Why, and How, Cowboys Cleared $12M in Salary Cap Space By Extending Lawrence

The salary cap isn’t a myth, but it is misunderstood. Even when teams seem to be in tough positions financially, there are just way too many options for NFL franchises to constantly open more and more cap space. The Dallas Cowboys took advantage of one of those options by signing DeMarcus Lawrence to a one-year voidable extension on Friday to open up $12 million in cap space this year, Tom Pelissero from NFL Network reported.

https://twitter.com/TomPelissero/status/1304421285288697869

Essentially, what the Cowboys did was restructure Lawrence’s contract. Remember, a contract restructure isn’t the same as taking a pay cut. In fact, it’s quite the contrary. The player’s salary is turned into a signing bonus (which means the player receives cash now) but pushes the cap hit to future years.

How is it pushed to the following years? Although the player gets paid now, the cap hit for a signing bonus is always prorated over the length of the contract. By adding the voidable year to Lawrence’s contract in 2024, the signing bonus proration is spread over one extra year.

But why are the Cowboys opening up cap space? The first answer that may come to mind is the fact that Safety Earl Thomas is still a free agent with week 1 already underway. But in reality, the front office is thinking about 2021 and the fact that Dak Prescott isn’t under a long-term contract yet.

It’s important to note that the salary cap is defined by the unadjusted cap that’s set annually by the NFL plus each team’s carryover (what they didn’t use in the current year, they can use the following), and other adjustments.

As the NFL expects income to decrease in 2020 with limited fan attendance, teams are doing everything they can to be prepared for a tight salary cap by carrying over as much cap space as possible from 2020 to 2021. A few months ago, teams agreed to a minimum $175M salary cap (the unadjusted number) for 2021 to protect players in case the league’s revenue drops significantly.

Amidst the risk of a canceled season this year, Michael Gehlken made a great point on Twitter mentioning there’s an additional reason for the moves the Cowboys’ front office has made over the last couple of months: protecting their best players.