Can someone explain 'Dead Cap' money

[softball guy]

I hear it all the time, but I have never heard anyone explain what it means. Obviously, the name implies that a player's salary is still on our books even after they leave? Is this a way of punishing teams that try to turnover quickly?

[mnbob70]

From Microsoft Co-pilot:

Dead cap money in the NFL refers to the financial burden a team faces when they release or cut a player who still has guaranteed money remaining on their contract. Let’s break it down:

1. Definition: Dead cap money is the charge against a team’s salary cap for paying a player who has been cut or released. It includes any remaining bonus money and salary figures owed to the player.

• How It Accumulates:
  • When a player signs a contract, it often includes signing bonuses, roster bonuses, and guaranteed salaries.
  • If the player is cut or traded before the contract ends, the team is still responsible for the guaranteed money.
  • This “dead” money counts against the team’s salary cap, even though the player is no longer on the roster.

• Example:
  • Let’s consider Russell Wilson, who played for the Denver Broncos.
  • Wilson had a massive five-year, $245 million extension with $165 million guaranteed.
  • Over his first two years, he received $39 million in bonuses and salary.
  • The remaining guarantees included $38 million in roster bonuses and $30 million from his signing bonus.
    His 2024 base salary was $17 million.
  • When the Broncos cut Wilson, they were left with a whopping $85 million in dead money for him.

• Handling Dead Cap:
  • Teams can choose to release a player before or after June 1.
  • The timing affects how the dead cap hit is spread over multiple years.

In summary, dead cap money impacts a team’s financial flexibility and can result from releasing players with significant guaranteed contracts. It’s a crucial aspect of managing the NFL salary cap.

[Da Gas Man's Ghost]

In the olden days, when currency wasn't used as much as bartering, people would often pay for things with livestock. If the livestock was alive, it would be called regular money. If it had been slaughtered, it would be called "dead money".

[witljon]

In the olden days, when currency wasn't used as much as bartering, people would often pay for things with livestock. If the livestock was alive, it would be called regular money. If it had been slaughtered, it would be called "dead money".

Very interesting

[Beef Supreme]

If you have my money, you’re dead. No cap.

[Bob Wiley]

From Microsoft Co-pilot:

Dead cap money in the NFL refers to the financial burden a team faces when they release or cut a player who still has guaranteed money remaining on their contract. Let’s break it down:

1. Definition: Dead cap money is the charge against a team’s salary cap for paying a player who has been cut or released. It includes any remaining bonus money and salary figures owed to the player.

• How It Accumulates:
  • When a player signs a contract, it often includes signing bonuses, roster bonuses, and guaranteed salaries.
  • If the player is cut or traded before the contract ends, the team is still responsible for the guaranteed money.
  • This “dead” money counts against the team’s salary cap, even though the player is no longer on the roster.

• Example:
  • Let’s consider Russell Wilson, who played for the Denver Broncos.
  • Wilson had a massive five-year, $245 million extension with $165 million guaranteed.
  • Over his first two years, he received $39 million in bonuses and salary.
  • The remaining guarantees included $38 million in roster bonuses and $30 million from his signing bonus.
    His 2024 base salary was $17 million.
  • When the Broncos cut Wilson, they were left with a whopping $85 million in dead money for him.

• Handling Dead Cap:
  • Teams can choose to release a player before or after June 1.
  • The timing affects how the dead cap hit is spread over multiple years.

In summary, dead cap money impacts a team’s financial flexibility and can result from releasing players with significant guaranteed contracts. It’s a crucial aspect of managing the NFL salary cap.

Thanks for posting this.

[mlhouse]

A simpler explanation of dead cap is this.

1. The player is released, traded, or retired or some other method of no longer being on a team which is why the term "dead" is used.

2. There were cap allocations that were for contract years that the player is no longer on the team.

Certain payments like signing bonuses or option bonuses are paid immediately but allocated across the total years of the contract. To use an example, lets say a player got a $5 million signing bonus and a 5 year contract. The signing bonus would be allocated evenly across all five years for cap purposes, or $1 million per season.

