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NFL Contracts Dead Money – Is It Really All Bad?

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NFL Contracts Dead Money – Is It Really All Bad?

Dead money happens.  Sometimes it is unavoidable, such as when it is due to career-ending injuries, which are usually not foreseeable.  More often teams take dead money charges because of declining skill or because the team needs to make room for a more important player. 

Dead money is defined as money a team paid to a player who at the end of the season was not on a team’s active or inactive list.  Fans usually think of dead money solely as signing bonuses already paid to a player but which have not yet been accounted for on the cap for a player no longer on the team.  Unfortunately, OTC and Sportrac use the stricter definition.  Thus, Clinton-Dix is listed as having a $2.82 million in dead money charge (that’s the amount the Packers actually paid him for playing in the first seven games).  Because the team traded him, he did not end up on Green Bay's roster at the end of the season, so he was listed under dead money.  That is a limitation of the data set, but I think it is still useful for comparison.

Green Bay Packers fans are used to tiny dead money amounts.  That is in part due to the way Ted Thompson operated: few free agent signings and giving draft picks several years to blossom leads to low dead money charges.  Other teams operate differently.

How Much Dead Money is Normal?

In 2018, the average amount of dead money was $21.6 million (using Sportrac figures).  The average is not very useful because the number is skewed by Buffalo, which had a whopping $70.34 million in dead money, followed by Arizona with $40.23 million.  The median is $18.19 million.  [I believe the median cited, while technically correct, can be misleading because the 16th ranked team had $16.28 million and the 17th ranked team had $20.09 million - that's actually a large difference between most slots on the ranking.]  The Packers ranked twelfth with $14.98 million.  The main Packer players involved were Bennett ($4.2M), Clinton-Dix ($2.82M), Nelson ($2.3M), Randall ($1M), and Toomer ($630K).  For those interested, the Packers’ largest dead money hits since 2011 were Bennett ($4.25 million), Shields ($3.25 million) and Collins ($2.3 million). 

Is There Any Correlation Between Dead Money and Wins?

Definitively answering that question would require looking at multiple years and comparing those results to wins for the teams.  Looking at just 2018, there does seem to be some correlation, but not as much as I expected or where I expected.  Since there are 32 teams, I looked at 8 sets of teams (4 teams per set or quantile).  They are called octiles.  Teams ranked first to fourth - the first octile - for lowest dead money charges - averaged 7.75 wins.  The second octile averaged 8.25 wins (5th-8th).  The third octile averaged 8.5 wins.  The fourth octile (teams that ranked 13th through 16th – LAC, Chicago, Houston and LAR with $15.37 million to $16.28 million in dead money) averaged 12 wins. The fifth octile averaged 8 wins.  The sixth octile averaged 7.5 wins.  The seventh octile averaged 6 wins, and the eighth octile averaged 5.25 wins. [That is an asymmetrical distribution that is positively skewed rather than a bell-shaped curve.]  

Of the teams in the last octile – Washington, Arizona, the Giants, and Buffalo – three were rebuilding and were not expected or even trying to maximize wins in 2018.  Washington was 29th with $33.93 million and Dallas was 28th (which actually is in the next higher octile) with $32.68 million in dead money were both trying to win.  Washington ended up with 7 wins (but probably would have won more except Alex Smith got injured) and Dallas ended up with 10 wins.

I looked at two teams in the AFC (Pittsburgh and New England) and two in the NFC (Seattle and Green Bay) which have clearly been trying to win super bowls since 2011.  I chose 2011 because that is the first year of the new CBA and because that is how far back the more or less readily available data goes.  As you can see from the table below, the Packers have averaged $6.69 million in dead money per year since 2011 and has 79 wins in that time frame.  Pittsburgh comes in at $11.28 million and 82 wins.  New England averaged $14.27 million in dead money and had 99 wins.  Seattle averaged $16.72 million and 82 wins.  I do not see dead money as something that should be avoided at all costs. [I looked at New Orleans as well but that team is crazy.  Since 2015, the Saints have averaged $31.42 million in dead money.]   

