Dead Money

In our most recent PFR Glossary entry, we explored the different kinds of guaranteed money found in NFL contracts, concluding that the only figures in a contract can be considered fully guaranteed are signing bonuses and salary that is guaranteed for injury, skill, and cap purposes. This fully guaranteed portion of a contract is also known as dead money, from a club’s perspective — it will hit the player’s team’s cap sooner or later, whether he plays out his full contract or whether he gets released early in the deal.

Because signing bonuses are prorated, teams signing bigger contracts that include bonuses typically can spread out that guaranteed money over several years. However, if a team releases a player while it still owes him some or all of this guaranteed money, it “accelerates” onto either the current league year (if the player is released prior to June 1) or the following year (if the player is released after June 1), and applies to the team’s cap even when the player is no longer on the roster. This is what makes it “dead” money.

Let’s take a look at a free agent who signed a new contract this offseason for a practical example. As our Zach Links covered in his Offseason in Review piece on the Browns earlier this week, linebacker Karlos Dansby inked a four-year, $24MM pact with the team — the agreement included a $6MM signing bonus and $6MM in guaranteed base salary ($4MM in 2014 and $2MM of his $4MM salary in 2015). Therefore, the contract currently contains $12MM in dead money – $5.5MM in ’14, $3.5MM in ’15, and $1.5MM each in ’16 and ’17.

When the dead money left on a player’s contract is greater than his current year cap hit, he’s in little danger of being released. Dansby has a $5.5MM cap number in 2014, compared to $12MM in total dead money, meaning even if the Browns had reason to want to cut him (which is unlikely, considering it’s only been a few months since they made that offer), it would make little sense to do so. Under the post-June 1 rule, if Dansby were released now, his $12MM in dead money would hit the cap for a total of $5.5MM this year and $6.5MM in 2015, with the remaining dead money accelerating on that season’s cap. That means Cleveland would be taking larger overall cap hits to get him off the roster than to keep him on it.

In some instances, even a huge amount of dead money isn’t enough reason for a team to keep a player on its roster. For instance, LaMarr Woodley headed into 2014 with a cap number of $13.59MM and $14.71MM in dead money remaining on his contract. By designating him as a post-June 1 cut, the Steelers were able to reduce Woodley’s ’14 cap hit to just $5.59MM, while his ’15 cap hit decreased from $14.09MM to $8.58MM.

Of course, in that scenario, a 2015 cap number of $8.58MM is still exorbitant for a player who won’t be on the team’s roster, which is why clubs who manage the cap the best generally try to keep dead money for non-roster players to a minimum. There are ways of constructing deals to avoid piling up dead money charges, including avoiding large signing bonuses. Darrelle Revis‘ six-year, $96MM pact with the Buccaneers looked massive on paper, but it featured yearly $16MM salaries, with no bonus, meaning the deal didn’t include any guaranteed money. So when Tampa Bay cut the star cornerback earlier this year, the team wasn’t on the hook for any salary, and Revis doesn’t count against the club’s cap at all in 2014.

NFL players often don’t have a ton of job security, but if a player has a sizable amount of dead money left on his contract, it gives him more leverage than he’d otherwise have. If you’re wondering if a veteran player on your favorite team might be a candidate to be cut, it’s worth checking a salary database like Over the Cap or Spotrac to see how much dead money is remaining on his deal. The higher that number is, the less likely the player is to go anywhere in the near future.

Note: This is a PFR Glossary entry. Our glossary posts will explain specific rules relating to free agency, trades, or other aspects of the NFL’s Collective Bargaining Agreement. Information from Over the Cap was used in the creation of this post.

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