Dallas City News

When the Cowboys and CeeDee Lamb agreed on a new contract last week, the initial reports revealed a pretty straightforward deal: A four-year contract worth $136 million which includes a signing bonus of $38 million prorated over the next five years, annual salaries of between $25 million and $30 million per year, plus $4 million worth of roster bonuses. In table form, this is what the initial reports looked like:

The four-year contract is tacked on top of the $17,991,000 Lamb was scheduled to make this year, which is why the total above shows $153.9 million ($136 million + $17.9 million) for the next five years. The Cowboys have effectively secured Lamb for the next five years at an average annual value of $30.8 million.

But after those initial contract reports, Todd Archer of ESPN followed up with more contract details that showed the Cowboys had added a void year to Lamb’s contract.

Void years are a cap tool used by NFL teams that take advantage of the fact that the NFL allows signing bonuses to be prorated over up to five years for salary cap purposes. In the Lamb contract above, the $38 million signing bonus that Lamb gets this year is prorated over the next five years at $7.6 million per year. And traditionally these signing bonuses, as the name implies, were handed out when the contract was signed.

But you can also use that proration later in a contract. The classic contract restructure (which the Cowboys like to use) is done later in a contract and simply converts base salary into a signing bonus, which is then spread out over the next five years for salary cap purposes again. And if the five-year proration lasts longer than the length of the contract, “void years” are added to the end of the contract to account for the five-year proration period.

The other way to use proration later in a contract is via an option bonus. Instead of waiting a few years and then doing a contract restructure, you plug the option bonus into the contract right away. And that’s exactly what the Cowboys did with Lamb’s contract.

Originally due $30.9 million in 2028 as a base salary, the Cowboys turned $29 million of that into an option bonus, leaving a base salary of $1.9 million. For cap purposes the $29 million is spread out over five years at $5.8 million per year. But because Lamb’s contract ends in 2028, the Cowboys added four void years to the contract to spread out the cap hit. This is what Lamb’s contract with the void years now looks like:

The Cowboys lowered Lamb’s cap hit in 2028 from $39.6 million to $16.4 million with the option bonus. But if there’s no extension for Lamb and he’s released after 2028, the remaining prorated option bonus in the void years of his contract would accelerate into 2029 and leave the Cowboys with a cap hit of $23.2 million.

The Cowboys are not entirely unfamiliar with void years in their contracts. Dak Prescott, DeMarcus Lawrence, Zack Martin, and Brandin Cooks all have void years in their contracts that could accelerate to a combined cap hit of up to $78 million in 2025 if none of them are extended.

One team that’s taken advantage of these void years at an unprecedented level are the Eagles. In Lamb’s case, the Cowboys added one option bonus to the contract. On A.J. Brown’s recent contract extension, signed in May 2024, the Eagles converted Brown’s base salary into an option bonus in every single year of his contract.

Brown had an existing contract through 2026, and the Eagles tacked on a three-year, $96 million contract. Here’s what that contract looks like, with a split for every single bonus proration (and there are a lot!) in that contract:

All that proration comes at a price: If Brown were to see out his contract until 2029, the Eagles would be hit with a $53.5 million cap hit in 2030 for the unamortized option bonuses left in the void years.

And this use of void years is not an aberration, the Eagles do this on the majority of their big contracts. Here are the 10 top player by annual contract value on each team, and the amount of money deferred into void years for each:

Now, before we get all tangled up in the pros and cons of option bonuses, it’s important to understand that what the Eagles are doing with their option bonuses, the Cowboys do with the yearly contract restructures, though not to the same extent. Simply put, an option bonus is the same as a contract restructure, with the difference being that you announce the option bonus ahead of time (like the Eagles did with every year of A.J. Brown’s contract) but teams generally do restructures only when they need cap space (as the Cowboys did when they restructured Zack Martin’s contract in March, freeing up $13 million in cap space).

But technicalities aside, the Eagles’ use of void years is interesting because it looks markedly different from what the Cowboys are doing. In fact, it looks markedly different from what almost the entire rest of the league is doing. Here’s an overview of the cap hits (in the form of prorated and non-prorated bonuses) each NFL team has deferred into void years.

So, what is going on here? Have the Eagles cracked the salary cap code or something? Or is the fact that Kansas City and New England (who have more than a few Super Bowl rings between them) don’t have any cap money tied up in void years more telling? If only it were that simple.

First of all, the cap money deferred into void years is just one part of a team’s overall cap commitment. There’s also the normal signing bonus proration that we are all familiar with, which also “borrows” from future years, just as there are many other contract elements that combine to make up a team’s future cap commitment.