Dead Money By Team and Year
Team 2011 2012 2013 2014 2015 2016 2017 2018 AVE
SEA 20.57 22.99 8.37 17.97 19.63 14.16 7.36 22.74 16.72
NE 5.2 18.67 16.7 18.66 19.48 17.53 7.23 10.72 14.27
PIT 3.09 9.86 12.96 14.43 20.14 11.73 11.86 8.16 11.28
GB 3.08 4.7 3.12 5.48 5.44 4.66 12.07 14.98 6.69

 

 

 

 

 

There Are Other Ways to Waste Money and Cap Space

The general manager that never signs an expensive free agent because that type of signing carries both risk and large signing bonuses and guaranteed money limits exposure to dead money hits but may well not be maximizing the overall talent on the team.  Ditto as to the general manager that refuses to cut his own draft picks, particularly for first-round picks (whose 4-year contracts are 100% guaranteed for the most part). 

While I do not mean to turn this site into Bean town.com, I have to note Belichick signed Revis to a two-year deal with $10 million in signing bonus in 2014.  He knew he was going to cut Revis in 2015 and take a $5 million dead money charge.  That might make him look bad, but it did not deter Belichick.  The Patriots won the Super Bowl in 2014 and no one cared about that pesky dead money charge or thought it was a waste.

Deciding whether to accept the dead money charge or not always involves evaluating the player.  It can require an evaluation of the roster as a whole as well.  Few believed that Clay Matthews would be sufficiently productive to justify his $11.4 cost.  Ditto for Randall Cobb and Jordy Nelson and their scheduled $9.5 million and $10.2 million cash earnings in 2018.  It took a stretch of the imagination to believe that Nick Perry or Jimmy Graham would be productive enough to justify their expected cash earnings, their AAV, or their cap numbers in 2018 (take your pick). 

If Gutekunst did not expect to get any surplus value out of those players, keeping them can be seen as simply wasting money and cap space: it can only be justified if he thought the roster as a whole with the production of those players was good enough to make the Packers a contender.  Perhaps if everything had gone well (such as great health and those players producing as well as one reasonably hoped), the Packers would have been true contenders in 2018.  I will always suspect that Gutekunst felt the need to give Mike McCarthy a fighting chance to succeed.     

Nick Perry has $11.1 million in dead money and cap savings of $3.337 or $10.737 million, depending on how the dead money is divvied up.  That is the hand General Manager Gutekunst was dealt, and those numbers should not unduly concern him.  What matters is the future: that is, future cost versus the expected value of Perry’s future play.  Perry is scheduled to receive $10.4 million in cash if he plays for the Packers in 2019, plus the potential for another $600,000 in a game-active bonus.  That should be the main consideration, not dead money. The Packers can pay $10.4-$11 million cash in 2019 to save $3.7 million in dead money, and the team would get the value of Perry’s play.  Should they? 

Perry might play so well that he is worth his $11 million or even so well that Green Bay wants him back in 2020.  One could argue that the team breaks even if Perry's play is worth about $7.3 million ($11 million paid in 2019 minus $3.7 million saved in dead money).  I would suggest that just perpetuates trotting out underperforming players to avoid dead money.  After consulting with the medical staff, Gutekunst needs to decide if Perry is going to make a full recovery.  If yes, then Gutekunst has to decide whether a healthy Perry is still a good or a very good player.  If yes, then he needs to decide whether Perry will remain healthy long enough to produce on the field.  If yes, keep him.  If there is a "no" or two in there, or if there are equivocal answers, then Gutekunst should release Perry or obtain a pay cut so that the risk is greatly reduced.       

