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

[OhSnap]

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..

It's ridiculous to suggest you let a good QB go because you think your team is so bad that he will be too old when the rest of the team get's good even if you were right on your projection. The 1 million that Spencer MIGHT have been over paid was worth it to keep the D-line together and keep him from coming back to Dallas in a ginat or skin uniform. The fact that he got injured doesn't make it a bad 1 year deal.

 

[fanfromvirginia]

It would possible, but pretty devastating. He would have 37.5m in dead money. Of that 18.3 would hit in 2015 and 19.2m would hit in 2016.

Ah, okay. I totally misunderstood something, it seems. If that's the case then I agree he is almost certainly with us in 2015.

 

[Fla Cowpoke]

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(My understanding is that 7.5m of this is guaranteed now because he was on the roster past the 3rd day of the 2014 league yr. If he is on the roster past the third day of the 2015 new year, another 7.5m becomes guaranteed.)
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.

Most likely, you keep him through 2016. Even with his current contract, we have room on the cap to handle him without restructuring.

I don't think cutting him in 2015 is a realistic option unless it's a medical issue or the team finishes with just a few wins. According to overthe cap, because he was on the roster after the third day of the 2014 new year, we are already guaranteeing him 7.5m of his 2015 salary. If he is on the roster past the third day of 2015, another 7.5m of his salary becomes guaranteed. We cant take a 30m hit and not have the player on the field. 20% dead money on one guy never is a good thing.

So...we will face the same issue next year with Romo that we faced with Ware this year. The alternative is to go to him next year and offer a salary reduction as we asked Ware and Free to do. Offer him something reasonable for an older vet....reduce his cap number...say give him 8.5m instead of 17m, the same as his 2016 number. Guarantee the 2015 and 2016 salary if he has stayed healthy and performed. So you still keep him through 2016.

 

[Frosty]

Saying the Broncos "do the opposite" of the Cowboys only means they don't keep or attract top level players by offering up front signing bonuses. Its easy to say you only offer your top CB one year guaranteed at 10MM with out year salaries but very few are going to take it. If you want to replace Alan Ball with Brandon Carr, you do have to pay the upfront bonuses to attract FA's or you stick with Alan Ball.

Even without the signing bonuses, you end up paying guaranteed salaries to guys who may or may not perform - exactly like the Cowboys did. The Broncos are guaranteeing DeMarcus Ware 13 Million Dollars next year - is that good cap management that the Cowboys should emulate?

They sure have scooped up some nice players the last few years, DRC, Welker, Manning, Talib, TJ Ward, DWARE...while the Cowboys are struggling to merely find ways to get under the cap every year.......not sure what the difference is... but I don't think John Elway and the Broncos are struggling to find players...

 

[casmith07]

One of your best posts, GB. Good work.

 

[daveferr33]

Good write up, GB. Much appreciated and Like'd.

I am glad you now recognize that cutting D-Ware was indeed influenced by cap considerations:

Which is another reason why the team is cleaning the books of bad contracts now.

 

[Kaiser]

They sure have scooped up some nice players the last few years, DRC, Welker, Manning, Talib, TJ Ward, DWARE...while the Cowboys are struggling to merely find ways to get under the cap every year.......not sure what the difference is... but I don't think John Elway and the Broncos are struggling to find players...

IMO Denver attracting players has a lot more to do with their 13-3 record last year. They have been in the playoffs the last three years while Dallas has been 8-8 or worse in the same seasons. Not really arguing, but the difference in cap management is exactly what XWalker has posted many times, they are availing themselves of less cap space by paying large upfront salaries instead of large upfront signing bonuses. The player ends up with the same amount of money but the team has less available cap space. And even for Welker (I didn't check the others) they used upfront bonuses the same way Dallas does.

The real difference is something everyone agrees on - drafting and developing talent better than the Cowboys have.

 

[Beast_from_East]

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..

The answer to that is pretty simple...................ticket sales.

Romo will put "butts in the stands", even if the overall team sucks.................you cut Romo and all you are left with is a 500 team full of scrubs.

That is a hard sell to make to the fans, especially with Ware just walking out the door.

 

[CyberB0b]

So, according to your plan, the only time we can get rid of Romo is 2018?

 

[Beast_from_East]

Most likely, you keep him through 2016. Even with his current contract, we have room on the cap to handle him without restructuring.

I don't think cutting him in 2015 is a realistic option unless it's a medical issue or the team finishes with just a few wins. According to overthe cap, because he was on the roster after the third day of the 2014 new year, we are already guaranteeing him 7.5m of his 2015 salary. If he is on the roster past the third day of 2015, another 7.5m of his salary becomes guaranteed. We cant take a 30m hit and not have the player on the field. 20% dead money on one guy never is a good thing.

