Cowboys Offseason Manifesto: Reallocation Way

As our astute readers know, there is no such thing as Salary Cap Hell. CowboysHQ writers has been trying to beat that out of Cowboys Nation’s collective lexicon since before this site even existed. We look at the options within the Dallas roster to create 2015 cap space.

Note: Offseason Manifesto Part I: Needs Assessment looks at the Process of building a team’s roster and the litany of free agents Dallas will need to either resign or replace. Click Here.

“Fans often times devote all of their attention to the draft process once the season is over, forgetting the all-important rule; fill your holes in free agency so the draft is about the best talent available. Dallas’ holes are a-plenty…”

As our astute readers know, there is no such thing as Salary Cap Hell. CowboysHQ writers has been trying to beat that out of Cowboys Nation’s collective lexicon since before this site even existed. The salary cap is dynamic, not static. It fluctuates from year to year, moving the ceiling up as the league brings in more and more revenue. It is entirely possible, and likely, that each year’s cap rises above and beyond the projected increases, because the NFL annually brings in more money beyond their wildest dreams. In addition and possibly more importantly, the Collective Bargaining Agreement (CBA) that is agreed to by the NFL and the NFL Player’s Association (NFLPA) allows for multiple contract mechanisms that allow teams to play “funny money” with the amount of cap space used on each deal. Teams can very easily spend ‘X’ amount of dollars on a player one year, yet have up to 5 years to actually “be charged” for that amount.

Creative financing by multi-millionaires and billionaires? Absurd!

For more insight into the inner workings of the cap, make sure you check out our October series on the Cowboys 2015 Salary Cap Overview, Part I. That article discussed carrying over cap space from one year to the next (Dallas now has a little over $3 million), projected salary for the next year (Dallas currently has a little under $137m on the books for 2015 for 53 players) and the projected cap for next year (current estimates are around $142.5m).

With approximately $8.5 million in cap space going into free agency, one might wonder how exactly Dallas is going to be able to afford to bring back the majority of those 23 free agents. Even more worrisome, how is Dallas going to be able to improve? Simple… Salary Cap Math.

Salary Cap Math

Salary Cap Math is the use of reallocation to pay a player the exact same amount that is agreed upon for his base salary. The most common method, Restructure Bonus, is when base salary for a year is converted to bonus money. That money is normally then paid immediately to the player instead of over the 17-week regular season (unless an agreement is made for the bonus to be spread out as well). It allows the same “salary” to hit multiple years of the team’s cap instead of just one. If a team converts $10m of base salary into a bonus (and that player has a minimum of five years remaining on his deal) then that $10 million hit is now only a $2 million hit. It just adds a $2 million hit to the cap in each of the next four years as well. There’s another interesting form of reallocation that will be discussed later in the article.

Salary Cap Math also includes being able to wipe out potential cap charges for players that are not living up to their part of the contract. While it sucks for the player, the majority of an NFL contract is not guaranteed. At any time, a team can release a player and they are no longer responsible for any non-guaranteed money.

It is in these two methodologies where Dallas will once again prove that Salary Cap Hell is a simply a media narrative used to fill up space and generate website clicks. $8.5 million worth of salary cap space isn’t a lot, but it’s not a little, either. In Part Three of this series, we’ll get into the details as to how Dallas can fit certain things under the cap. For now, we’ll discuss the players who Dallas might call upon to rework the structure of the deal they’ve signed to allow more flexibility this offseason.

Potential Cap Savings

Player2015 Base SalaryCost-Saving MeasureDead Money Breakdown
QB Tony Romo$17 million Jerry Jones has already gone on record that the club will probably continue to look at Romo as a viable “3-4 more years” type of player. They might not hesitate to push off a good chunk of his $27.8m 2015 cap hit. A restructure that moves $16m from base salary to signing bonus (his base would still have to be league minimum, roughly $1m) prorated over five years, would give the Cowboys an additional $12.8 million of cap space.None for now, but team would still be on hook for $32m of unamortized bonus over the 2016-2019 seasons.
DT Henry Melton$9 millionThe Cowboys have a built-in three year option that kicks in if they want to, but it would cost them $9m in 2015 for Melton's services. There is the caveat that players are often much better in the second year removed from ACL surgery, but Melton’s bone bruise to the knee he suffered will squash that talk. This is the same type of injury (really a fracture) that knocked Spencer out the equation for an entire season and a half before he got right again. Dallas would only eat $750k in dead money, meaning the move would save them $8.5m off their projected cap hit. There remains a possibility that Dallas and Melton negotiate a new contract, with another “prove it” year before latching on for big money.
CB Brandon Carr$8 millionBrandon Carr’s base salary ($8m) is barely above the final two years of prorated signing bonus ($7.4m) in 2016 and 2017. When combined with the $4.7m of prorated bonus in 2015, it’s a wash to outright release the underperforming corner. However, as a June 1st cut, moving on from Carr would have it’s benefits. Dallas would get $8m in 2015 cap space to work with.The downside is that $7.4 million would now be 2016 dead money; or the equivalent of what the team will have on it's books in 2015 from the long-since departed Miles Austin and Kyle Orton combined.
OT Tyron Smith$11 millionSmith signed a huge extension in 2014, but those in the know think that Dallas did well for itself in the construction of the deal. Smith’s “bargain” signing bonus of $10 million is allocated over 5 years at just $2m per year. Smith's 2015 base salary is a little over $11m, with each of the next six years being at just $10m in base salary. Restructuring Smith to the league minimum could net Dallas another $8 million in cap space. His deal is for so long, that there are seveal opportunities to rework his deal and because the base salary + allocation sits at just $12 million, a restructure allocation will still keep him in the range of the cap hits other teams take for franchise left tackles.