The analysis is almost the same for Graham and Williams.  The difference is that they are older and Williams is only under contract for 2019, so Gutekunst needs to evaluate the roster as a whole.  Does Gutekunst think the Packers can contend in 2019?  If not, he has to consider releasing Williams, who is only under contract for 2019 and is getting older, and perhaps Graham, unless he thinks they will still be good players in 2020.  Graham is scheduled to earn $9 million.  Williams is scheduled to earn $4.75 million.  It appears that quite a few things need to go well for Green Bay to be real contenders in 2019.  The Packers do have more ammunition than normal in terms of draft picks (particularly picks in rounds one through four) and in cap space to help plug holes.  Teams have caught lightning in the draft and free agency.  But if General Manager Gutekunst is really looking at 2020 to contend, then he has to consider releasing Tramon Williams to clear $4.75 million in cap space since Williams is both older and not even under contract for 2020.  Ditto for Graham, although 2020 is his last contract year.  If there is enough ammunition to make a real run in 2019, then it makes some sense to keep them. 

In hindsight, doing a rebuild rather than a re-load in 2018, which probably means releasing not just Nelson but Cobb and Matthews as well, and not signing older players, would have resulted in the Packers a lot more cap space and better draft picks in each round to look forward to in 2019.  I have to admit I was in favor of the re-load option.

General Managers can waste cap resources simply by trotting out players for an extra year or two with bloated salaries and cap charges even though the skills of those players have deteriorated due to age or injury.  Doing that wastes cap space as much as dead money does.  Teams should make decisions on each player for the right reasons unless the general manager is all-in for that year or a couple of years.  Every general manager makes mistakes: admit clear mistakes and take the hit if that is what the evaluation independent of cap consequences suggests.     

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Fan friendly comments only: off Comments (33) This filter will hide comments which have ratio of 5 to 1 down-vote to up-vote.

BoCallahan's picture

And this is why I am not an accountant.

Bearmeat's picture

I was 100% in favor of the rebuild option - starting waaaay back in 2015. Firing TT, MM, Ball and reloading/tanking would have been smart back then. ARod and ARod alone is why we had RunTheTable (TM) in 2016. Other than those 7-8 games, we've had schlock since THAT game in January of 2015.

Since we (unwisely IMO) didn't completely tank and deal ARod in 2016 for 3 1st round picks, we're stuck with the hand we're dealt. So I remain 100% convinced that rebuilding is STILL the right option and that this team will have to catch lightning in a bottle to compete for Super Bowls in 2019. I don't care about making the divisional round. I want another title with Zeus. And I think, given the right moves, that it could have been done in 2 years (starting in 2015) with excellent draft capital and a ton of cap room because of all those shed contracts. Now? I think, given the right moves, we're still looking at 2-3 years to compete at a Super Bowl level.

8-8 is the worst possible outcome for a team with a franchise QB. This is one reason I like MLF's hire: It's ballsy. There's no 8-8 in there at all. It's either going to be a home run....or a strike out.

Point Packer's picture

The top of the Green Bay Packers organization is a bunch of outdated white dudes who think they know more about football then they do. Old. Crusty. Conservative. Out of touch. Welcome to the GB Packers.

Barnacle's picture

Point Packer

...........”old, crusty, white, conservative, outdated, out of touch”........

Are those all bad things?

dobber's picture

Isn't that 90% of NFL management?

Thegreatreynoldo's picture

I think GB has gotten surplus value out of AR every year since 2008, including 2018. His cap hits are going to increase, so to justify them he is going to have to play closer to his 2011 to 2015 form.

The offense has been top 10 in the last few years. It has been just one or two players away from being electric. Last year it was a RG and 1 more good receiving threat away from being top 3, over 30 points/game, IMO. Ditto for 2019, though some depth at RB, OL and WR/TE would be nice.

That's why as a fan it is difficult to write off this team. It was very good in 2014. In 2015, if Nelson misses just 12 weeks we beat Arizona in the playoffs. In 2016, we have a shot anyway against Atlanta if the WRs hadn't been beaten up and Lacy wasn't fat. (I know the defense was dreadful.)

jannes bjornson's picture

Thanks for the detailed article. Seems BG wants Graham back for camp, but we'll have to wait and see if they renegotiate the terms prior to March 1st. At 4.35M Tramon is a fair value safety net/coach on the field type of guy. As you say, Perry will have to go through the Mayo Clinic type evaluation to see if he can hold up. If he goes, Matthews could be retained on a contract with team friendly terms, but his snap count would need to be reduced by 50%.

