NFL Salary Cap 101 - Part 2 - Dead Money

Welcome back, friends. Last time you visited the blog we got a quick overview of the NFL salary cap and some of its nuances (Like that? Yeah, I’ve been reading my dictionary). In part two we talk about what dead money is and how it affects salary money in the NFL.

Now dead money has nothing to do with paying awful players. If that was the case, the New Jersey…sorry New York Giants would need a week-long funeral. No dead money is money that a team has to assign to a player that it chooses to cut. This helps to assure that all salary dollars paid by a team are allocated to its salary cap. By now you may be saying, “MZE, what in the hell are you talking about?”  Relax, my students. Let me take you through a little scenario.
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Let’s just say the New Jersey…New York (I will NEVER get used to this geographic anomaly) Giants decide to overpay an offensive lineman $50 million over five years with $30 million guaranteed. Also under the deal, the player gets a $15 million signing bonus and bonuses of $1 million each year for workouts as soon as he satisfies the offseason workout requirements. With the Giants I’m guessing that would be carrying Eli around on his shoulders to make sure he doesn’t put too much weight on his old knees. I’m big on illustrations so here’s what the contract would look like:

---------	Base Salary	Signing Bonus	Workout Bonus	Cap Hit
Year 1	$4.2M	$3M	$0	$7.2M
Year 2	$5.2M	$3M	$1M	$9.2M
Year 3	$6.2M	$3M	$1M	$10.2M
Year 4	$7.2M	$3M	$1M	$11.2M
Year 5	$8.2M	$3M	$1M	$12.2M
Total	$31M	$15M	$4M	$50M

Still with me? Okay prepare to get lost for a second. The signing bonus in the table was prorated throughout the life of the contract, as allowed. However the bonus itself could have paid out entirely up front so in Year 1, the player may have received $19,200,000 in actual cash. That would mean only $6,200,000 paid out in Year 2, $7,200,000 paid in Year 3, $8,200,000 paid in Year 4, and $9,200,000 paid in Year 5. Now that your head feels like that of an actual Giants fan after a day of drinking and watching another disappointing loss, let’s continue.
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It’s been two years with the overpaid lineman and the Giants think an inanimate carbon rod would be a better left tackle. It looks like the big fella is going to get cut before his third training camp. In total cash payouts, he’s received $25,400,000 but if you remember he’s only cost them $16,400,000 against the cap. Also remember that the Giants, in their infinite wisdom, guaranteed $30 million on this contract. Cutting him will cost the team another $4.6 million dollars. That’s a hell of an alimony payment. So now we can calculate the ‘dead money.’

Brock Osweiler became the poster child for Dead Money ($25M) after signing a $72 Million contract with Houston and getting traded to Cleveland then cut by the Browns.

They’ve paid him $25,400,000 in cash. They owe him $4,600,000 to get to $30,000,000 guaranteed. They’ve taken total cap hits of $16,400,000 thus far on the contract. Deduct the cap hits from the $30 million in total pay outs and the team’s dead money is $13,600,000. Here’s the problem for the Giants (aside from not knowing what state they actually play in), Year 3 of the contract was only going to be a $10.2 million hit to the cap. By cutting this player, they take a $13.6 million hit. Not an economically sound decision but neither was the contract in the first place. If cash isn’t a concern, they may as well hold onto Buster McBusterson one more season. Do that and it’s only $6 million in dead money to cut him. Only $6 million. Compare that to the $11.2 million cap hit the Giants would have taken by keeping him on the roster, and it’s the smart thing to do…until they sign Buster’s replacement, Ika Notblock, to an even bigger contract.

Hopefully this has been helpful to you, readers. One part to go in my three part series. Don’t worry. You will not be tested on this material.

Until we meet again, make sure you get your money up front, know the only guarantee in life is that Robert Kraft likes strip malls, and real dead money is buying a draft beer and spilling it when you go to take off your coat.
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Yours in football,
MZE

Author

Mike Zimmers Ears is a Minnesota Vikings fan and regular contributor on Blitzed. He also hosts his own Vikings podcast Sound the Gjallahorn.