Dead Money and Acceleration
The term “Dead Money” refers to the amount of player’s salary that a team has already committed to but hasn’t been charged to the cap (NFL CBA, p. 93-95). It’s essentially a sunk cost. Signing bonus prorations, fully guaranteed base salaries and earned bonuses are examples of dead money—money a team has either already paid or is obligated to pay to its players in the future.
Any money that a team actually pays to a player—outside of a max of five $5,000 community relations/sponsor appearances from the team—must be accounted for on the salary cap.
If there is dead money in a player’s contract and he is released, that money will “accelerate” onto the current year’s cap. There is a way to split the dead money over two seasons. A contract that is terminated after June 1 will have the cap charge divided between this year’s and next year’s cap. Each team has the right to designate two players as June 1 releases, which allows them to cut a player before the date and get the same cap treatment.
If a player retires, his remaining dead money is accelerated onto the cap as well. The Ravens found this out when they were charged $2.95 million on the 2013 cap when Ray Lewis retired after the team’s Super Bowl victory.
To show the difference in dead money, let’s compare Aaron Rodgers’ 2013 contract with Colin Kaepernick’s 2014 deal.
|Contract||Aaron Rodgers (2013)||Colin Kaepernick (2014)|
|Length||5 years||6 years|
|Fully Guaranteed $||$54,000,000||$12,973,766|
|Dead $ Year 1||$54,000,000||$13,730,456|
|Dead $ Year 2||$46,100,000||$9,963,012|
|Dead $ Year 3||$29,450,000||$7,497,259|
Although Kaepernick’s deal seems to be comparable, it actually provides very little security for the quarterback and gives the team tremendous leverage (it was a really bad deal).
If either of these players were released before the start of the first season, Rodgers would count for $54 million against the cap, while Kaepernick would count for a little over $13 million. As we see with the dead money in the following years of the deal, Green Bay will suffer far greater cap consequences for releasing Rodgers than San Francisco would by releasing Kaepernick. The dead money in both deals doesn’t clear the books until after the fifth season, but the numbers in Rodgers deal are far more significant.