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Examining how Broncos' Nearly $30M in Projected Dead Money Affects Salary Cap in 2020
When it comes to the NFL salary cap, numbers get tossed around left and right without much context. This is because a lot of people still get confused by the salary cap and what it's all about.
In particular, dead money confuses people because they tend to think of it as money a team doesn't have to spend on other players. In reality, dead money applies to the cap, but doesn't always apply to cash a team has to spend.
Basically, the salary cap reflects a limit regarding how much a team may commit to players on the 53-man roster, practice squad and injured reserve, whereas cash spending refers to the amount of cash actually committed to the payroll for that season.
Pro-rated bonuses, more commonly known as signing bonuses, are methods of paying cash from the payroll in a given year, while borrowing against future cap space. They are used by many NFL teams as a means to fit players under the cap. A few teams do utilize base salaries and roster bonuses, with no signing bonuses, to pay players, but they do not represent the majority,
The Broncos operate like the majority of the teams, though they tend to keep signing bonuses as small as possible. They do this to limit the amount of future cap space they borrow.
When you hear about "dead money" from a signing bonus, what's really happening is that, when a player has been released or traded, you have to pay up at that point for the future cap space you borrowed against. Though that cuts into your cap space, it doesn't always require you to pay more cash to the player.
There is a time when dead money actually comes as cash spending, and that's when you have fully guaranteed base salary remaining when you cut a player. Base salaries always apply to current-year cash spending, so that's when dead money really becomes a bad thing.
Dead money can also become a problem when you have too much cap space tied up to player contracts and limited space, because then it really hampers your ability to add new players. It can also be a problem when you move on too quickly from a player you acquire for whatever the reason may be.
To understand whether the dead money is really bad requires looking at why the dead money is there, what the dead money is from, and how much cap space is available after a player is cut.
How Denver got $29.8M in Dead Money
Consider that the Broncos have accrued $29.8M in dead money for 2019. On one hand, that seems like a lot and the Broncos are doing a bad job with managing the cap.
On the other hand, when you learn that the Broncos are one of 14 teams with more than $20M in dead money — and that the list includes teams ranging from playoff contenders to those likely getting a top-10 pick in 2020 — it makes you realize there are plenty of teams with a lot of dead money against the cap.
Furthermore, just six NFL teams have less than $10M in dead money. Given that the majority of teams are in double digits in dead money, using total dead money isn't enough by itself to judge what a team is doing with cap space. This is where we get into the specific players who are no longer with the team.
Let's break down the Broncos' top-7 individual dead money hits: $7M for Case Keenum, $6.9M for Emmanuel Sanders, $4M for Brandon Marshall, $3.5M for Demaryius Thomas, $2.8M for Darian Stewart, $1.3M for Menelik Watson and $1.2M for Paxton Lynch.
Keenum is an example of the bad kind of dead money because $4M of that is fully guaranteed base salary that the Broncos owed him in 2019. They agreed to pay that when they traded him to Washington, who is paying the remainder of his $7M total sum guaranteed in 2019.
In other words, that $4M is cash spending this year — it's not like the other $3M in dead money resulting from his signing bonus, which was cash spent in 2018 while he was on the team.
Sanders, however, is not a example of this. That represents both the remainder of his signing bonus from his last extension, plus money the Broncos already paid him for the seven games in which he played.
His trade to the Niners means that his new team is paying the remainder of his base salary this year. In other words, the dead money from cash spending this year was actually paid to him to play for the Broncos. Therefore, it's not a bad thing.
The other players are ones that the Broncos moved on from last season and represent dead money from the remainder of their signing bonuses. You can consider it good or bad depending on what the player contributed.
Lynch (busted draft pick) and Watson (busted free agent signing) would definitely be bad, but it's hard to complain about Stewart, who made significant contributions in the three-and-a-half seasons he was with the team.
In other words, the worst kind of dead money comes from base salary you pay to a player to play for somebody else. After that comes dead money from a failed acquisition. But if the player contributed to your team for the bulk of his contract, it's not something to get upset about.
