Dead Money: The Cowboy’s Painful Consequence for Past Decisions

There are roughly a bazillion reasons why the Dallas Cowboys humbly hold a 5-6 record eleven games into the season. Previously discussed explanations for the sorry state of the Cowboys has ranged from their pitiful offensive line, their inconsistent QB play, dismal running game, special teams failures, no accountability, and no Will to Win. While these reasons are all true (some more than others), maybe the problem dates further back. Maybe it dates back to front office decisions made years ago.

Dead Money

Nov 11, 2012; Philadelphia, PA, USA; Dallas Cowboys owner Jerry Jones (center) talks with COO/EVP Stephen Jones (left) and EVP Jerry Jones, Jr. (right) prior to playing the Philadelphia Eagles at Lincoln Financial Field. The Cowboys defeated the Eagles 38-23. Mandatory Credit: Howard Smith-US PRESSWIRE

As many know, Dead Money is the name given to the money owed to players no longer on the team. If a player is cut from the roster prior to the expiration of his contract, the remaining guaranteed portion of his contract will be paid to him and will still count against the upcoming salary cap. Based on when the team chooses to cut the player, they decide if they wish to take the salary cap hit the upcoming year or divide it out into a more manageable amount the next two seasons.

Either way, prematurely cutting a player with guaranteed money remaining will impact the team’s upcoming available salary cap space and limit what it can do regarding personnel. With less salary cap space available, the team has less money to pay players currently on the team and less money to sign needed free agents. The Cowboys currently have 15 players responsible for Dead Money on the current salary cap. Majority of those players only minimally impact the cap and were smart decisions by the front office. It’s the big contracts that really hurt.

Oct 2, 2011; Arlington, TX, USA; Detroit Lions receiver Calvin Johnson (81) catches a fourth quarter touchdown against Dallas Cowboys cornerback Terence Newman (41) at Cowboys Stadium. Mandatory Credit: Matthew Emmons-US PRESSWIRE

Terence Newman (Dead Money: $4,800,000)

In 2008 Newman was signed to a 6 year $50.2 million contract extension, $22.5 million of which was guaranteed. At the age of 30 it was quite clear this contract would be covering the down-slope of his career. It would be foolish to believe he would play out the entirety of the contract and he would need to play at least the first four years (through 2012) to avoid major salary cap implications if he was cut.

To say Newman’s play declined in 2011 would be a polite understatement. The team really had no choice to cut him the following off season and take the salary cap hit despite his remaining guaranteed money owed.  Doing so freed up money and a roster space to be used (in part) on 27 year old Brandon Carr.

Because of the Dallas Cowboys miscalculation on exactly when his decline would take place, the Cowboys were forced to cut Newman a year before they wanted to and therefore eat 4.8 million in Dead Money. This is always the risk in signing players past their prime and why doing so rarely works out.

Marion Barber (Dead Money: $4,000,000)

In 2008 the Dallas Cowboys front office made yet another mistake. They resigned Marion Barber to a seven year $45 million contract extension with 16 million guaranteed. Coming off an amazing Pro Bowl year it seemed like a good move at the time. Unfortunately it was not as Barber never again played up to the level he did in 2007. Much like Terence Newman’s contract, the Cowboys needed Barber to play at least through 2012 to avoid sizable salary cap penalties. After displaying a large decline in play the previous seasons, Barber was cut prior to the 2011 season. The Cowboys chose to cut him in late July thus spreading the cap penalty over the next two years.

Leonard Davis (Dead Money: $2,666,667)

The year before Barber and Newman were resigned, the Cowboys signed Leonard “Big” Davis. The free agent from the Arizona Cardinals was signed to a seven year, $46.6 million contract with $18.75 guaranteed.  Much like Newman, Davis played well at first but his performance decreased substantially faster than expected. While the Cowboys offensive lineman earned frequent Pro Bowl honors he was also known for wearing down each season and playing far below average in all of his playoff performances. Davis was released in 2011 on the same day as Marion Barber, also spreading his cap penalty into two years instead of all at once.

Additional Cap Penalties ($1,315,326)

This group consists of Kyle Kosier, Mario Butler, Stephen McGee, Tashard Choice, Brodney Pool, Danny Coale, David Buehler, Shaun Chapas, and Bill Nagy among others. Since prematurely cutting these players only resulted in roughly $1.3 million in dead money, it’s safe to assume these moves comparatively held little consequence.  The ramifications were small because these players were all low-cost players nearing the end of their expected contracts. They had little guaranteed money remaining on their deals so the financial consequences were minimal. In any organization, Dead Money like this can be expected. What should not be expected, or even tolerated, are the three mega contracts above (T. Newman, M. Barber, and L. Davis). When team evaluators and the front office miss on the big money contracts, the consequences are quite severe. In this case the consequences were exactly $11,466,667 in 2012 alone.

This much is clear: The Cowboys could have built a much better offensive line with that wasted $11.5 million. All-Pro Carl Nicks was the best guard on the market and he signed in Tampa Bay for five years $47.5 million. He would have fit under budget with room to spare. A moderately priced center could have been acquired and been a clear upgrade over Costa, Cook, and Bernadeau. The Cowboys could not have predicted Doug Free would struggle as badly as he has, but with a much upgraded interior line, Free’s negative impact would have been much less severe.

Unforeseen Cap Penalties

Miles Austin (Dead Money: $5,000,000)

Oct 28, 2012; Arlington, TX, USA; Dallas Cowboys wide receiver MIles Austin (19) cannot make a catch in the fourth quarter against the New York Giants at Cowboys Stadium.The Giants beat the Cowboys 29-24. Mandatory Credit: Tim Heitman-US PRESSWIRE

Miles Austin was given a contract extension during the leagues “uncapped year”. For those with a short memory, the uncapped year was a consequence of not agreeing to a new Collective Bargaining Agreement (CBA) with the Players Union.  In an uncapped year, the owners would theoretically be able to spend as much (or as little) as they desired. Unbeknownst to fans and players the owners met and decided to all agree NOT to exceed a set level of money and to NOT front-load contracts that would absorb most costs in the uncapped year. On a completely unrelated note, here is the definition of Collusion.

The Cowboys clearly did not follow this “gentlemen’s agreement (ehhhmmm – improper mandate)” and front-loaded Miles Austin’s contract anyway. After the CBA was agreed on with the players union, the uber-whiny John Mara complained to the league that Jerry wasn’t playing fair. The league then issued a $10 million penalty on the Dallas Cowboys. The Cowboys elected to take the penalty in two parts absorbing half in 2012 and the other half in 2013.

Some may blame the Cowboy’s front office for this and some may blame the league office for this. Regardless of where you place the blame, it was a rare situation that will most likely never repeat. The reward would have been great if it had worked but regrettably it did not work, and the consequences were severe.

The Future

The three crippling errors (totaling $11,466,667 in dead money this year) were decisions made in 2007 and 2008. This should teach everyone, the errors made today, may not be felt until much later. It’s that time of year when teams start offering extensions to their players. The Cowboys front office should remember this lesson when making these future contract decisions or they may be feeling the consequences down the road.