah Parsons $4.7 million $4.3 million
Grand Total $195.9 million $96.2 million $114.5 million

At first glance, the Cowboys look to be in good shape with a $96.2 million cap commitment for their Top 10 positions (43% of cap). This is of course helped massively by having CeeDee Lamb, Trevon Diggs, Micah Parsons, and Mazi Smith on rookie contracts, which shaves about $61 million off the cap compared to the tag levels for their positions.

At the same time, because the Cowboys have pushed some cap chargers into later years, some players here have a lower cap hit in 2023 than the annual average value (AAV) of their contracts, which is why the AAV total of $114.5 million is a better indicator of how much the Cowboys have committed to their Top 10 positions (51% of cap).

Looking forward to 2024, the situation gets a bit more tricky. While the team can expect an increase in cap space of around $20 million in 2024 (a 9% increase vs 2023), a lot of that will be eaten up by Diggs’ contract extension. Add a similar extension for Lamb, a lesser but still big extension for Steele, a salary bump for Zack Martin, and a potential new contract for Prescott, and the Cowboys will be hard-pressed to fit all of that under the cap without savings somewhere else. And that’s not even including the Aaron-Donald-level blockbuster extension for Micah Parsons that’s coming in 2024.

Let’s assume, for the sake of argument, that you’re a team that’s drafting fairly well. You draft one standout player per year on average and you reward that player with a contract extension at a franchise-tag rate once his rookie deal is up. Let’s further assume that the average career of those standout picks is 10 years, so that at any point in time you’ll have 10 such players on your roster. In that ideal world, at any given time, six of your top players would be playing at a franchise-tag rate, four would be playing on their rookie contracts.

This year, the Cowboys are pretty close to that model. But to maintain that, it is critical that the Cowboys find players in next year’s draft that can be immediate contributors and provide immediate cap savings, and it also means you can’t keep high-priced veterans around forever.

They do have two rookie-contract players “in reserve” in Tyler Smith and Sam Williams, but realizing their cap savings potential, and maintaining a competitive roster for the next few years, will require some hard choices at OT, DE, and elsewhere next year.

Charles Robinson of YahooSports points out that a changing of the guard could be in the books in Dallas.

The Cowboys have a roster saturated with young talent and a handful of aging stars or starters who are entering dicey territory when it comes to the implications of their contracts. Prescott is entering a phase where he’s going to need to do an extension next offseason to get some relief from a $54.9 million salary-cap number. Martin’s impending push for a raise could signal a literal changing of the guard next offseason. Meanwhile, Smith, Lawrence and Gilmore could all be let go in free agency next offseason.

This is what fans should have heard Tuesday when Stephen Jones rattled off much-needed contract extensions and went in this order: Diggs (whose deal was being wrapped up at that very moment), wideout CeeDee Lamb, edge rusher Micah Parsons and offensive tackle Terence Steele. That quartet is the next set of cornerstones, presumably with an extended Prescott in the middle for the stretch run of his 30s.

They say you can’t have All-Pro players at every position in the NFL. The data here suggests you’ll already have a hard time paying just 10 (potential) Pro Bowlers at market rates. Which 10 positions make up your Top 10 is debatable of course, but you’ll always have to make some kind of trade-off: You think the team needs a top TE? You probably can’t have that and two top WRs unless you make significant concessions somewhere else. Want a top safety? Get yourself some cheap linebackers, or forget about paying top rates at DT. Want two top cornerbacks? Better hope they can cover really, really well, because you may not have any money left to invest in pass rushers.

And if you don’t want to make any of those choices?

Draft well.

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