How Broncos Compare to Outside Teams
Now, let's compare that to a couple other teams who have a similar amount of dead money to the Broncos: the Ravens and the Steelers. This allows us to compare to a playoff contender and a team that likely winds up with a top-10 pick.
The Ravens have $29.1M in dead money for 2019. The bulk of that comes from none other than Joe Flacco, to the tune of $16M from past signing bonuses. There's also $4.6M in dead money for Michael Crabtree, $2M for Justin Bethel, $1.75M for Eric Weddle and $1.5M for Zach Brown, all of it from signing bonuses.
The Steelers have $29.7M in dead money. The bulk of that comes from Antonio Brown, to the tune of $21.2M, all from signing bonuses, some from an extension they gave him in 2018. They also have $2.8M in dead money for Morgan Burnett, $2.025M from Xavier Grimble and $1.72M from Marcus Gilbert.
But let's look at cap space each team has available this season and next. The Broncos have $16.5M in cap space this season, which they can carry over into 2020 if they wish. They are projected to have $63.5M in cap space in 2020 before carryover and any roster cuts.
The Broncos have 40 players under contract for 2020, which means that once they add players on future contracts (most likely practice squad players) and tender exclusive rights free agents, they will have expected cap space of $57.9M — and that expected number doesn't include cap carryover from 2019 or account for potential roster cuts.
So the Broncos are in good shape cap-wise going into 2020, even if they take on a $13.6M dead money charge from cutting Joe Flacco (which will net them $10M in cap space).
The Ravens were at $780,210 in cap space for 2019, but gave a one-year extension to WR Willie Snead, which should give them a little more wiggle room. It was safe to do this because the Ravens have a lot of cap space projected for 2020 — about $63M with 37 players under contract (but that was before the Snead extension) and expected cap space of $55.9M. Like the Broncos, the Ravens are in good shape cap-wise.
The Steelers, however, are not. They have $3.06M in cap space for 2019 and have $3.9M in projected cap space in 2020. However, that's with 42 players under contract — get to 53 and the Steelers are expected to be $649,330 over the cap. The carryover will help, but the Steelers will still be tight on cap space.
The primary reason the Steelers got into that situation is the short-term extension they gave to Ben Roethlisberger. He is a future Hall-of-Famer, but was in decline in 2018 and his 2019 season ended early because of an elbow injury. Now, the Steelers face a $33.5M cap charge for a quarterback who will most likely no longer be the guy they can build around.
The Steelers normally don't explore free agency, but they might want to keep a couple of their own pending free agents. But that means they'll either need to cut or extend other players — and extensions mean more cap space borrowed in future years.
The Steelers have reached the point the Broncos were at after 2015, in which they need to find that next quarterback. If Mason Rudolph doesn't do enough to prove he's the guy, the Steelers need to look to the draft — and that's going to be a problem when they have only have six draft picks, of which just one is in the first three rounds.
In other words, the Steelers are going to face some difficult decisions — this is a team who expected to go to the playoffs this year, but is really a team that needs to rebuild and isn't in good position to do so.
The Steelers aren't the only team with some serious cap management questions coming. Let's look at three other examples.
Jaguars: From a cap standpoint, it's not all bad for the Jags — they have $9.5M in cap space for 2019 and are projected to have $4.4M in 2020 with expected space of $1.8M once they get the roster to 53 players. Add the cap carryover from 2019 and cut Marcell Dareus to save $20M in space, then look at the extra first-rounder they got in the Jalen Ramsey trade, and it would appear they're in solid shape, especially with a cheap quarterback (Gardner Minshew) they might be able to build around.
However, there's an elephant in the room named Nick Foles, and he is due $15.125M in base salary in 2020 — in other words, that's actual cash spending for next year.
If you want to know why there are still whispers about Foles starting when he's healthy, that money owed in 2020 is why. Otherwise, the Jaguars will have to try to trade Foles — and if it's anything like the Keenum trade, that means taking at least $8M of his salary (if you base in on a near 50-50 split) or as much as $12M (if you base it on Washington paying Keenum $3M, so the team acquiring Foles pays the same).