If the player is released after year 2 of the deal, there is still 3 years of that allocation, or $$3 million left on the cap. That is $3 million in dead money.

[Norn_Iron]

A simpler explanation of dead cap is this.

1. The player is released, traded, or retired or some other method of no longer being on a team which is why the term "dead" is used.

2. There were cap allocations that were for contract years that the player is no longer on the team.

Certain payments like signing bonuses or option bonuses are paid immediately but allocated across the total years of the contract. To use an example, lets say a player got a $5 million signing bonus and a 5 year contract. The signing bonus would be allocated evenly across all five years for cap purposes, or $1 million per season.

If the player is released after year 2 of the deal, there is still 3 years of that allocation, or $$3 million left on the cap. That is $3 million in dead money.

So my question is, once the player leaves the remaining money on the contract all moves into that current year?

i.e. In your example the player had 3 years left, so its 3 million dead cap that year, not 1 million for the next 3 years

[Beef Supreme]

A simpler explanation of dead cap is this.

1. The player is released, traded, or retired or some other method of no longer being on a team which is why the term "dead" is used.

2. There were cap allocations that were for contract years that the player is no longer on the team.

Certain payments like signing bonuses or option bonuses are paid immediately but allocated across the total years of the contract. To use an example, lets say a player got a $5 million signing bonus and a 5 year contract. The signing bonus would be allocated evenly across all five years for cap purposes, or $1 million per season.

If the player is released after year 2 of the deal, there is still 3 years of that allocation, or $$3 million left on the cap. That is $3 million in dead money.

So my question is, once the player leaves the remaining money on the contract all moves into that current year?

i.e. In your example the player had 3 years left, so its 3 million dead cap that year, not 1 million for the next 3 years

Yes. So long as that player is released with a pre-June 1 designation. If he is released post-June 1, that penalty is split between the next two seasons.

[Norn_Iron]

A simpler explanation of dead cap is this.

1. The player is released, traded, or retired or some other method of no longer being on a team which is why the term "dead" is used.

2. There were cap allocations that were for contract years that the player is no longer on the team.

Certain payments like signing bonuses or option bonuses are paid immediately but allocated across the total years of the contract. To use an example, lets say a player got a $5 million signing bonus and a 5 year contract. The signing bonus would be allocated evenly across all five years for cap purposes, or $1 million per season.

If the player is released after year 2 of the deal, there is still 3 years of that allocation, or $$3 million left on the cap. That is $3 million in dead money.

So my question is, once the player leaves the remaining money on the contract all moves into that current year?

i.e. In your example the player had 3 years left, so its 3 million dead cap that year, not 1 million for the next 3 years

Yes. So long as that player is released with a pre-June 1 designation. If he is released post-June 1, that penalty is split between the next two seasons.

Ah ok, I wondered what the June 1st date did.

[mlhouse]

A simpler explanation of dead cap is this.

1. The player is released, traded, or retired or some other method of no longer being on a team which is why the term "dead" is used.

2. There were cap allocations that were for contract years that the player is no longer on the team.

Certain payments like signing bonuses or option bonuses are paid immediately but allocated across the total years of the contract. To use an example, lets say a player got a $5 million signing bonus and a 5 year contract. The signing bonus would be allocated evenly across all five years for cap purposes, or $1 million per season.

If the player is released after year 2 of the deal, there is still 3 years of that allocation, or $$3 million left on the cap. That is $3 million in dead money.

So my question is, once the player leaves the remaining money on the contract all moves into that current year?

i.e. In your example the player had 3 years left, so its 3 million dead cap that year, not 1 million for the next 3 years

Yes. So long as that player is released with a pre-June 1 designation. If he is released post-June 1, that penalty is split between the next two seasons.

To be technical, it isn't split after the 6/1 date for a release or trade (and I assume retirement).

After 6/1, the dead cap from the current league year is allocated to that year and the balance to the following year.

So in the example above, if the player was released after 6/1, $1 million of his dead cap would be allocated in the current league year and $2 million in the following year.