In the NFL, a "dead salary" is commonly referred to as dead money. It represents a salary cap charge that a team incurs for a player who is no longer on their active roster. This financial commitment arises due to the specific accounting rules of the NFL's salary cap.
Understanding Dead Money in the NFL
Dead money impacts a team's available salary cap space, even though the player it's associated with is no longer contributing on the field. It's a crucial concept for general managers and front offices to understand when managing their rosters and financial outlook.
How Dead Money Occurs
The existence of dead money primarily stems from how certain player bonuses are accounted for under the NFL's Collective Bargaining Agreement (CBA):
- Prorated Bonuses:
- Signing Bonuses: A large upfront payment given to a player when they sign a contract.
- Option Bonuses: Payments triggered by a team option to extend a contract.
- Certain Roster Bonuses: Specific payments that are not tied to active roster status or game performance.
These bonuses are not expensed against the salary cap in the year they are paid. Instead, they are prorated, or spread out evenly, over the life of the contract, up to a maximum of five years.
Example of Proration:
If a player receives a $10 million signing bonus on a five-year contract, $2 million of that bonus is charged against the salary cap for each of those five years.
| Year | Signing Bonus Proration |
|---|---|
| Year 1 | $2,000,000 |
| Year 2 | $2,000,000 |
| Year 3 | $2,000,000 |
| Year 4 | $2,000,000 |
| Year 5 | $2,000,000 |
| Total | $10,000,000 |
When Does "Dead Salary" Become a Cap Charge?
Dead money is triggered when a player is released, traded, or retires before all the prorated portions of their bonuses have been accounted for against the salary cap. When this happens:
- Immediate Acceleration: Any remaining, unamortized (unaccounted for) portions of those prorated bonuses immediately "accelerate" onto the team's salary cap in the current league year.
- Cap Impact: This accelerated charge directly reduces the team's available salary cap space, even though the player is no longer with the team.
Practical Scenario:
Imagine the player from the example above, who received a $10 million signing bonus ($2M per year prorated), is released after Year 2 of their five-year contract.
- Years 1 and 2: $4 million of the bonus has been accounted for ($2M + $2M).
- Years 3, 4, and 5: $6 million remains unamortized ($2M x 3 years).
Upon release, that remaining $6 million immediately becomes a dead money charge against the team's salary cap in the year the player is cut.
Impact on NFL Teams
Dead money significantly influences a team's financial flexibility and roster construction:
- Reduced Cap Space: It directly ties up valuable cap space that could otherwise be used to sign new players, extend current talent, or absorb other contracts.
- Strategic Decisions: Teams must carefully weigh the cap implications of cutting or trading players, especially those with significant prorated bonuses still on the books. This often leads to difficult decisions about keeping underperforming veterans versus taking a large cap hit.
- Future Planning: High dead money charges in one year can cripple a team's ability to compete in the free agency market or sign draft picks in subsequent years.
Understanding dead money is essential for comprehending the complex financial landscape of the National Football League and how teams manage their valuable salary cap resources. For more details on current team cap situations, resources like Spotrac and Over The Cap provide extensive data.
