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Spagnola: Salary Cap Bells And Headaches

Posted Mar 1, 2013

IRVING, Texas – Hopefully none of you burned too many brain cells or swallowed far too many antidepressants worrying over the Dallas Cowboys salary cap.

Seems to happen every year ’bout this time. This hysteria caused by the Cowboys reportedly all these millions over the NFL salary cap, meaning to abide by these strict rules they will have to cut this guy and that guy or not be able to re-sign this other dude of significance.

All giving new meaning to March Madness.

Then in like a 48-hour period, the Cowboys get their cap house in order, or at least close to in order since this year, what with the second half of the $10 million NFL-imposed cap penalty, things are a little more dicey trying to creep under what looks like is going to be a $123 million cap.

None of this comes as a surprise to this veteran reporter, but then I sort of learned the hard way back 15 years or so ago when the cap was somewhat in its infancy, having officially started in 1994. What with the likes of Troy Aikman, Emmitt Smith, Larry Allen, Michael Irvin, Leon Lett, Deion Sanders, Darren Woodson, Kevin Smith, Daryl Johnston, Nate Newton and Erik Williams littering this roster, the Cowboys were way over the salary cap a couple of weeks before the start of the league year.

And I distinctly remember writing how this team was in trouble, that there was a good chance the salary cap bell was going to sound on the Cowboys, as if an air raid siren proclaiming they were in violation and subject to punishment.

Well, they made it under, of course, and about a week or so later Stephens Jones took a polite jab at me one day when crossing paths here at The Ranch, sarcastically saying, “Heard any bells going off lately?”

Ha-ha, but lesson learned.

So that is why over this past month I wasn’t buying into all the talk of the Cowboys having to cut Miles Austin and Jay Ratliff and Gerald Sensabaugh and Doug Free so they could just duck under the salary cap in time. With most of these huge contracts, like the $50 million deal Brandon Carr signed about this time last year, certain mechanisms are built into them that can be activated on an at-need basis to lessen the cap burden for that year.

And please, do not get the impression these guys are giving money back to help out the cause, or are taking far less money, as had initially been suggested last week when Tom Brady signed his extension, so the club can bring in better players. The NFL does not stand for Nottingham Forest League. Robin Hoods don’t exist in this economy.

Basically what takes place to reduce the salary cap impact is teams convert base salary into a signing bonus, then spread the bonus impact evenly over the life of the contract.

For example: Carr’s 2013 base salary was scheduled to be $14.3 million. That was reduced to $715,000, the player receiving the difference up front in bonus money that then is prorated for accounting purposes over the remainder of the contract, thus saving the club $11 million against the cap this year but upping the charges for coming years.

Just look at the history of Tony Romo’s contract. His initial six-year, $67.5 million deal has been restructured three times, and one of the reasons his current cap charge in the final year of the deal is $16.8 million – $5.318 million of it from miscellaneous bonuses.

So just know, these salary cap machinations are somewhat like buying with a credit card. At some point, you’ve got to pay.

Same with DeMarcus Ware. His contract was just restructured for the third time, his base salary for 2013 going from $5.5 million to $500,000, then taking the $5 million handed to him in bonus money from this year and spreading it over the final three years of the deal. So by time 2015 arrives, his cap hit is scheduled to be $18.1 million. Ouch!

By Friday afternoon, the Cowboys had restructured Austin, Carr, Ryan Cook, Ware and Jason Witten. And, they still have more to do, likely including Ratliff, Orlando Scandrick and possibly Free, although they restructured Free and Scandrick just last year. Mackenzy Bernadeau and Nate Livings were also candidates to have deals redone.

Even with that, the Cowboys’ work will not be finished. Remember, they will have at least the $5 million penalty in dead money, plus at least another $194,440 from the escalated signing bonuses of guys who were cut from the 53-man roster last year – Danny Coale, Shaun Chappas, Bill Nagy, Ron Leary and Levy Adcock. Also, don’t forget come March 12 only the top 51 contracts count against the cap, plus the Cowboys were able to roll over $2.61 million in credits from what they didn’t spend last year.

So while they are currently under their $120 million cap, they still need more space to A) extend restricted free-agent qualifying offers to the likes of Phil Costa and Danny McCray; B) sign their draft class; and C) even remotely think of offering unrestricted free agent Anthony Spencer an inoffensive contract.

That’s where Romo’s extension comes in. Doing so will at least reduce his cap charge for this year in half, maybe more. Then there are other potential shavings the Cowboys might consider, such as saving $1.1 million if they release fullback Lawrence Vickers or think long and hard on defensive lineman Marcus Spears, who will count $2.7 million against the cap this year. Releasing him after June 1 would erase his $2 million base salary, but then they still would be charged $700,000 this year and $1.4 million next year for his prorated signing bonus.

And remember, teams do get two June 1 release designations, meaning you don’t get hit with the entire signing bonus escalation this year if releasing a guy, as the Cowboys did last year with Terence Newman, before June 1. Let’s just use Free for example, and I’m not suggesting this is what the Cowboys are going to do or should do, especially since they really don’t have a viable replacement at right tackle – unless you are convinced Jermey Parnell can play, and frankly that would seem a stretch.

If Free is designated for a June 1 release with three years left on his deal, then the Cowboys would recoup his $7 million base salary for 2013 and only be charged one-third of his remaining prorated signing bonus this year ($3.02 million) and the other two-thirds ($6.02 million) in 2014. But if he is cut immediately, as some suggest, then while the Cowboys aren’t charged his $7 million base salary, the final three years of his prorated signing bonus would come to $9.06 million, meaning the Cowboys only come out $1 million ahead since the 2013 proration of $3.02 million will count this year either way. Plus, they would need to spend more than the $1 million saved to sufficiently replace him in the starting lineup.

Good deal? Not to me when you will have $6.04 million of dead money roll into either this year’s cap for nobody or next year’s, which isn’t expected to increase a significant amount, just as this year’s didn’t either.

Got tired head yet?

And you say you’d love to be the GM? Huh, right. Fantasy football doesn’t have these types of headaches – or financial outlays.

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