Old School's picture

Bearmeat….I questions about the "rebuilding".

Does it make any sense to rebuild around a 35+ year old QB? Can you give me an example of a new HC coming in and having success with an entrenched vet QB?

Please don't mention McCarthy/Favre, because I would not really consider those two years successful. The first year Favre had a QB rating of around 75 and we were 8-8. Then he put his house up for sale, threw the season away in the Championship game, and engineered two fake retirements to take revenge.

IMO, the fact that Gutekunst immediately extended Rodgers means that he thinks he can win with Rodgers now. We've missed the playoffs two years in a row and if we miss another year the heat is going to be on.

Personally, I don't think this is going to work out well for Rodgers, LaFleur, Gutekunst, Murphy and the rest of this.

SSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS

On the topic of dead money, it's essentially saying "We made a mistake and we're willing to pay money to make it go away". I don't think it sends a signal that we want to be sending.

In the cases of Perry and Graham, both of those deals are structured with an "out" following the 2019 season. I think the organization benefits from honoring contracts that they drew up and agreed to. Fiscally, the organization is solid. Capwise, we don't have to release anybody for solely contract reasons, like we did with Mike Wahle back in the day.

We actually have enough cap space, right now, to sign several FAs.

If you cut a player and his salary is greater than the prorated portion of his signing bonus, you can gain cap space. But you've created a hole on the roster than you're going to be filling with ………...something.

Another FA, a UDFA, a high draft pick ………I think you make the team stronger by adding, not replacing. I'm not a fan of creating a hole just so that I fill it.

nostradanus's picture

I think most of us figured that the Packers were only a few good signings, a good draft and a rare healthy year as a team and the Packers would again rule the NFC North.

Our bad!!

The Packers have to swallow hard, make the tough choices, cut any players on the downslide and go for the long but correct re-build.

The focus must on the Best Player Available in the draft and targeting young upcoming free-agents who have not yet peaked or veterans who for one reason or another have not worked out with their current team, need a change of scenery and can be had at a bargain price such as C.J. Anderson.

that is all...

stockholder's picture

The Tough choice? You have a QB they threw money at! Year after year TT had to hit the players, because he wouldn't give into their demands. In TT we Trust! Capers was a failure. Players regressed. They did what they could. They didn't stockpile the players behind the stars. The cupboards are bare. Because of draft failures. Ask yourself what is LefLeur doing here. MM was the punching bag and got the shaft. How sure are we Gute is the man to trust? Cutting players is not the answer. Competition is. Earn it Baby. The packers are so determined Arron Rodgers wears a cape and can rescue season after season.

Nick Perry's picture

You have a QB they threw money at! Year after year TT had to hit the players, because he wouldn't give into their demands. In TT we Trust! Capers was a failure."

"The packers are so determined Arron Rodgers wears a cape and can rescue season after season."

DOUBLE BOOM.... While I don't agree with your opinion on McCarthy, these points in your comment are 100% the absolute truth. I also believe Mark Murphy deserves a lot of the blame for where this team ended up in 2018. Thompson's last several drafts were bad, some downright horrible. It comes out later and IIRC it was after Thompson was relieved of his GM duties that he might not be well. If that was the case WHERE the hell was Murphy? Did he not see the changes in Ted or was he to damn busy building Titletown to notice the football team he was ultimately responsible for was winning ONLY because of a generational QB who could cover up multiple flaws.

