The NFL salary cap is a puzzle that teams must navigate to build competitive rosters while managing financial constraints. One crucial piece of this puzzle is dead cap money– a concept that often creates challenges for teams trying to optimize their cap space.
Let’s break it down in simple terms, understand how it works, and look at some of its real-world examples.
Dead Cap Money Explained
Dead cap money represents the portion of a player’s contract that still counts against a team’s salary cap after the player is no longer on the roster. This happens because NFL contracts often include guaranteed money, such as signing bonuses and guaranteed salaries.
When a player is cut or traded, any unpaid guaranteed amounts that were spread out over the contract’s life (via prorated bonuses) must be accounted for immediately. This creates a cap charge for a player who is no longer playing for the team- a dead cap hit.
How Does Dead Cap Work?
Dead cap hits arise from the structure of NFL contracts. For example, teams often prorate signing bonuses over the length of the contract (up to five years) to manage cap space. If the player is cut before the contract ends, all remaining prorated amounts are accelerated onto the team’s cap in the year of the release or trade.
Consider quarterback Russell Wilson’s earlier contract as an example:
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- Wilson’s deal with the Broncos included a $50 million signing bonus, prorated over five years ($10 million per year).
- By 2023, Wilson had already received $20 million of the bonus, but $30 million remained to be accounted for.
When the Broncos cut him in 2024, they owed $38 million in remaining roster bonuses and $17 million in guaranteed salary, resulting in $85 million in dead cap charges.
Also Read: How Does The NFL Salary Cap Work?
Pre-June 1 vs. Post-June 1 Releases
How and when a team cuts a player determines how dead cap hits are distributed:
- Pre-June 1 Release:
If a team releases a player before June 1, all remaining dead cap charges are applied to that year’s cap. Using Wilson’s example, cutting him pre-June 1 would result in the Broncos absorbing the full $85 million dead cap hit in 2024- a massive blow to their cap flexibility. - Post-June 1 Release:
Teams can designate up to two players as post-June 1 cuts, allowing them to spread the dead cap hit over two years. For Wilson, this would mean:- $35.4 million in dead cap charges for 2024 (covering his bonuses and guaranteed salary for that year).
- $49.6 million hitting the cap in 2025 (the remaining prorated bonuses).
This method eases the financial strain in a single year but still limits flexibility in future seasons.
Rolling Over Cap Space to Manage Dead Cap
Teams can mitigate dead cap impacts by rolling over unused salary cap space from one year to the next. For instance, if a team spends less than the cap in 2024, it can apply the leftover amount to 2025. This approach can help cover dead money charges from releasing high-value players.
Denver Broncos are in the playoffs with a rookie QB, 90 Mil in Dead Cap money, and didn't have a 1st rnd pick in '22 or '23. #NFL #BroncosCountry pic.twitter.com/yLWee1NnYL
— Walter (@ChillNRelaxed) January 6, 2025
Real-World Examples of Dead Money Hits
Dead money charges can significantly influence a team’s roster-building strategy. Here are some notable examples:
- Matt Ryan (2022): The Falcons absorbed a record $40.5 million dead cap hit when they traded Ryan to the Colts.
- Aaron Rodgers (2023): The Packers took on a $40.3 million dead cap charge after trading Rodgers to the Jets.
- Russell Wilson (2022): The Seahawks incurred a $26 million dead cap hit when they traded Wilson to the Broncos.
What Is a Dead Money Charge?
NFL reporter Dan Graziano explains dead money charges as the cap costs resulting from releasing or trading a player with remaining guaranteed money. It’s not actual cash payment; it’s simply a financial accounting mechanism tied to how bonuses and guarantees are structured.
Teams can strategically manage dead cap through post-June 1 designations, as mentioned earlier, to spread out the financial impact.
“Won’t win more than five games.”
— Zack Kelberman (@KelbermanNFL) January 6, 2025
“Worst roster in the NFL.”
“Biggest dead cap hit in league history.” pic.twitter.com/2E8sD2iY1m
Why Does Dead Cap Matter?
Dead cap restricts teams’ ability to sign new players or retain talent. A large dead cap hit ties up valuable salary cap space, leaving teams less flexibility to make competitive roster moves.
Understanding dead cap is essential for fans trying to grasp the complexities of NFL contracts and team management. While it might sound complicated, dead cap boils down to this: It’s money that reflects past financial commitments but still affects a team’s future.
Also Read: Ranking The Top 5 Most Team-Friendly Contracts In The NFL
