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The Genius Of Tony Romo’s Contract For The Dallas Cowboys

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Cowboys Blog - Tony Romo and the Statistical Argument, Not the Answers

Last year, Tony Romo received a new contract, and it was trumpeted that he signed a 6 year, $108 million contract extension that pays him $18 million per season.  Many people were upset.  Also, many people are still upset because it seems that the Cowboys are killing themselves in future seasons by constantly restructuring Romo’s deal.

What I want to explain is why that is the wrong way to look at Romo’s contract.  In fact, Romo’s contract is a masterpiece of financial planning, and Stephen Jones deserves a lot of credit for helping provide financial stability for the Cowboys at the starting QB position for the foreseeable future.

Let me explain…

Although it was reported that Romo’s contract was a 6 year deal, in fact, it was a 7 year contract.  Here are the official numbers.

  •  Official length and size:  7 yrs, $119.5 million, $25 million signing bonus, $55 million guaranteed

Breakout:

  • $25 million in bonus paid up front.
  • (Age 33) 2013 Salary - $1.5 million + $5 million prorated bonus
  • (Age 34) 2014 Salary - $13.5 million + $5 million prorated bonus
  • (Age 35) 2015 Salary - $17 million + $5 million prorated bonus
  • (Age 36) 2016 Salary - $8.5 million + $5 million prorated bonus
  • (Age 37) 2017 Salary - $14 million + $5 million prorated bonus
  • (Age 38) 2018 Salary - $19.5 million
  • (Age 39) 2019 Salary - $20.5 million

So, let's dive into the analysis of this contract.

  • Average Salary over first 3 years - $19 million per season
  • Average Salary over first 4 years - $16.375 million per season
  • Average Salary over first 5 years - $15.9 million per season
  • Average Salary over entire 7 years - $17.07 million per season

The first thing that jumps out at me is the Big drop in Salary in the 4th year of the contract.  The second thing that jumps out at me is that the last 2 years of the contract are for $40 million with no prorated signing bonuses.

So, if you look at the contract from the standpoint of being a 5 year contract, then the Cowboys are paying an average of less than $16 million per year, which is exactly what I thought was the right market price for Romo at this point in his career.

I suggested several times last year that the Cowboys would give Romo a 5 year, $80 million contract with a $25 million signing bonus, and about $48 million guaranteed.  In other words, the first 3 years of the contract would be guaranteed.  Well, in fact, if you drop off the last 2 years with the $40 million in salary that Romo is unlikely to see, what Romo got was a 5 yr. contract for $79.5 million, a $25 million bonus, and $55 million guaranteed.  I was over by $500K on the total amount, and under by $7 million on the guarantee.

But if you look even closer, this contract becomes even more CAP friendly for the Cowboys.  It is quite obvious that the Cowboys plan to Restructure Romo's salary in both years 2 & 3 of his contract, and possibly in years 4 & 5.

This year the Cowboys had a CAP number of $22,836,333 for Romo.  But after restructuring his contract next year, he will get about a $12.5 million Restructure bonus with a $1 million salary. That will lower his CAP hit this year by $10 million.  Next year, in 2015, the Cowboys are likely to restructure Romo's contract a 2nd time, giving him say a $2 million salary, and a $15 million Restructure Bonus.  That will lower his CAP hit in 2015 by $12 million - another big way for the Cowboys to save money on the CAP.

Then, in 2016, Romo's contract drops to $8.5 million.  The Cowboys could choose not to restructure his contract that season. With Romo playing the 2016 season at the age of 36, the Cowboys can choose to cut ties with Romo anytime after 2016 and still walk away with a good deal.