A very unlikely move of releasing future Hall of Famer Jason Witten could reap between $3 and $5 million in savings, but there’s little chance Dallas pulls that trigger until after 2015. There are also other small moves Dallas could make to reap a million dollars’ worth of savings on each individual move, but those will likely play out as depth charts are reworked.

It is important at this point to remember, Dallas doesn’t HAVE to restructure any or all of these deals, and if they choose to, don’t always have to restructure a base salary down to the league minimum for the year. These are simply various options they have should they choose to create additional cap room for other signings. More to the point, the decision to make such moves is not exactly a rush job. The NFL calendar mandates that clubs be below the salary cap by the start of the league year, March 10th for 2015. After that point, there is nothing prohibiting Dallas from waiting until a new deal is agreed upon before initiating the restructure in another player's contract.

Tony Romo, His Window And Creative Reallocation

In the “Needs Assessment” writeup, it was discussed that it’s more realistic for Dallas to envision 2-3 years of quality Romo play than 4-5 years as Jerry Jones boasts. As such, for the first time in years, spending on outside free agents gets the stamp of approval from this writer. The Cowboys need to enter a pseudo-“win now” mentality. It’s been five seasons since Dallas made a playoff run. 2009 was the fourth year of a playoff caliber edition of the Cowboys (2008 was playoff worthy, but injuries derailed the effort). The Cowboys made the decision to stand pat with their roster instead of dabbling in free agency. Age caught up to them and they started the 2010 season 1-5 before Romo’s season-ending injury. Dallas is in a much different place roster-wise than they were there, as they have a much younger core. Not using free agency to augment their talent, remaining complacent, could lead to the team not fulfilling the hopes of championship contending over the next two or three years. Most teams in the league have a window of 3-4 years of “being ready”. For Dallas, that window coincides with the expected time remaining on high-level Romo performance.

That window is further cemented with analysis of quarterbacks from age 35-38 as done here by OverTheCap.com. In the article, Jason Fitzgerald confirms that Dallas should indeed be looking at a 2-3 year window for Romo, and warns against using the full restructure of his deal as it will make his cap hit harder to maneuver down the line should Romo no longer be their franchise option. Recently it has been debated whether or not the Cowboys should restructure Romo or not. This debate normally takes the stance addressed above, that it’s restructure down to the minimum, or not at all. This clearly is not the case.



From OverTheCap.com

What Fitzgerald suggests is that Dallas avoids losing some of it’s “what if Romo turns bad” flexibility by putting cap charges onto the 2017-2019 seasons. Instead, he thinks Dallas should move a chunk of the 2015 base salary over to 2016 base salary. Look at the above graphic detailing Romo’s yearly salaries. Doesn’t 2016 seem a bit out of place? Is it possible this has been Dallas and Stephen Jones’ game plan all along?

Regardless, it is definitely an option that the club has in building their roster for the 2015 season and the next few years of championship contention. Dallas has at least $8.5 million in space right now, and that will jump to $17.5m as soon as they declare they aren’t bringing back Melton. Restructuring Tyron Smith could move them up to as high as $25.5 million. They could move on from Brandon Carr in such a way as to get to $33.5 million, and can have up to $46.5 million with a Romo restructure. Dallas could end up anywhere on that spectrum of cap space, depending on where they need to be.

In Part Three and our Series Finale, we’ll finally look at some potential moves in Free Agency as Dallas looks to shape their 2015 roster. These moves will determine which of the moves discussed in this piece Dallas will likely need to do in order to create the room.


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