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Recommended People aren't really familiar with Romo's contract

Discussion in 'Fan Zone' started by Galian Beast, Mar 15, 2014.

  1. Galian Beast

    Galian Beast Well-Known Member

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    I thought I tried to address this before, but I guess it didn't stick.

    Romo's contract was extremely team friendly and the whole plan was to restructure it as needed.

    Let's again look at every facet of Romo's contract

    1. Base Salaries
    2013: 1.5 million (restructured)
    2014: 1 million (restructured)
    2015: 17 million
    2016: 8.5 million
    2017: 14 million
    2018: 19.5 million
    2019: 20.5 million

    2. Signing Bonus Proration

    Romo received a 25 million dollar signing bonus. Signing Bonuses can only be prorated over the course of 5 years by NFL rules. This is why teams often sign players to 6 year deals or 7 year deals with the idea that they will restructure those deals and prorate one or two of those years as if it had originally been signing bonus in the first place. Basically a loophole, but what that means is Romo's signing bonus is not on the books for 2018 and 2019.

    2013: 5 million
    2014: 5 million
    2015: 5 million
    2016: 5 million
    2017: 5 million
    2018: 0
    2019: 0

    So when you look at cap hit you have to look at base salary + signing bonus.

    3. Restructured Bonuses

    Restructured Bonuses are essentially after the fact signing bonuses as I said earlier. The team takes base salary and converts it to prorated bonuses across the range of the contract. A restructure can only be spread 5 years just like a signing bonus, and shouldn't be confused with a paycut. The players are paid upfront.

    Romo has restructured twice now so these are his restructured bonuses per year

    2013: 5,813,833
    2014: 5,773,000
    2015: 5,773,000
    2016: 4,315,000
    2017: 2,500,000
    2018: 2,500,000
    2019: 0

    Since prorated money can only be spread 5 years, the amount that goes into later years is limited. That is why you see the amount decrease over time. The most recent restructure doesn't touch 2019 (because that would be the 6th year).

    4. Cap Hit

    The final thing you have to look at is the cap hit per year which takes everything into account

    2013: 11.8 million dollars
    2014: 11.7 million dollars
    2015: 27.7 million dollars
    2016: 17.6 million dollars
    2017: 21.5 million dollars
    2018: 22 million dollars
    2019: 20 million dollars


    5. Restructuring 2015

    As you can see 2015 looks like a huge number, and we'll have to cut Romo, right? No.

    As you can also see 2016 is a really small number in comparison.

    First thing you have to realize is that the salary cap increases, so every dollar Romo receives as a percentage of the cap shrinks with each additional year that the cap rises. In other words if the cap is 140 million in 2015 and 150 million in 2016, Romo's percentage of the cap in 2015 is 19.7% and 11.7% respectively.

    When you look at that and the fact that he still has one more year that is untouched by proration, it makes complete sense to restructure him again next year.

    Assuming you restructure the entire contract you would take his 17 million dollar base salary subtract the veteran minimum which would be 970k, let's just call it 1 million.

    Base salary 1 million

    leaves you with 16 million divided by 5, which gives you 3.2 million in proration per year.

    6. Final Cap Hits

    2013: 11.8 million dollars
    2014: 11.7 million dollars
    2015: 27.7 million dollars - 16 million + 3.2 million = 14.9 million (10.6% of projected cap)
    2016: 17.6 million dollars + 3.2 million = 20.8 million (13.8% of projected cap)
    2017: 21.5 million dollars + 3.2 million = 24.7 million
    2018: 22 million dollars + 3.2 million = 25.2 million
    2019: 20 million dollars + 3.2 million = 23.2 million

    This gives you a nice curve of accounting increases, that will be appropriate given increases in the salary cap. And part of the reason why the team wants to focus on the draft more. Of course this has a lot to do with Romo's health and performance. How much would it cost for Romo to be cut?