After restructuring his contract in 2014 and 2015, here is what the actual breakout will look more like:

Breakout:

  • $25 million in bonus paid up front in 2013
  • (Age 33) 2013 Salary - $1.5 million + $5 million prorated bonus = $6.5 million CAP hit
  • $12.5 million Restructure bonus paid in 2014
  • (Age 34) 2014 Salary - $1 million + $7.5 million prorated bonus = $8.5 million CAP hit
  • $15 million Restructure bonus paid in 2015
  • (Age 35) 2015 Salary - $2 million + $10.5 million prorated bonus = $12.5 million CAP hit
  • (Age 36) 2016 Salary - $8.5 million + $10.5 million prorated bonus = $19 million CAP hit
  • (Age 37) 2017 Salary - $14 million + $10.5 million prorated bonus = $24.5 million CAP hit
  • (Age 38) 2018 Salary - $19.5 million + $5.5 million prorated bonus = $24.5 million CAP hit
  • (Age 39) 2019 Salary - $20.5 million + $3 million prorate bonus = $23.5 million CAP hit.

The Cowboys can cut Romo at age 37 prior to the 2018 season, and only take a $8.5 million DEAD Money CAP hit in 2018.  If you consider that they will likely be paying a new QB on his Rookie contract in that year, taking that CAP hit will be easy to swallow.

Also, if the Cowboys decide to draft a rookie QB in 2015 or 2016, and let him sit for 1-2 years behind Romo, then theoretically the Cowboys can start the 2017 season with at least 2 years left on his Rookie contract.  The Cowboys could designate Romo a June 1st cut, and then take a $10.5 million CAP hit in 2017, and another $8.5 million CAP hit in 2018 while the salary of the new Cowboys QB is still relatively low.

What this means is that the Cowboys have arranged a contract with Romo, that when combined with the rookie contract of a new QB picked in 2015 or 2016, will not cost them more than $19 million per season for the next 6 years.

That, my friends is a very, very well written contract.  Romo get's 4 years to make it work at an average salary of just over $16 million per season - well below the rate the top QB's are getting.  The Cowboys get a contract guaranteed to cost them no more than $19 million per season against the Salary CAP for the starting QB.

(Note:  This does NOT include $14.6 million the Salary CAP hits for Romo's previous contract that are spread over the next 4 seasons.  The Analysis above was strictly for Romo's new contract.)

Now, instead of looking at it from the perspective of an individual player, let’s look at it from the perspective of a General Manager.  If I’m the General Manager, what I want is Salary CAP stability at the starting QB position.  At a time when franchise QB’s are getting paid at a rate of $20 million per year or more, can I reduce that obligation and at the same time, get quality play at the QB position at a reduced rate?

Here is the real deal.  Romo was already scheduled to make $11.5 million in 2013.  If you consider that his contract is ACTUALLY a 4 year deal for $65.5 million, that means that the Cowboys tacked on 3 more years for $54 million - an average of 18 million per season.

Here is where you have to just sit back and appreciate the Genius of the structure of the contract that the Cowboys got Romo to sign.

  1. Assume the Cowboys restructure Romo's $13.5 million salary in 2014 into a $12.5 million signing bonus + $1 million salary.
  2. Assume the Cowboys restructure Romo's $17.0 million salary in 2015 into a $15.0 million signing bonus + $2 million salary.
  3. Assume the Cowboys restructure Romo's $8.5 million salary in 2016 into a $6 million signing bonus + $2.5 million salary.
  4. Assume the Cowboys draft a new young QB in 2016 to replace Orton as the Backup who will learn as Romo’s backup for for 1 season.  The Cowboys draft this kid late in the 1st or early in the 2nd round, and pay him a contract in the range of $8 million over 4 years - an average of $2 million per season.
  5. Assume the Cowboys cut Romo in 2017, but designate him a June 1st cut.

Here are how those moves, along with the new contract Romo just signed, affects the Cowboys salary CAP over the next 6 seasons.

  • 2013 - Romo CAP hit - $6.5 million + $5,318,333 Old Bonus CAP hit (OBCH) = $11,818,833 Total CAP hit
  • 2014 - Romo CAP hit - $8.5 million + $4,336,333 OBCH = $12,836,333 Total CAP hit
  • 2015 - Romo CAP hit - $12.5 million +$3,273,000 OBCH = $15,773,000 Total CAP hit
  • 2016 - Romo CAP hit - $14.5 million +$1,635,000 OBCH = $16,135,000 Total CAP hit
  • 2017 - Romo DEAD money CAP hit - $12.0 million + New QB Salary - $2 million = $14 million Total CAP hit
  • 2018 - Romo DEAD money CAP hit - $11.5 million + New QB Salary - $2 million = $13.5 million Total CAP hit
  • 2019 - Negotiate new Contract for New QB based on performance.