So...we will face the same issue next year with Romo that we faced with Ware this year. The alternative is to go to him next year and offer a salary reduction as we asked Ware and Free to do. Offer him something reasonable for an older vet....reduce his cap number...say give him 8.5m instead of 17m, the same as his 2016 number. Guarantee the 2015 and 2016 salary if he has stayed healthy and performed. So you still keep him through 2016.

Difference is we gained cap room by cutting Ware, so we had some leverage.

If we go to Romo and want him to take a paycut and he laughs in our face, what are we going to do about it? Romo and his agent have all the leverage because we cannot cut Romo without a significant cap penalty.

Keep in mind that Dez Bryant and Tyron Smith are both free agents after this season, so we cant afford to take any cap hits by doing something with Romo, he has all the leverage here.

 

[Bluefin]

The answer to that is pretty simple...................ticket sales.

There's that.

The team exists to make money and Tony Romo playing quarterback definitely helps.

I don't know why any fan wants to hasten Romo's departure.

Searching for Troy Aikman's replacement wasn't easy, quick or enjoyable to watch.

 

[Beast_from_East]

So, according to your plan, the only time we can get rid of Romo is 2018?

Actually we can release Romo after the 2016 season without significant cap penalty if I am following along correctly.

Spags basically said the same thing on Talking Cowboys a while back, that we are "married" to Romo for the next 3 seasons (2014, 2015, 2016) and then we can do what we want with him.

 

[Beast_from_East]

There's that.

The team exists to make money and Tony Romo playing quarterback definitely helps.

I don't know why any fan wants to hasten Romo's departure.

Searching for Troy Aikman's replacement wasn't easy, quick or enjoyable to watch.

Yep, it is going to be some dark days when Romo hangs up the cleats.

Everybody keep in mind that we had 17 different starting QBs between Aikman and Romo.................franchise QBs do not grow on trees and it takes a long time to find them. Teams like the Colts and Packers are the outliers, you don't just go from one franchise QB to another. The norm is teams like Buffalo, Cleveland, Tennessee, Oakland, ect......that have been searching for years to find a franchise QB.

 

[jimmy40]

I really wish teams couldn't restructure contracts

The answer to that is pretty simple...................ticket sales.

Romo will put "butts in the stands", even if the overall team sucks.................you cut Romo and all you are left with is a 500 team full of scrubs.

That is a hard sell to make to the fans, especially with Ware just walking out the door.

How were ticket sales when Campo was coach and went 5-11 three years in a row? How about when Quincy Carter was QB?

 

[rcaldw]

I just have one thing to say.

He is a very rich man.

 

[Beast_from_East]

I really wish teams couldn't restructure contracts


How were ticket sales when Campo was coach and went 5-11 three years in a row? How about when Quincy Carter was QB?

Didn't have a 100,000 seat stadium to fill back then and Jerry wants his castle to be on primetime.

Don't recall a lot of prime time games during the Quincy Carter/Dave Campo era. There were some, but not very many.

 

[jimmy40]

Didn't have a 100,000 seat stadium to fill back then and Jerry wants his castle to be on primetime.

Don't recall a lot of prime time games during the Quincy Carter/Dave Campo era. There were some, but not very many.

Is there 100,000 for each game now?

 

[noshame]

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.

Drink much?

 

[WestCoastQB]

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.

Very well put...

 

[Fla Cowpoke]

Difference is we gained cap room by cutting Ware, so we had some leverage.

If we go to Romo and want him to take a paycut and he laughs in our face, what are we going to do about it? Romo and his agent have all the leverage because we cannot cut Romo without a significant cap penalty.

Keep in mind that Dez Bryant and Tyron Smith are both free agents after this season, so we cant afford to take any cap hits by doing something with Romo, he has all the leverage here.

I'd disagree we have no leverage. He isn't getting 17m in salary from anyone else. So if he could make decent money and help the team get better, then it behooves him to work with us.

If we made him a June 1st cut, it would save 9.5m against the 2015 cap. (27,773 cap hit - (7.5m guaranteed money + $10,773m )) and only increase 2016 cap hit by 1.5m where we tentatively have 69m in room. We only have 19 guys under contract in 2016 but even adding 32 base salaries we would still have about 53m in space tentatively. Of course there would be other moves, but it just gives you an idea.

If we don't sign any other significant free agents this year....we are going to have plenty of room to resign Dez and Smith and let Romo go.