Extreme Makeover: Salary Cap Edition – Dallas Cowboys

This is the sixth article in a six-part series looking at the teams who are currently projected to be $20 million or more in the red in cap space for 2024, and the path forward for them to get under the cap. 

The full list of teams includes: 

• New Orleans Saints: -$98.7 million
• Los Angeles Chargers: -$57.3 million
• Buffalo Bills: -$52.7 million
• Miami Dolphins: -$51.3 million
• Denver Broncos: -$26.8 million 
• Dallas Cowboys: -$21.4 million

While we don’t have a formal projection for the 2024 cap yet, it’s safe to say that number will end up north of $240 million, growing by more than $16 million for the second consecutive year.

Before we dive into the Cowboys, here are some quick salary cap-related notes and definitions, as this can be a complicated subject. 

• Salary cap: The cap is the maximum any NFL team can spend on player salaries. Essentially, every team gets the same pie and can choose how to split it up, with various accounting mechanisms to manipulate how much cap space is available in any given year. 
• Dead Money: A term for money that has already been paid to a player and will count against a team’s salary cap no matter what. Most of the time this comes from signing bonuses, either from when a deal is initially signed or from restructures. When a player is cut, all the dead money remaining on their contract accelerates to the current year. 
• Restructure: An accounting trick teams can use to manage the cap in a given year. Signing bonus money is always prorated (spread equally) over the remaining years of a contract. That means teams can convert all but the minimum of a player’s base salary to a signing bonus and reduce the cap hit at the expense of increasing dead money in future years. 
• June 1 designation: Another accounting trick for teams — after June 1 when a player is cut the dead money is split over two years instead of all accelerating to the current year. Teams can designate two players per year as “June 1 cuts” and cut them before that date without the dead money hit, although they don’t get the resulting cap savings until after that date either. 
• Void years: Essentially “dummy” years that are added onto a deal, usually to help spread out the cap hits with restructures. They are not actual contract years that teams or players are required to fulfill. 

If you’re a visual learner like me, Over The Cap’s team cap calculator is a handy little tool to play around with and get a sense of how all of these terms and numbers shake out in real life. I leaned on it heavily when breaking down the cap situations and path forward for these teams. 

With the homework out of the way, let’s get into it…

Dallas Cowboys: -$21.4 million

Who knows what will happen over the next two months, but at this point I expect it to be a very, very quiet offseason for the Cowboys in 2024 — at least as quiet as it can be in Dallas. Though the current $21 million cap deficit will be easily manageable, the Cowboys don’t look like they’ll have the cap space to be as aggressive as they were even this past offseason. 

Any big splashes the Cowboys make this offseason will likely come from extending homegrown players. Dallas has three candidates who will be candidates for huge new deals: QB Dak Prescott, WR CeeDee Lamb and LB Micah Parson. How they decide to navigate those negotiations will have a major impact on the rest of the offseason. 

Prescott A Prime Priority

The No. 1 priority for Dallas has to be an extension for Prescott, who will be entering the final year of his contract in 2024. Somehow Prescott has even more leverage than he did when he first signed his extension with Dallas, which came at the end of a long negotiating process where Prescott successfully stared the team down through two franchise tags and earned a deal worth $40 million a year — a number a lot of people were scoffing at less than a year before. 

Prescott got a no-tag clause as a part of his extension, meaning he controls a path to unrestricted free agency in 2025 if he’s not extended. He has a cap hit of nearly $60 million in 2024, which adds another layer of motivation for Dallas to get a deal done ASAP this offseason. And because Prescott is a legitimate MVP candidate this year, he has leverage to push for high-end quarterback money, leverage he might not have had this past offseason when he was coming off a less productive year. 

Based on how the quarterback market has moved since Prescott’s last deal, how his previous negotiations went and how much leverage he has now, I think Prescott’s extension this offseason would be for $50 million a year — minimum. 

