DALLAS (105.3 The Fan) - We’re going to try a new exercise for 1053TheFan.com today.
The acronym “ELI5” has become quite popular on the internet over the last decade or so. It stands for, “Explain Like I’m 5,” and doesn’t literally mean to explain something so that even a five-year-old could understand it, but rather to simplify it as much as reasonably possible. Dictionary.com (yes, seriously) defines ELI5 as, “a request for a simple explanation to a complicated question or problem.”
Every so often there is a talking point surrounding local and national Cowboys discussion that fans need a simplified explanation for. These topics usually have to do with complicated salary cap rules, CBA jargon, obscure league rules, or something similar.
When questions like these arise, and have Cowboys fans scratching their heads, we’ll try to provide a simplified explanation. Given these are often complex questions, that will still mean that we’ll have to go into a bit of detail, but we’ll try to make it as smooth as possible.
One of these questions that I’ve seen on Twitter, message boards, and our TruckWreck.com text line recently is about Ezekiel Elliott’s contract. Plenty of fans understand by now that releasing Elliott hurts the Cowboys’ finances quite a bit more than it helps, but they don’t exactly know why.
So let’s dive into the answer.
HOW IS CAP SAVINGS DETERMINED?
Before we look at the specifics of Elliott, we’re going to use Amari Cooper’s contract to explain how cap charges work, since it’s the most straightforward contract the Cowboys currently have on the books.
Whether you can save money by cutting a player comes down to one equation: cap number - dead money = total savings.
Dead money is the amount of guaranteed money left on a player’s contract, plus whatever bonus money has been prorated over the life of the deal.
When a player signs a contract, it is standard for them to receive a lump payment upfront in the form of a signing bonus. Instead of having to eat the entire signing bonus on a single year’s salary cap, the NFL allows teams to spread the hit out evenly over the life of the contract, up to five years.
So for example: when Amari Cooper signed his five-year contract in the spring of 2020, he received a $10 million dollar signing bonus. Even though he received all of that money up front, the NFL only counted $2 million of it against the salary cap in 2020, $2 million in 2021, $2 million in 2022, $2 million in 2023, and $2 million in 2024. If the Cowboys were to cut Cooper this offseason, they would no longer be allowed to spread the signing bonus charge through 2024. The prorated bonus in 2022, 2023, and 2024 would count immediately, which means $6 million in prorated bonus money that would be considered “dead money.”
Cooper’s contract doesn’t currently have any guaranteed money remaining on it (his 2022 salary will become fully guaranteed if they haven’t cut him by March 21st) so his $6 million in remaining prorated bonus, plus $0 in guaranteed money remaining on his deal means his total dead money would be $6 million.
Now to determine if you would save money by releasing Cooper, you’d have to subtract the dead money from his cap number.
A player’s cap number is determined by adding up their current year base salary (whether the salary is guaranteed or not) with their current year cap proration. So Cooper’s $20 million dollar salary in 2022, plus his $2 million dollar prorated cap charge means his cap number this season is $22 million.
So Cooper’s equation is a $22 million dollar cap number - $6 million in dead money = $16 million in savings.
ELLIOTT’S CONTRACT
Because of the way Ezekiel Elliott’s contract was structured, when he signed it, and various salary triggers along the way, his contract is much more complex than Cooper’s.
What’s important to know is that Elliott received a signing bonus at the time of his deal in 2019, and an additional option bonus that was paid out in 2020. He then received a third bonus in the form of a restructure in 2021.
With the five year cap proration rule, Elliott’s signing bonus proration runs through 2023, his option bonus proration runs through 2024, and his restructure proration runs through 2025. The total sum remaining of all three prorations is $17.68 million.
Unlike Cooper, Elliott’s 2022 salary of $12.4 million is fully guaranteed. It’s the last of the guaranteed money remaining on his contract.
$12.4 million in guaranteed money + $17.68 million in proration charges = $30.08 in dead money.
Elliott’s 2022 cap proration charge is $5.82 million, which when coupled with his salary totals up to a cap number of $18.22 million.
$18.22 million dollar cap number - $30.08 million in dead money = –$11.86 million.
The prorated bonuses and guaranteed salary make it impossible to save money by releasing Elliott. Doing so would actually put Dallas almost $12 million extra in a salary cap hole that they’re already trying to dig out of.
THE JUNE 1ST OPTION
A lot of fans have heard about releasing players on June 1st or later and how you can save some additional money that way.
While it’s true that you can lessen the cap burden by releasing a player post-June 1st, it doesn’t save the Cowboys any money in Elliott’s case.
By making a player a June 1st release, the NFL only charges you for the current year bonus proration, and any remaining guaranteed money. The remaining cap prorations will be counted against the following year’s cap.
We’ve already established that Elliott’s dead money is $30.08 million. If you remove all but the 2022 bonus proration, you’re left with $12.4 million in guaranteed money and $5.82 million in 2022 bonus proration, for a total of $18.22 million in dead money on the 2022 cap, and $11.86 million in dead money on the 2023 cap.
$18.22 million dollar cap number - $18.22 million in post-June 1st dead money = $0 savings on the 2022 cap.
WHAT ABOUT A TRADE?
There is a bit more financial flexibility if you’re able to swing a trade, and the Cowboys could even pocket a small savings before June 1st.
If the Cowboys were to trade Elliott they would only be responsible for the bonus prorations. The guaranteed salary would be counted against the cap of the team that traded for him.
That means the pre-June 1st dead money for Dallas would drop from $30.08 million to $17.68 million.
$18.22 million dollar cap number - $17.68 million in dead money = $540k savings.
The same post-June 1st dead money rules with a release would apply with a trade too, which means Dallas would have $5.82 million in dead money on its 2022 cap with a post-June 1st trade, and the same $11.86 million in dead money on the 2023 cap that a release would net you.
$18.22 million dollar cap number - $5.82 million in post-June 1st dead money = $12.4 million savings on the 2022 cap.
SUMMARY
Because of various bonuses paid to Ezekiel Elliott, and his guaranteed salary in 2022, his $30.08 million in dead money makes it financially impossible to save money with a release.
If a trade partner can’t be found, the Cowboys should ride the contract out in 2022, and re-evaluate next offseason.
In order to avoid putting any additional dead money on the cap, Dallas should avoid restructuring Elliott again this offseason, even though they could net $9 million in short term savings for 2022.
