NFL Free Agency 2013: "Dead Money" Overview
As a concept, the NFL salary cap is a fairly easy one to understand. Unlike the NBA, with its myriad of loopholes, exceptions, and fine print that allow teams like the Lakers and, well, almost everyone else to zoom past the artificial "cap", the NFL is a simple hard cap. What you spend is what what you spend and you have to stay below the ceiling with one important exception -- signing bonuses can be spread out over the life of a contract.
So when a player gets a $10 million signing bonus on a five year deal, it counts $2 million against the cap each of the next five years. Now, the kicker (in the balls) is that when that player is traded or cut during a contract, all of that prorated bonus money in future years gets accelerated into the present year's spending total.
Hence, the concept of "dead money."
When a team decides it's time to call it a day on a certain player (whether it's by trading him or releasing him), they accept the fact that money spent on signing bonuses in previous years will come back to roost on the present year's cap, a necessary cost of doing business in the NFL.
So when the Texans cut Kevin Walter this past week, sure, they are free and clear of having to pay his $3.5 million base salary for the 2013 season (and any salary in seasons after that they had committed to), but they now must accept the remaining prorated portion ($2 million, to be exact) of the signing bonus they gave him with his new deal a couple years ago into the 2013 cap.
So, yes, the Texans won't pay Kevin Walter any real dollars in 2013 to play football, but they will be counting two million of the dollars they've paid him previously on this year's cap. That money, cap wise, is "dead money," cap dollars that are allocated to the ghost of a player from years gone by.
Now, do you want a decent gauge on which NFL teams are doing a good job of evaluating talent and allocating dollars to players who are a long-term fit? Look at which teams have the least amount of "dead money" against the current year's cap, and you'll find some of the answers.
How do teams stack up (so far) heading into 2013? Funny you should ask, I have those numbers right here! From the teams spending the most "dead money" in 2013 to the least: