What is dead cap in nfl?

In the NFL, a "dead cap" refers to the portion of a player's contract that a team is still obligated to pay, even after the player is no longer on the roster. This money is essentially a sunk cost that counts against the team's salary cap, even though they aren't receiving any on-field benefit from the player.

Here's a breakdown of how it happens:

• Guaranteed Money: Many NFL contracts contain guaranteed money, meaning the team must pay the player regardless of their performance or whether they're released. If a team releases a player with guaranteed money remaining on their contract, that guaranteed money becomes dead cap.

• Signing Bonuses: A significant portion of a player's signing bonus is usually prorated over the length of the contract. This means a part of the signing bonus hits the salary cap each year, even if the player is cut. If the player is released before the prorated bonus is fully accounted for, the remaining portion becomes dead cap.

• Roster Bonuses: These are bonuses paid to players for simply making the team's roster by a certain date. If a player is cut after receiving a roster bonus, the remaining portion that hasn't yet counted against the cap becomes dead cap.

• Restructuring Contracts: Teams sometimes restructure contracts to create cap space in the short term. This often involves converting base salary into signing bonus, which pushes some of the cap hit into future years. If the player is then released, this converted salary becomes dead cap.

Why is dead cap a problem?

Dead cap significantly limits a team's flexibility. It reduces the amount of money available to sign free agents, extend current players, or simply stay under the salary cap. A large dead cap number can severely hamper a team's ability to compete.

Example:

Imagine a player has a $10 million contract with $5 million guaranteed. If the team cuts him after one year, that $5 million becomes dead cap. Even though the player is no longer with the team, the $5 million still counts against their salary cap, limiting their ability to spend money elsewhere.

In short, dead cap is a crucial concept in NFL salary cap management. Teams must carefully consider the potential for dead cap when structuring contracts and making roster decisions. The goal is to minimize dead cap while maximizing on-field talent.