HankScorpio's picture

"How sure are we Gute is the man to trust? "

If he does keep Graham as a single uncorroborated report has suggested, I'll be way less sure of that. Graham was always a risky signing. It's not 20/20 hindsight to say that. Plenty of people said it at the time. The risk blew up on him. It's a bad sign that he made the deal in the first place. It's a worse sign if he can't admit his mistake.

stockholder's picture

With 8 good Tes in this draft. Help is on the way. I see Graham doing better. Relocating is always tough on a Athlete. If you want a Te early, it's the wrong choice. Remember Ebron and how he played for the Lions? The transition to the NFL can be tough for an offensive pick. It won't be easy in GreenBay. The packers need to come up with extra picks. Not give them away. The extra picks must be used on the offense. But first they must get that defensive player. Are three DTs went down last year. What does that tell you? Adams didn't get the snaps. Lowrey doesn't have it. And LanCaster looked good because of it. It's been a eye sore at edge for a lot of fans. CM3 will get his money on another team. But taking a Te in Rd 1 is the kiss of death for the packers. Gute: I want, I need, I love. Gute can't make TTs mistake. The OL needs Depth. Good depth for their injuries. The best solution was to Keep Graham.

jannes bjornson's picture

If Hockenson shows at the Combine and the Gronk comparisons are valid, he is a safe bet @ #12. I believe Montravious will have a better season after another round in the weight room and staying in Pettine's system.
Wilkerson back on board seems a waste of space. Looking at Clemson DTs
dominate the ACC and Alabama says something about their talent. The kid from LSU can probably be taken in the third round 325# NT. That give Pettine flexibility with Clark at 3 and 5 technique which he is capable of playing. I would try to get Edge and OT in the first but if Hockenson is there take him. #30 may have to go to Irv Smith or Fant as most boards have them staying in the first round. Pack needs the Double TE formation in their arsenal.

PatrickGB's picture

I did not do well in my class on Statistics in college. But I love how it got me to think. This article is a great example of how using data is better than trusting ones heart. Dead money need not be the death of a team yet should always be considered when building a roster.

jannes bjornson's picture

When rebuilding a roster. See how Perry does on his medical, or its bye bye.

2020hindsight's picture

MM and Capers were both good coaches. They were felled by the 2011 collective bargaining agreement. The reductions in repetitions during available practice time made both systems unworkable without veteran units in the same system. On defense in the NFL you must react without having to think. You cannot do that with a complicated defense and not enough reps. The offense lasted longer because the receivers and quarterback were 3 year vets or more with plenty of experience together. That died in 2015. ML runs an offense that many plays look the same at the start but you can run many variations both run and pass. Hopefully this confuses the defense or gets the defense in a variant your play is designed to defeat. with the Packers draft capital and available cap space the front office should be able to field a team capable of reaching the playoffs.

Thegreatreynoldo's picture

One purpose of my article is to suggest that if Gute generates $12M to $17M in dead money in 2019, that is not really a bad thing: it is perfectly normal.

The eight teams that generated the least dead money were a little under .500 for combined record. The 8 teams that generated the most dead money averaged just under 6 wins.

Sure, it is a great sign if the GM generates very little dead money IF it is because he didn't make hardly any mistakes with his FA signings, or in re-signing his own players. But teams that have talent in the pipeline and coaches that can adapt can afford to cut under-performing players even if the dead money total climbs moderately.

Lare's picture

I agree TGR. My feeling is if you're paying a player a lot of money with no resulting return in production (ie Nick Perry), then you're wasting more dead money on the roster than the money you'd be wasting off the roster. You also have a one-time hit of wasted money as opposed to continuing to waste money year after year.

We all make mistakes. Admit them, take your lumps and move on.

Thegreatreynoldo's picture

Right, IMO. If GB keeps Perry, then the dead money drops to $7.4M in 2020 but the team paid him $11M in new money in 2019, so the team is down $18.4M minus the value of Perry's play in 2019. [I like Perry - when healthy - better than most, and can see him playing like a 2nd tier ($11M in FA) to 3rd Tier OLB (around $7M) player. Despite being a cold-hearted numbers cruncher, if I thought Perry would have a season worth $8 or $9M, I'd keep him: give the rookie a fair evaluation with some talent across from him, and GB some kind of rotation and a bit of depth at OLB.]