    Well that is why you have to look at dead money. Which is another reason why the team is cleaning the books of bad contracts now.

    7. Dead Money

    Current dead money for Romo if he is released:
    2014: 41.6 million
    2015: 19.9 million
    2016: 11.6 million
    2017: 5 million
    2018: 0
    2019: 0

    But remember we restructured Romo again in 2015:
    2015: 35.9 million
    2016: 24.4 million
    2017: 14.6 million
    2018: 6.4 million
    2019: 3.2 million

    The formula you really need to look at is Base Salary - Dead Money

    8. Base Salary vs Dead Money

    2015: 14. 9 million - 35.9 million (upside down)
    2016: 20.8 million - 24.4 million (upside down, but not by much, if you draft a QB you basically don't feel this dead money at all)
    2017: 24.7 - 14.6 (you save 10.1 million by cutting Romo)
    2018: 25.2 million - 6.4 million (you save 19 million by cutting Romo)
    2019: 23.2 million - 3.2 million (you save 20 million by cutting Romo)

    You can ultimately cut Romo in 2016 if you want. You take less than a 4 million dollar hit on the salary cap. And who knows depending on where we are, Romo might take a paycut, or maybe we'll be doing so well that we don't need him to. As I suggested earlier, Romo's contract is pretty friendly to our team. These are also assuming we don't cut him in June.

    Also if you cut him in 2015 instead of restructuring him you also only take a 2 million dollar cap hit. So after 2014, you can do with Romo as you wish.
  2. dstew60105

    dstew60105 Active Member

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    Well Done.
    xvendettax914 and Zordon like this.
  3. Alexander

    Alexander What's it going to be then, eh?

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    I think it has been pretty obvious he was going to be used as a bank from the time the contract was announced.
  4. radioactivecowboy88

    radioactivecowboy88 Active Member

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    Im sooo confused... just tell me what year he is too expensive to keep and needs "the ware treatment." Paycut or be cut.
    bsheeern likes this.
  5. big dog cowboy

    big dog cowboy THE BIG DOG Staff Member

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    That's impossible.

    I read in here multiple times each day it was an awful contract and will burden our team for decades to come.
    jobberone, Fletch, cheftjpeck and 8 others like this.
  6. DuDa

    DuDa Well-Known Member

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    The contract wasn't bad until this last restructure. We are fully invested in Romo and don't expect and a young new starting QB anytime soon. Barring a career ending injury of course.
  7. Vinnie2u

    Vinnie2u Well-Known Member

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    I was very critical of 2 Jerry moves last year.. Putting the franchise tag on Spencer and Extending Romo.. I was right on Spencer and Romo is TBD.. I think Romo is a good QB but his talents are wasted on a mediocre team.. And by the time this team is good, Romo will be long gone.. So why waste salary cap space on a franchise QB. When you don't have a good team around him..
    dstone2962 and BoysFan4ever like this.
  8. ninja

    ninja Numbnuts

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    @Galian Beast
    Nice write-up. I thought a lot of people commenting on his contract in the news were wrong. overthecap has a nice salary cap wher people can play around with the cap and cut or trade or designate people June 1st cuts and restructures.

    Basically, to cut to the chase, the bottom line up front is Base Salary vs Dead Money. That is all that really matters. If I am reading your numbers right, for 2015, we can a) cut Romo and take a $21M cap hit or b) designate Romo a June 1st cut and take the $21M cap hit over two years which would be $10.5M spread over 2015 and 2016. Designating Romo a June 1st cut in 2015 would actually result in a cap gain of $4.4M ($14.9-10.5) for 2015 and a gain of $10.3M ($20.8M - $10.5M) for 2016. Sounds too good to be true. I'm also assuming no amount of Romo's base salaries for 2015 and 2016 are not guaranteed. I don't know if that is true or not.
  9. CowboyFan74