Maybe Dallas balks at that steep of an asking price, particularly given the other big deals that will be looming. The trade with the 49ers for QB Trey Lance was a thinly-veiled attempt from owner Jerry Jones to claw back a little bit of leverage in the situation. But the reality is the prospect of losing Prescott for nothing as an unrestricted free agent is not something most teams would stomach. 

Depending on how the deal is structured, the Cowboys could save $20-$25 million on their 2024 cap with a new deal for Prescott. Technically they could also restructure his deal, as there are two void years on the contract, and save $21 million but that puts them in a potentially worse bind in 2025 with no way to keep Prescott from hitting unrestricted free agency. One way or another, the team should get itself back in the black via whatever they do with Prescott. The rest of their budget for other moves will have to come from other sources. 

The Lion & The Lamb

There’s more urgency to reach a contractual solution with Prescott first, but Dallas has two other pillars of the team who are eligible for extensions. 

Lamb is entering the final year of his rookie contract and is set to make just under $18 million from the fifth-year option in 2024. He’s not under contract past next season. Parsons, the former Penn State Nittany Lions star, is finishing up the third year of his contract and will have two more years to go once Dallas exercises his fifth-year option for the 2025 season. This offseason is the first time he’s eligible for a new deal. 

The next in line should be Lamb since 2024 is a contract year, and a new extension would have the added benefit of potentially lowering his cap hit. Dallas has some time to do a deal with Parsons but given the high bar he’s set to start his career, he could push for sooner rather than later. 

For most of the last decade, the Cowboys have been willing to do early extensions for first-round picks and even go to the top of the salary market at their respective positions as long as players were willing to sign five or six-year deals to give Dallas years of control on the back end. Former RB Ezekiel Elliott, C Travis Frederick and LT Tyron Smith all signed after their third seasons. Elliott and Frederick signed for six years and Smith signed for a whopping eight, adding up to 10 years of contract control for Dallas. 

It hasn’t been cookie-cutter — Cowboys G Zack Martin signed a new deal entering his fifth-year option season, which is where Lamb will be in 2024. Elliott had to hold out to get his deal, too. But there’s been a general formula the Cowboys loved because of how quickly the growing cap changed the market at some positions. A player who signed for top dollar became a bargain by the third year and was still under contract for three more. It also gave the Cowboys a lot of flexibility to restructure or get out of a deal, as once the guaranteed money expires on a contract each year basically becomes a team option. 

In recent years, players and agents have become more opposed to long deals that give them little upside or security on the back end. They want short deals with a higher percentage of money guaranteed and a chance for multiple bites at the free agency apple. The Cowboys haven’t been willing to budge on both length and total value, and it’s cost them in a couple of situations where players have been willing to stand their ground: 

• Cowboys DE DeMarcus Lawrence played out his rookie contract and a full year on the franchise tag, notching double-digit sacks both years. He was tagged a second time but ended up signing a lucrative extension. 
• After Dallas traded a first-round pick for WR Amari Cooper, he played out his fifth-year option and a year on the franchise tag. He technically became an unrestricted free agent in 2020, but elected to re-sign with Dallas after the Cowboys ponied up the $20 million per year he was seeking. 
• Dallas had to let CB Byron Jones walk that same year after he played out his first-round contract and the fifth-year option. The Cowboys didn’t have a tag to use because…
• They had to use the tag on Prescott, who played out his rookie deal and was tagged twice before signing for the second-most annual average salary among all quarterbacks at the time. 

Had Dallas been able to get those deals done earlier, they likely would have saved some money in the long run. Prescott was able to get a four-year deal, while Dallas still got five years for Lawrence, Cooper and some other extensions they’ve signed recently like for CB Trevon Diggs. But in terms of leverage, Lamb and Parsons will be closer to Prescott than they will be to Cooper and Lawrence. 

