2020 NFL CBA Explained: Dead Money

Dead money refers to salary a team has already paid or has committed to paying (i.e., a signing bonus, fully guaranteed base salaries, earned bonuses, etc.) but has not been charged against the salary cap.

In business terms, it is essentially a “sunk cost.” Any money a team pays a player must be accounted for against the salary cap. If there is dead money in a player’s contract and he is released or retires, that charge will accelerate onto the team’s salary cap for the current year.

There is one avenue to lower this cap hit in a current league year: the June 1 designation. Teams can spread the cap hit over two seasons by releasing or trading a player after June 1 — any signing bonus prorations for future seasons are charged to the following seasons’ salary cap. Teams are allowed to release two players prior to June 1 (but on or after the first day of the league year) while still using this designation and getting the same cap treatment. However, the cap savings created by a June 1 designation do not take effect until after June 1.

Essentially, the salary cap is like a credit card, minus the interest. Anything that is paid out to a player must be paid back to (and accounted for against) the salary cap at some point.

Example: Tom Brady left behind $13.5 million in dead money on the Patriots 2020 salary cap 

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