I. Introduction
Dead money is a term used in the NFL to describe the financial impact of player contracts on team budgets. It refers to the salary cap space that is committed to players who are no longer on the team, either because they have been traded, released, retired, or passed away. This article provides a comprehensive guide to understanding and dealing with dead money in the NFL, including its impact on team performance and roster flexibility, the biggest dead money hits in NFL history, strategies for avoiding dead money, and the human side of dead money in the NFL.
II. Explaining Dead Money in the NFL
Dead money is the amount of salary cap space that a team must devote to players who are no longer on the roster. This occurs when a team signs a player to a contract with guaranteed money, and then releases or trades that player before the end of the contract. The guaranteed money or signing bonus that was paid to the player is spread out over the length of the contract for salary cap purposes. When the player is no longer on the team, the remaining portion of the guaranteed money accelerates onto the salary cap, creating dead money. This has a significant impact on team budgets and restricts their ability to sign or retain other players.
For example, if a player signs a five-year contract with a $20 million signing bonus, that bonus will be divided by five and count as a $4 million cap hit each year for salary cap purposes. If the player is released or traded after two years, the remaining $12 million of the signing bonus will accelerate onto the team’s cap, creating $6 million in dead money for the next two years.
III. NFL Teams Struggling with Dead Money
Dead money has a negative effect on team performance and roster flexibility, as it restricts a team’s ability to sign or retain other players. When a team has a significant amount of dead money on its cap, it can result in a weaker roster and reduced depth. This can lead to missed opportunities, missed playoffs, and even a decline in fan support.
Several NFL teams have struggled with dead money in recent years, including the Miami Dolphins, the New Orleans Saints, and the Washington Football Team. These teams have had to absorb significant dead money hits due to poor salary cap management, bad contracts, and unexpected player retirements or releases.
Dead money also has a significant impact on team building and success, as it limits a team’s flexibility in pursuing free agents, extending contracts, and making trades. Teams that are unable to manage their salary cap effectively are at a disadvantage compared to those that are financially stable and able to make moves when necessary.
IV. Looking at the Biggest Dead Money Hits in NFL History
There have been several large dead money hits in NFL history, with some deals resulting in millions of dollars in dead money for teams. One of the biggest dead money hits in NFL history was the contract of former Dallas Cowboys quarterback Tony Romo. In 2013, Romo signed a six-year, $108 million contract extension that included $55 million in guaranteed money. However, Romo suffered a back injury and was released by the Cowboys in 2017 with two years remaining on his contract. The Cowboys absorbed a $19.6 million dead money cap hit in 2017 and a $8.9 million hit in 2018, limiting their ability to build a strong roster.
Another large dead money hit was the contract of former Baltimore Ravens linebacker Elvis Dumervil. In 2013, Dumervil signed a five-year, $35 million contract that included $12 million in guaranteed money. However, a miscommunication during contract negotiations led to the Ravens missing a deadline to file the paperwork, resulting in Dumervil’s contract being voided. The Ravens then had to re-sign Dumervil to a smaller contract, resulting in a $4.75 million dead money cap hit in 2013.
These examples demonstrate the lasting impact that dead money can have on team finances and player contracts. They also highlight the mistakes that can lead to dead money situations and the importance of effective salary cap management.
V. How NFL Teams Can Avoid Dead Money
To avoid dead money situations, NFL teams must prioritize effective contract negotiations and cap management. Teams must be strategic in their contract offers, avoiding overpaying for players or backloading contracts with guaranteed money. They must also be aware of their salary cap situation in the short-term and long-term and plan accordingly to prevent future dead money hits.
Specific tips for teams to prevent dead money situations include:
- Limiting guaranteed money in contracts.
- Front-loading contracts to reduce long-term cap hits.
- Re-negotiating contracts before they become a burden on the salary cap.
- Being aware of the salary cap implications of releasing or trading players.
- Restructuring contracts to reduce cap hits in the short-term.
Some recent successes in avoiding dead money include the New England Patriots and the Green Bay Packers. Both teams have a reputation for being financially savvy and have consistently avoided major dead money hits. This has allowed them to build successful teams over the long term.
VI. The Role of Dead Money in Successful NFL Rebuilding
Dead money can actually play a positive role in successful NFL rebuilding. By managing their salary cap effectively, teams can create financial flexibility and acquire assets that can help them rebuild and strengthen their roster. Some teams have even used dead money to unload bad contracts or acquire future draft picks. By taking calculated risks and making smart financial decisions, teams can turn dead money situations into opportunities for success.
One example of this is the Denver Broncos. In 2019, the team absorbed a $10 million dead money cap hit from the release of former quarterback Case Keenum. However, the Broncos used their financial flexibility to acquire future draft picks and improve their overall roster. In the 2020 draft, the Broncos used one of the acquired picks to select wide receiver Jerry Jeudy, who has already made an impact on the team.
VII. The Human Side of Dead Money in the NFL
Dead money in the NFL can have a significant impact on players, team morale, and the future of the league. Players who are released or traded due to dead money situations may face uncertain futures and may struggle to find new contracts. The financial implications of dead money can also affect team morale, as players may perceive bad contracts or poor salary cap management as a sign of instability or incompetence.
Additionally, dead money has broader implications for the future of the NFL. As the league continues to grow and expand, teams must prioritize smart financial management and salary cap strategies to remain competitive. The consequences of poor salary cap management can be far-reaching and affect not only individual teams but the entire league’s financial health and stability.
VIII. Conclusion
Dead money in the NFL is a complex and challenging financial concept that requires careful management and planning. Teams and fans must prioritize understanding and avoiding dead money situations to promote long-term success and financial stability. By avoiding bad contracts, managing the salary cap effectively, and taking calculated risks, teams can turn dead money situations into opportunities for success and growth.