Outside of quarterback, pass rusher and wide receiver might be the two most important positions in the modern NFL, with offensive tackle and a true three-down disruptive defensive tackle the only other positions in the conversation. Parsons and Lamb give the Cowboys two of the best in the NFL at premium positions, but the tradeoff is neither player will be cheap.

Lamb is set to profit majorly off of the exploding wide receiver market and could push $30 million a year on his next contract. Parsons will have a case to beat 49ers DE Nick Bosa as the NFL’s highest-paid defensive player at $34 million a year. 

With how quickly the market is moving at those positions and how much the salary cap could grow in the next few years, the Cowboys should be pushing to do these deals sooner rather than later. The longer they wait, the more leverage Lamb and Parsons get, and the more the price will probably go up. 

Finding Change In The Couch Cushions

With three players who in terms of APY could account for over $100 million, the Cowboys have to be shrewd with how they build the rest of the roster. They have an extensive free agent list as well. All of these players are on deals that expire in 2024: 

• LT Tyron Smith
• CB Stephon Gilmore
• RB Tony Pollard
• C Tyler Biadasz
• DE Dorance Armstrong
• S Jayron Kearse
• DT Neville Gallimore
• CB Jourdan Lewis
• DT Johnathan Hankins
• DE Dante Fowler

Dallas is set to lose 28 percent of its snaps on both offense and defense to free agency, setting up a potential significant amount of turnover this coming offseason. They can cut LB Leighton Vander Esch and 36-year-old P Bryan Anger to generate $5.5 million in cap room, but after that most of the decisions they could make to create additional cap space come with serious tradeoffs. 

For example, both Martin and Lawrence are candidates to be restructured. It would save $12.6 million in cap space with Martin and $4.5 million for Lawrence, which is a significant amount. However, both players are in the danger zone for adding a lot more dead money to their deals at 32 for Lawrence and 34 for Martin. Both are still playing at a high level but that’s not necessarily a guarantee of future success. 

The 2024 season is also the final contract year for both players, so it’s possible the Cowboys could work out some kind of extension. That could increase the savings but comes with the same risk as a restructure — more in some ways because both would likely receive more guaranteed money than they’re currently scheduled to earn next season. 

Guys like Diggs, RT Terence Steele and S Donovan Wilson are cleaner restructure candidates as players who have recently signed extensions and already have guaranteed 2024 base salaries. In fact, I would expect Dallas to restructure both Diggs and Steele despite the fact both have torn ACLs in the past year or so. That would save $7.9 million and $4.9 million respectively. Restructuring Wilson would save $2.9 million but he’s played fewer snaps and had less of an impact in 2023, so I could see Dallas holding off on that one to preserve some savings in 2025. 

The other big decision for Dallas will be at wide receiver where they have to weigh the futures of Michael Gallup and Brandin Cooks. 

Cooks has been the better player with five touchdowns to Gallup’s two but he’s on the other side of 30. Neither player has necessarily been a huge difference-maker. The Cowboys have to ask themselves if this is the best allocation of resources at the receiver position. What they’re paying Cooks is reasonable for a low-end No. 2 or a high-end No. 3 if they draft someone, but his age has to be a concern and the $8 million in cash savings could matter more than the $4 million against the cap. 

Gallup hasn’t been the same since his knee injury unfortunately. If the Cowboys did a June 1 cut, it would boost the savings to $9.5 million and leave $4.35 million in dead money this year, $8.7 million in 2025. That or some kind of pay cut could be an option, as Gallup’s production is just not validating his cost right now. 

Add it all up and this is what you’d get: 

• Extend Prescott
• Cut Vander Esch, Anger, Cooks
• Cut Gallup with a June 1 designation
• Restructure Diggs, Steele, Martin and Lawrence
• Total 2024 budget: $39 million, with another $9.5M coming after June 1 as an in-season budget

That’s enough to re-sign maybe one or two key pending free agents and go after one or two mid-major free agents, particularly at wide receiver. The rest will be rolled over toward extensions for all the star power on the roster.