What the Cowboys have done with this contract is guarantee that they will have a very friendly Salary CAP number for the Starting QB for the next 6 years.

Also, the DEAD money for Romo's bonuses in 2017 and 2018 prevent the Cowboys from spending that money on other players - ensuring that they have the CAP space to sign the new QB they draft in 2016 without having to cut a bunch of guys in 2019.  Essentially, the DEAD money acts as a place-holder reserving that part of the CAP for the starting QB in the past and in the future for those 2 seasons.

Genius, I tell you.  Just Genius.  I am in admiration of Stephen Jones.



Engineer, writer and private NFL analyst, he began developing his own statistical analysis program in 1998 to measure and predict the performance of NFL teams. Scott is also a self-taught expert on the NFL salary CAP, analyzing how Cowboys contracts affect the team this year and in future seasons. Mr. Harris' skill lies in digging inside the numbers to explain which statistical measurements matter, and which do not. Mr. Harris developed his skill at writing for his college newspaper, and had his own politically oriented blog for several years. A passionate fan of the Cowboys, Scott uses his skill with numbers and writing to provide a unique viewpoint of the Cowboys and the NFL as a whole. He is a native of the DFW metroplex and currently resides in Golden, Colorado designing environmental controls systems for data centers, high rise buildings, college campuses, and government bases.

Star Blog

Cowboys Defense is Ready to Win Now, Time for Offense to Prove the Same

Sean Martin

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Cowboys Defense is Ready to Win Now, Time for Offense to Prove the Same
(Tim Heitman-USA TODAY Sports)

The Dallas Cowboys lead the NFC East at 1-1, and have a favorable schedule ahead of them. With such an inexperienced roster, early season growing pains were expected, and likely should be still as the team comes off their first win to play in Seattle on Sunday.

Through a season opening clunker in Carolina and hard-earned divisional win against the Giants, the Cowboys have exceeded already high expectations on defense.

With the currently 0-2 Seahawks, Lions, and Texans awaiting Dallas, the time is now for Scott Linehan's offense to hit their stride. It will take more than a five week assessment to determine if the Cowboys are truly playoff contenders for 2018, but it could take even less than that for Cowboys Nation to realize this team is fighting an uphill battle at QB and WR.

Following Dak Prescott's 64-yard touchdown pass to Tavon Austin against the Giants, the Cowboys punted on four of their remaining seven drives. The Cowboys did a better job mixing up their early down play calling to remain ahead of the chains for most of the night, but even still their execution was lacking. Finishing three of ten on third downs, the Cowboys didn't sustain the type of originality on offense that earned them an early cushion.

Thankfully, the Cowboys turning back the clock to 2016 on a clinching touchdown drive of 14 plays would be all the defense needed. Prescott and Ezekiel Elliott would both convert a pair of first downs on the ground. The Cowboys took a 20-3 lead, and more importantly the game clock down to 5:45 with an eight minute and 23 second march.

As such, the Cowboys offense is an enigma. With the return of Brice Butler, the team is currently carrying seven wide receivers and four tight ends.

On defense, the Cowboys are expecting reinforcements in Xavier Woods, Randy Gregory, and David Irving to further bolster this aggressive, blitzing unit in the coming weeks. For the offense, Dallas must make the most out of the unknown depth they have, without any drastic change in style around the corner.

The Cowboys record under Prescott proves they're at their best when Dak is efficient. The ceiling for a new-look Cowboys offense built for Dak is not as high for this reason. Through just two weeks, it's clear that the Cowboys offense will be as good as the sum of its parts - instead of relying on any individual talents.

