The Dallas Cowboys are working dilligently to prepare for the eventual Dak Prescott contract standoff in 2021. With their franchise quarterback showing the type of leadership other organizations could only dream of, the club would be wise to do everything in their power to follow through on their public stance they want him to steward the ship for the foreseeable future. Things might not come easily, though, with several financial factors at play in 2021.
To help prepare for all risks known and unknown, the club is doing their due diligence on how to create as much cap room for 2021 as possible. One way they can do this is to create cap space in 2020, with the intention to roll it over after the season. First, the club restructured the contract of LT Tyron Smith. On Wednesday, they did the same with the contract of RG Zack Martin. Now, they’ve gotten creative with the contract of defensive end DeMarcus Lawrence.
Dallas has added a voidable year and restructured Lawrence’s deal to change his 2020 base salary into a bonus that hits the cap across five seasons.
The #Cowboys are signing DE DeMarcus Lawrence to a one-year voidable extension for salary cap purposes, converting $15 million of his 2020 base salary to a signing bonus and clearing $12M in cap space this year, source said.
— Tom Pelissero (@TomPelissero) September 11, 2020
Here’s how the Cowboys turning $15 million of Lawrence’s 2020 base salary works.
Lawrence signed a five-year, $105 million deal prior to the 2019 season. It called for his 2020 base salary to be $16.9 million. His signing bonus at the time of the deal, $25 million, was spread out equally across each of the five years so while he received all of it up front, $5 million was placed on the cap for each year from 2019 through 2023.
That meant Lawrence’s cap hit for 2020 was $21.9 million ($16.9M + $5M).
The team utilized a funny-money clause of the CBA where a team can basically write in fake years at the end of a deal. They build in voidable years; which both sides know will evaporate. What it does, though, is allow the team to spread out the cap hit of a restructure bonus.
If the Cowboys had spread out Lawrence’s $15 million restructure bonus over the four years that previously remained (2020 through 2023), then each year would have added a cap hit of $3.75 million a year ($15 million divided by four).
With the voidable year, each year has an added cap hit of $3 million. This guarantees there will be dead money from DeMarcus Lawrence’s contract on the 2024 season, the year he will be an unrestricted free agent (presuming no extension before that year happens, which is a distinct possibility).
While the $750,000 savings on the 2020 cap by using the void year might not seem like a lot, when looked at from the view of 2021 savings the move turns into trimming $1.5 million from the restructure.
So to recap, Lawrence makes the exact same $16.9 million this season. His base salary drops from that amount down to $1.9 million. His cap hit, which was $21.9 million now drops to $9.9 million, meaning there is $12 million of savings.
Lawrence’s 2021 cap hit, which was $22 million, is now $25 million. His 2022 hit is now $27 million (from $24M) and his 2023 hit is now $28 million (from $25M). He now also has a 2024 cap hit of $3 million despite not being under contract.
The Cowboys entered the day with around $17.2 million in cap space according to Over The Cap. This pushes them to around $29 million, which whatever is unused (some will go to in-season signings) will roll over into the 2021 cap year.
Currently, OTC has the Cowboys down as having $173 million in cap liabilities next season, with the possibility the cap can go as low as $175 million in 2021, that’s only $2 million of wiggle room before the carryover.
Now Dallas is approaching $30 million of space.
If the club re-signs Prescott during the window following the season and before the new league year, this is plenty of space. However, if no deal is made and they have to use the $36.9 million franchise tag again, they still have work to be done, and that doesn’t include signing any of their own or outside free agents.
Catch This Fade! Season 5, Episode 2: Zack Martin & the Cap, Dak Battling Depression, Season Opener https://t.co/Kl7ym0fOsd
— KD Drummond (@KDDrummondNFL) September 11, 2020
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