    CowboyFan74 Cowboys Analyst

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    Stephen is that you?
  10. ninja

    ninja Numbnuts

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    Per my previous post, I forgot to write that I am not advocating cutting Romo. Just considering worst case scenario for 2015 if his back is bad or his play deteriorates badly in 2014. I'm hoping we can at least get a good 2014 and 2015 out of Romo.
  11. 44cowboys22

    44cowboys22 Active Member

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    You know it's bad when you worry about stuff like this ......... instead of the actual team.
  12. Galian Beast

    Galian Beast Well-Known Member

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    It's actually a misconception that cutting someone in June splits the proration in half. What happens is you pay the current years proration in year one, and in year two you pay the remainder. I've got to doublecheck Spotrac's numbers because they appear to be off on the dead money calculations, but I'm pretty hung over at the moment, so that will have to wait until tonight.
    Muhast and Common Sense like this.
  13. cowboyvic

    cowboyvic It's Stuck

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    Then fool Jerry and his son should draft a QB this year, and get Romo out of here after this season. but they are not smart enough to do that.
    Zordon and CowboyFan74 like this.
  14. TheCount

    TheCount Pixel Pusher

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    Nice post by the OP, but nothing I read here made me feel good about restructing him every year.
    BoysFan4ever likes this.
  15. Galian Beast

    Galian Beast Well-Known Member

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    You'd be a fool to give up on a perennial top 10 QB and just draft someone hoping that he will be as good...

    Just because you draft someone doesn't mean it is going to work out. You can almost assure yourself that whoever you draft isn't going to be as good as Romo...
    alicetooljam and DandyDon1722 like this.
  16. Double Trouble

    Double Trouble Well-Known Member

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    No, you'd be a fool to keep struggling along as a pretender on the back of a QB who is nearing the end of the road. Too late, but the prudent move would've been to start afresh, look for a QB to draft, and give Romo a chance to win elsewhere before he's done. Instead, Jones does whatever he can to keep in place the mirage that this team has a chance.

    The Dallas Cowboys are utterly irrelevant and will remain so without a change in decision makers. The only reason ESPN keeps Cowboys' stories up on the front page and they still get a lot of nationally broadcast games is the tabloid appeal they still hold. As a football team, they're only slightly more relevant and interesting than the Jacksonville Jaguars
  17. OhSnap

    OhSnap Well-Known Member

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    Nice work GB but I don't think they make a glue strong enough to make it stick. People are convinced that a man that paid 140 million for the team can't manage a 133 million properly.
    bkight13 likes this.
  18. starfrombirth

    starfrombirth Well-Known Member

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    So you're saying 2016 is the magic year versus 2015. No matter which way you look at it... relatively quickly we are going to have to bite the bullet that is his contract unless he agrees to take a paycut. You also are taking for granted that the cap will go up. That isn't a given and we never know by how much or how little. Please don't get me wrong. I am a huge Romo supporter but I've never been an advocate of putting so many resources into 1 spot. I know your qb is going to get more than anyone else but I think having a broad range of good players instead of 1 or 2 superstars is better in the long run. Also as much of a fan as I am of Romo. . . he isn't Tom Brady who can make anyone around him look good and elevate his receivers to great looking players. Tony needs his supporting cast to also be good which means we need to spend money on them as well ala Dez and Tyrone and the defense : Pray :
  19. Galian Beast

    Galian Beast Well-Known Member

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    Tell that to Laurent Robinson...

    You give Romo the time that Brady gets, and he is going to perform as well if not better given his ability to extend the play as well. QBs cost money in this league. It's a good problem to have.
    casmith07 likes this.
  20. theSHOW

    theSHOW Benched

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    In todays football world just understanding who blocks who and what route is run and how the quarterbacks reads are important is not enough to understand what each team needs to do to win it all. Money is now the fans worry, just as it is the owner, even more now as the owners seem to have plenty, but the cap makes each players cost critical to over all team success. I love to read a post like this that explains how it works.

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