Jon Machota on Twitter

Cowboys' record when Dak Prescott ... Doesn't throw an interception: 20-4 Records at least a 100.0 passer rating: 15-1 Commits no turnovers: 18-1

After a strong preseason from rookie Wide Receiver Michael Gallup, the third-round pick has played less than half his team's offensive snaps through two games. Cole Beasley has seemed to regain his connection with Prescott, snagging a team high nine catches so far. Terrance Williams has been a non-factor, and the same is surprisingly said about FA acquisition Allen Hurns.

Regardless of what the Cowboys do over the coming weeks, a few narratives and lingering questions about the team feel evident. With the defense set to tee off against the Seahawks sub par OL this week, Rod Marinelli's unit will still likely not receive the credit it deserves heading into week four.

With the task at hand being maintaining their standing atop the division, the Cowboys must also be out to prove they can sustain success without a consistent passing game.

All of this to effectively say, the Cowboys are going to Seattle expecting to control the game on defense. To finish off Russell Wilson in his home opener (already at 0-2), it will take a sharper performance for a full four quarters on offense too.

A win at the Seahawks might not mean as much as it has in past seasons, but in improving the Cowboys record to 2-1 on the way back to AT&T Stadium, it could be all the confidence they need to understand the NFC East is theirs for the taking while continuing to truly find their identity.

2014 NFL: Week 6 Cowboys vs. Seahawks highlights

Week 6 Own by nfl

Tell us what you think about "Cowboys Defense is Ready to Win Now, Time for Offense to Prove the Same" in the comments below. You can also email me at Sean.Martin@InsideTheStar.com, or Tweet to me at @SeanMartinNFL!



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Star Blog

Cowboys Defense So Far So Good as Seahawks Up Next

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Cowboys Defense So Far So Good as Seahawks Up Next

Dallas may only be 1-1 on the season, but the Cowboys are officially tied for first-place in the NFC East, and fresh off a workmanlike victory over divisional rivals, the New York Giants. It was a game they should have won, and did win, but the takeaways so early in the season are that, although the offense has not clicked on all cylinders, the defense is getting high praise.

The Cowboys sacked New York’s Eli Manning six times and limited the No. 2 overall pick in the 2018 draft, Saquon Barkley, to a mere 28 yards rushing. It was also a night in which Dak Prescott not only out-gained Barkley by 17 yards on the ground, but torched the Giants’ secondary on a 64-yard touchdown strike to Tavon Austin which proved New York’s Safety Landon Collins wrong when leading up to this game he remarked that the key to a Giants’ victory would be getting Prescott to throw. When Prescott was made aware of the comment in a midweek interview he replied, "…challenge accepted," and the third-year veteran made good on his word leading to the 20-13 victory.

However, Prescott ended the night with just 160 yards passing yet the ankle injury he sustained in Week 1 showed no signs of rearing its head as Prescott moved seamlessly in the pocket and ran the ball well.

As we move ahead to the Cowboys meeting in Seattle, we take a quick check over to one of the most reputable online sportsbooks in the industry - Intertops according to the reviews - where we can monitor the line on this pivotal NFC clash as the week progresses.

Seattle boasts a talented quarterback of their own in Russell Wilson but one who will find the sledding tough if the Dallas defense continues to shut down All-World wide outs like Odell Beckham Jr. and contain future rushing stars like Saquon Barkley. Outside of Wilson, Seattle is not loaded offensively, with their biggest target, Doug Baldwin, ailing with a knee injury and a backfield which consists of two young rushers in second-year man Chris Carson and a first-round rookie in Rashaad Penny who dealt with nagging injuries throughout the preseason and looked unsettled in Seattle’s 27-24 loss to the Broncos.

The Cowboys defense has already proven its worth in Carolina with Cam Newton under center and again last week against New York. The unit is surrendering an average of 14 ½ points per game and is incorporating more blitz packages than we’ve come to expect.