Secondly, void years and option bonuses are just another accounting tool teams use to manage the cap. They do not create “extra money” for any team. Borrowing heavily from future years ultimately does not allow you to spend more money than other teams. The cap is the same for every team, every year. Any incremental dollar a team spends in one year is one less dollar available to the team in the future.

And finally, the salary cap was initially designed to limit the amount of money a team can spend on player salaries. But teams quickly recognized that the best way to stay under the cap was by working around it. One way of doing this is by backloading contracts and pushing chunks of salaries into future years with the expectation that a rising cap in future years will create more room under the cap. And different teams have different philosophies about how to manage the cap, just like some real-life companies have a high gearing ratio (a high proportion of debt to equity) and others have a low gearing ratio (a low proportion of debt to equity).

Borrowing against future years or backloading contracts or deferring cap hits into future years – whatever you want to call it – is the equivalent of taking out an interest-free cap loan (technically it is a negative interest loan as long as the cap continues to rise). But like in real life, taking out an interest-free loan only has value if you invest the money from the loan.

And that’s where the Eagles story gets really interesting: They’ve taken out more loans (to stick with the analogy above) against the future cap than any other team and are investing as much money as they can into the current team.

• The Eagles are completely maxed out against this year’s cap: Overthecap shows the Eagles with a maximum restructure potential this year of just $3.6 million, the least space in the league. League average is $49.9 million, the Cowboys show $56.8 million in max restructure potential. If anyone is “all-in” it’s the Eagles, certainly not the Cowboys.
• The Eagles are spending the second-highest amount of cash this year: By pushing as much of this year’s cap hits into the future as possible, the Eagles are spending $325.5 million in cash this year (per OverTheCap.com), second only to the Browns at $328.0 million. How is that possible when the salary cap is only $255.4 million? By deferring cap hits into the future. League average cash spending is $263.3 million, the Cowboys rank a miserly 29th with $220.3 million in cash spending, though that is before a potential Prescott extension. Relative to their peers, the Cowboys are cheap.
• The Eagles lead all teams in cash spending for the next five years. OTC show the Eagles with a cash commitment from 2024-2028 of $1,116 million (yes, that’s $1.1 billion!), tops in the league. League average is $682 million, the Cowboys once again find themselves at the rear of the table, ranked 25th with $574 million (again without a potential Prescott extension).

Again, and I can’t emphasize this enough, we are discussing accounting methods here. The Cowboys could easily copy the Eagles’ approach if they wanted to, and to some extent they do, just with a different accounting tool: Where the Eagles push the maximum cap space possible into future years (via signing and option bonuses) immediately when a contract is signed, the Cowboys wait until they need cap space and then restructure contracts accordingly to push cap space into future years.

The Eagles are not creating any “extra money”. The cap is the same for the Eagles as it is for every other team, and it is rigidly enforced (as the Cowboys and the team in Washington remember all too well when they thought an “uncapped year” was, well, uncapped). Any dollar the Eagles spend more than other teams this year is one less dollar available to them in the future. Howie Roseman is keenly aware of this, it’s just that he thinks it’s worth doing anyway.

“Coming out of (2017 and 2018), trying to be aggressive, we knew at some point we were going to have to take a step back, we were going to pay it, but I would do that 100 times out of 100 times,” Roseman said.

“If you said to me in the next five years we’re going to go to the playoffs four of the five years, we’re going to win one World Championship and then we’re going to have a horrible, (crappy) year, would I sign up for that? Yes? Where do I sign up for that?”

Cash-to-Cap vs Cash-over-Cap

There are two broad schools of thought or philosophies when it comes to cap management and most teams find themselves somewhere between the two extremes. I may be misusing the terms, but cash-to-cap and cash-over-cap best describe the two approaches.

Cash-to-cap is the idea is that your cash spend equals your salary cap every year. The CBA even has built-in protections to ensure teams are spending to the cap that look similar to a cash-to-cap approach: Over three tranches (2021-2023, 2024-2026, and 2027-2030) the league-wide spend has to be at least 95% of the salary cap; individual clubs have to average at least 90% of the salary cap on player salaries over the periods.

A cash-to-cap approach does not mean that you never prorate any part of a player’s salary, that just isn’t feasible in today’s NFL with some of the megabucks contracts in play today. But you try to limit the use of contract devices aimed at pushing costs into future years.

But all those good intention went out the window in 2021, when the cap dipped for a year: Every team had to scramble to push cap dollars into future years to get under the cap.

The benefit of a cash-to-cap approach is that, in principle, because you’re only spending what you have available under the cap, you won’t run into what Roseman describes as a “a horrible, (crappy) year” where you have to cut player contracts, reduce your spend on players salaries, or field a team full of players on rookie or league minimum contracts just to get under the cap. Cash-to-cap works to preserve cap flexibility in the future if, inevitably, contracts do not work out, and helps avoid future dead money.