And the Jaguars are also paying Blake Bortles $5M or so this year and he's the backup for the Rams. So, yes, there's a team with bigger problems with owing money to quarterbacks than the Broncos.
Vikings: While the Vikings are making a playoff push, they will need to proceed with caution when it comes to 2020. They have just $1.2M in cap space for 2019 and are projected to be $2.1M over the cap in 2020 — or $8.7M once they get the roster to 53 players.
When the Vikings gave Kirk Cousins a three-year contract that fully guaranteed nearly every dollar, they expected playoff trips. They missed out last year and are hoping that doesn't repeat itself this year.
Regardless of what happens with the Vikings, they will have to ask themselves this in 2020: Do they want to extend Cousins and risk him asking for more fully guaranteed money? Would they rather extend other veterans on the roster and hope they don't decline? Or would they prefer to cut several veterans and take comfort in having 11 projected draft picks to replenish the roster?
The Vikings are in a "danger zone" in which the wrong decisions could do more to set them back than to keep them a playoff contender for years to come. They got into this position because of the Kirk Cousins contract. If they make the playoffs, they'll have to hit pause before proceeding in 2020. If they miss the playoffs, they will have to do more than hit pause.
Falcons: No team is in worse cap shape than the Atlanta Falcons. You would think a team with talented players such as Matt Ryan, Julio Jones, Jake Matthews, Grady Jarrett and Desmond Trufant would be in good shape, but that's not the case.
The Falcons sit at $5.3M in cap space for 2019 and are projected to be $2.7M over the cap in 2020 — and when you get the roster to 53 players, the expectation is the Falcons will be $8.4M over the cap. Yikes!
You can read this good article by Zack Moore at Over the Cap, which shows that the Falcons have over-invested in the offense and haven't done a good job building the defense. To add to what Moore wrote, the Falcons don't have the flexibility to create cap space without taking huge dead money hits.
This brings me back to the point about how much space you can free when you cut a player versus the dead money left. On one hand, the Falcons can cut Matt Schaub, which means $375,000 in dead money with $2M cap space freed. On the other hand, that's not a lot of freed cap space.
Or maybe the Falcons can cut center Alex Mack, which frees $8M in cap space with $2.55M in dead money. But that could get taken up if the Falcons want to extend tight end Austin Hooper, who is having a breakout season.
So perhaps the Falcons part ways with Luke Stocker, freeing $2.6M in cap space with $750,000 in dead money. But then I tell you that the Falcons need $10.4M in cap space for draft picks and there's no post-June 1 cut option available, and now what?
The Falcons expected to be a playoff contender this season and are far from that — and it's not just because of coaching. They are a team that became too desperate to keep everyone together and are now paying a price. It's not going to be easy for the Falcons to dig their way out of this hole.
What it All Means
Situations like the Steelers, Jaguars, Vikings and Falcons can serve as good lessons for the Broncos. They are fortunate to have lots of cap space next year, but it could have been a lot worse if GM John Elway had gotten too desperate after 2015.
The keys for the Broncos to keep themselves in good cap shape and avoid too much dead money in the future, though, are quite simple: Draft well, be smarter about free agency and know when to move on from a player before he declines.
On point A, Elway didn't do well in a couple of years but is getting better. On point C, Elway has been good for the most part but with a couple of misses. On point B, however, that's where Elway has made his biggest mistakes, particularly at the right tackle position, in which the only one who worked out was Jared Veldheer, while investments in Donald Stephenson and Menelik Watson flopped and the return on Ja'Wuan James has been next to nothing.
This is why the Broncos may need to say goodbye to certain veterans with expiring contracts and not go crazy in free agency in 2020. I'm all for pursuing a cornerback, but take it easy at other positions and look for value once the first wave of signings ends.
Taking a smarter approach to free agency and to which players to extend ensures the Broncos are less likely to have the bad kind of dead money. And knowing what is the bad kind means keeping the details in mind, rather than just looking at a lump sum.
Follow Bob on Twitter @BobMorrisSports and @MileHighHuddle.