The difference this year is that the players they have on defense are capable of getting to the quarterback quick enough so that the coverage linebackers and secondary aren’t alone on an island for too long. The one concern is the status of Linebacker Sean Lee, who checked out of the game in the fourth quarter Sunday night and brought to mind his hamstring issues of a year ago, but apparently it was in fact cramping, and not straining, of the hammy which allowed Lee to return.

The bottom line in terms of the Cowboys' upcoming matchup on Sunday afternoon is that they will get the Seahawks coming off a short week, as Seattle played on Monday night and should be relatively healthy for the contest.

Dak Prescott may not have the formidable offensive line that he has had in the past, nor a top-tier arsenal of receivers, but he does have the elusive Ezekiel Elliott in the backfield and is capable of extricating himself from pressure situations when no target is available.

If the Dallas defense continues to play at the current level, it will not only be limiting the opposition on the scoreboard but putting its offense in good field position throughout. So check out Intertops, one of the most trusted and reputable online sportsbooks, to see where this line goes because a Dallas win and an ATS cover are just days away.



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Taco Tuesday: Cowboys DE Taco Charlton Starting to Dominate?

Brian Martin

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Taco Tuesday: DE Taco Charlton Starting to Dominate?
(Tim Heitman-USA TODAY Sports)

There has been quite a bit of talk about what a bad decision it was for the Dallas Cowboys to draft Taco Charlton with their first-round pick in the 2017 NFL Draft. Nearly everybody wanted someone different, not a player that needed time to develop.

Well, fast forward a year later and it looks as if the Cowboys made the right decision.

Don't look now, but Defensive End Taco Charlton is starting to live up to that first-round pedigree. In the first two weeks of the 2018 season, Charlton has already looked like a much improved player from what we saw a season ago. Imagine that, a little bit of time to develop and he's turning into a solid player.

I know I may be getting a little bit ahead of myself, especially suggesting that he is starting to dominate, but I can't help myself. I'm that excited about how much he has improved in one offseason. I may be alone here, but I have high hopes he could turn into something special.

In 2017, Taco Charlton failed to start a single game for the Dallas Cowboys as a rookie. That's not really what you want from your first-round draft pick. To makes matters worse, in 16 games he only registered 25 total tackles, four QB sacks, two passes defensed, and one forced fumble. As you can imagine, it didn't sit well with most Cowboys fans.

Luckily, it looks as if Charlton's offseason in the Dallas Cowboys strength and conditioning program has paid off. Already in 2018 he has accumulated six total tackles, one QB sack, one pass defensed, and recovered a fumble. If he keeps this pace up, we could be looking at #97 reaching double-digit sacks this year.

Taco Charlton

Dallas Cowboys DE Taco Charlton

Now, I wouldn't call what Taco Charlton has accomplished so far this season dominating, but he is proving to be a starting quality DE along the Cowboys defensive line. It's a unit that has looked really good in the first two weeks of the season and is expected to be even better once Randy Gregory and David Irving are able to return to the field.

In the meantime, the Dallas Cowboys are happy to get plays like this from Taco Charlton.

Taco Charlton Eli Manning sack

Check out this video on Streamable using your phone, tablet or desktop.

This is a play Charlton is expected to make. He was left unblocked, but we've seen players left unblocked before not make the play. So, it may not be as impressive as some QB sacks. But, I'll take the routine tackle any day over someone trying to make a splash play and failing.

If you're looking for an impressive play from Taco Charlton, take a look at what he was able to do against Odell Beckham Jr. in the passing game.

Taco Charlton covering Odell Beckham Jr

Check out this video on Streamable using your phone, tablet or desktop.

In case you're wondering, that's Taco Charlton in OBJ's hip pocket 15 yards down the field in pass coverage. It looks as if that's where Eli Manning was wanting to go with the ball, but tight coverage by the Cowboys, and Charlton, across the board ended up resulting in a QB sack.

If you don't find that impressive, I don't know what will. A 275 pound DE covering arguably the best and highest paid wide receiver down the field is almost unheard of. I would count that as impressive.

What do you think of Taco Charlton's play so far in 2018?



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