The other benefit is that you get to whine and moan publicly about the salary cap, you can liberally throw around the term “cap hell” in your off-the-record talks with local media, you can pontificate about the size of the salary cap pie, and much more – all because you are unwilling to spend more than your self-imposed limit.

Care to guess whether the Cowboys are more of a cash-to-cap or cash-over-cap team?

“We spend max, max money year in and year out. All 32 can only spend the same amount of money over a five-year stretch,” Stephen Jones said (via 105.3 The Fan in Dallas). “When we’re all said and done, we max out our salary cap every year.”

Also, remember when Jerry Jones said in July that Lamb, Prescott, and Parsons could account for 70% of the Cowboys payroll?

“Those three players you mean could be 70 percent of all the money you got — 70 percent of your payroll,”

Social media reaction was swift and merciless.

But consider this: The Cowboys will pay CeeDee Lamb almost $40 million in cash this year ($38 million signing bonus, $1.1 million base salary). Nick Bosa got a contract last year with a signing bonus of $50 million, Parsons will want to top that. Jared Goff’s deal this year pays him $80.6M in cash in 2024, including an historic $73 million signing bonus. Dak Prescott will want to top that as well.

Let’s put Parsons down with $53 million, Dak with $85 million, plus Lamb’s $40 million. That adds up to $178 million. The salary cap is $255 million. 178 is 70% of 255.

Jerry Jones was not lying. It’s just that nobody understood what he was talking about. The Cowboys are a cash-to-cap team and don’t like spending cash-over-cap. At all.

Cash-over-cap is the idea that your cash spend frequently or consistently exceeds your salary cap. Ravens GM Eric DeCosta explains:

Basically, the philosophy that we have – that I have – is that we want to spend cash every year.

You’ve got the salary cap and you’ve got cash spend. We were always historically – the Eagles are the same way – cash-over-cap, so we’re spending more money than the cap every single year through signing bonuses and different things.

We want be, every year, approximately the 7^th to 10^th best in the league in terms of cash spent. We don’t want to be number one and we certainly don’t want to be number 32. We want to be in the top third of all teams every single year in terms of cash spent, which we think gives us the chance to be somewhat responsible but also aggressive in terms of signing layers and retaining our own players.

DeCosta followed that up in a separate interview, explaining the risks associated with a cash-over-cap approach.

We’re going to be over the cap – cash-over-cap – most years. Now, there’s always going to be a day of reckoning; you can’t be cash-over-cap every single year. There’s going to have to be a purge at some point, so we understand that. But I’ve seen these contracts. Every club has to operate the way they want to operate. We operate the way we’re going to operate, and we look out, and we know we have a lot of really good players to pay, and every dollar that we can save on a contract is a dollar that we can use on another really good player. And that’s my theory.”

The Eagles are the current poster child of the cash-over-cap approach. They are spending 48% more cash on their team this year than the Cowboys are ($325.5 million vs $220.3 million), though that gap could be significantly reduced if the Cowboys extend Dak Prescott.

Are the Eagles 48% better than the Cowboys right now? Probably not. But do you improve your odds of putting together a good team if you invest more money? You sure do, but it’s no guarantee.

If you think of the salary cap not as a tool that limits your cash budget but as a tool that allows you to take out an interest-free loan against future years to increase your cash spend in the current year, then you understand the paradigm shift that has taken place in the NFL salary cap business model, a shift that not all teams have embraced.

And then you also understand that catch-all phrases like “you can’t build a contending team by paying a top quarterback” are just silly nonsense at best and deliberately misleading at worst.

Here’s former Packers GM Andrew Brandt in an article from February 2023 on big quarterback contracts, and what he writes about the QB position is true for all other positions as well.

Paying a top quarterback (cash) is not the issue; dealing with the leftover (cap) accounting in the future is much more the problem.

Teams can absolutely have large contracts with their top quarterback and simultaneously keep a contending team around them. It requires some expertise in cap management to deal with the detritus if things don’t work out later on, but as I always say: It doesn’t take a cap guru to push out cap problems for another day; it takes a cap guru to make sure a team doesn’t have to do that at all.

NFL teams have plenty of the two things they need to pay a top quarterback and to build a roster around them: cash and cap.

Every team is presently worth more than $2 billion and receives a check from the league worth $400 million before it even turns the lights on. Teams have plenty of cash. And cap room—even with some squandering on bad contracts—is always available. Again, with a good chunk of NFL rosters full of fixed and reasonable rookie contracts, it has never been easier to pay star players.

Don’t fall for the “you can’t build a contending team by paying a top quarterback” trope. You’re better than that.

“Cap room is always available.”

Even to a team like the Cowboys.

Especially to a team like the Cowboys.