Graham is a much closer call. His dead money is $7.33M but drops down to $3.66M in 2020. Graham is scheduled to receive $9M in new cash in 2019, so the team will be down $12.66M minus the value of Graham's play in 2019. Graham's play in 2018 might have been worth $6.75M (7th highest paid TE had an $8M AAV and the 10th got $7M) so I am knocking something off for poor blocking and some force-feeding. Graham gets $8M in 2020, so $17M over two years looking forward. If his play is going to be worth $14M to $15.5M, that's not so terrible if GB is playing in the playoffs.

HankScorpio's picture

"One purpose of my article is to suggest that if Gute generates $12M to $17M in dead money in 2019, that is not really a bad thing: it is perfectly normal."

Building on that concept, it is abnormal for a team to never have to carry such a big dead money hit. It means they are either playing in the very shallow end of the talent acquisition pool or have an extreme reluctance to admit a mistake. Or both.

The reason the Packers have not carried much dead money in the past is because TT rarely dabbled in FA or giving out 3rd contracts. His over-reliance on "draft and develop" and those lack of big dead money hits go hand in hand.

fthisJack's picture

James...i agree with your thought that both Graham and Perry need to be approached about a renegotiation in their salaries. if they aren't willing then it's bye bye don't let the door hit you in the ankle. let them see what other teams will pay them and i would say it wouldn't be as much as what they are making now....not even close. let them make the decision on how much they want to be Packers.

Lphill's picture

I don’t see Perry turning anything around at this point in his career, tough decision to make on him .

PatrickGB's picture

Perry is a quandary. But as much as I want to cut him, I think that keeping him a year and hope he doesn’t get injured and then trading him in this year may be our only option. By then we get stuck with some dead cap money but at least get some trade value.

HankScorpio's picture

Finding a trading partner willing to take on Perry's contract is going to be darn near impossible unless he puts up double-digit sacks in 2019. If he does that, why trade him?

PeteK's picture

Perry is one of the main reasons why our D has not performed up to par. He has never played a full 16 game season and had one good year with 52 tkls 11 scks, other years were not even close. We have a chance to rid ourselves of one of the worst signings. At least Matthews is on the field battling.

Oppy's picture

He followed up his contract year with very good play even though he fought injury all season.

7 sacks in 12 games is very good. Tackles don't come as frequently when teams run away from you as they did from perry in 2017.

Health and availability is the major factor for Perry. Always has been.

cheesycowboy's picture

Honestly, did anyone actually read this entire manifesto?

Jonathan Spader's picture

I did. Thought it was interesting and thought provoking. Unlike your comment.

Duke Divine's picture

Wake me up when this is over...

Since '61's picture

I'd rather have some dead money than some of the next to dead players that we have like Perry and Graham. Chuck them both and take the hit now and get it over with and move on with younger and more athletic players. Don't resign Cobb or CM3 either unless they are willing to sign for one year at $2 million or less each.

Perry and Graham are often injured and when they are healthy they are ineffective. Neither Cobb nor CM3 are returning to their 2014 or prior forms. Get the house cleaning done and move on. "It is time." Thanks, Since '61

Donster's picture

I do hope that Gute realizes that signing Graham was 1) A mistake and 2) Paid him way to much, and moves on from him. If he doesn't, then he is definitely to close in his training from TT, who could never let lose of a pick or UDFA that was a mistake. And if Gute is a mirror image of TT, which we don't know as of yet, then the organization is in deep doo doo.

They should say buh-bye to Perry, Matthews and Cobb. Don't keep Cobb just because he and Rodgers are close. You have to break the problem that Rodgers seems to have by not getting his way (think Nelson, and his former QB coach...didn't consult him).

And giving Rodgers his mega contract two years before they had to was a mistake too. How much cap room would the team have this coming draft if they hadn't done that deal?

Oppy's picture

I think the Packers might have cleared cap room this coming draft rather than lost it.

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