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Brandon George of the Dallas Morning News confirmed Archer's report.
Prior to the move, the Cowboys had the second-lowest available cap space ($4,196,915), per Spotrac.
In February, the Dallas Morning News' David Moore reported the team also reworked the contracts of Travis Frederick and Tyron Smith, which alleviated $17.3 million from Dallas' 2017 burden.
Under the original terms of his six-year extension, Lee was set to count for $12.45 million against the cap next year, according to Over the Cap. He's under contract with the team through 2019.
For the second season in a row, the 30-year-old was the Cowboys' leading tackler, registering 145 combined tackles in 2016. He was also a first-team All-Pro for the first time in his NFL career. Pro Football Focus graded Lee as the fifth-best linebacker (88.0) in the league.
The Cowboys' cost-cutting moves are likely to continue, with Tony Romo the most notable star probably out the door. Owner Jerry Jones told Rob Phillips of the team's official website Dallas is open to any scenario: trading Romo, releasing him outright or keeping him on the roster.
Should the Cowboys cut Romo, they'd save $5.1 million and create $19.6 million in dead cap money, per Over the Cap.
Archer noted the team could wait until June 1 to waive the signal-caller, which would save $14 million and spread his cap hit over the next two years. By then, though, most of the top free agents will have already signed with other teams.
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