Following the Cowboys disappointing exit from the NFL playoffs a number of people began questioning Dak Prescott’s future with the Cowboys. A number of things have been said pertaining to his contract, some of which are accurate and some which are not, so I thought it was worth taking the time to discuss a few of those points and maybe clear up some of the points being made about Prescott’s status with Dallas and what might be the outcome with his contract.
The Basics of the Contract
2024 will be the final year that Prescott is under contract to the Cowboys. His salary for the year is $34 million which is broken down as $5 million earned on March 17th and $29 million earned during the regular season. His cap charge for the year $59.455 million, which is the 2nd highest cap charge in the NFL next year. None of the salary is guaranteed.
Can Prescott be Cut?
If for some crazy reason the Cowboys wanted to cut Prescott they could but it would be costly. He would need to be released before the roster bonus is due and even then the Cowboys would need to account for $61.915 million in salary cap charges. Right now we estimate Dallas to be about $20 million over the salary cap which makes it very difficult to take on that kind of charge for Prescott.
My guess is Dallas would opt to June 1 Prescott if for any reason it came down to this. Because Prescott has void years in his contract (more on that in a minute) they can still use a June 1 designation even though it is Prescott’s final contract year. The team in this scenario would carry Prescott at his $59.455 million cap charge until June 2 at which point it would drop to $25.455 million in 2024 and he would leave the team with $36.46 million in 2025. This would give Dallas the room needed to sign draft picks and function in the regular season. In reality all of this would make little sense given the construction of the team and desire to win now.
Can Prescott be Traded?
Prescott has a no trade clause in his contract so he would have to agree to a trade. This would also result in a scenario where Dallas had to take on the full $61.915 million in dead money cap charges this year so it doesn’t seem too likely.
What is the Deal with these Void Years?
Void years seem to cause the most confusion regarding NFL contracts. Void years are a mechanism that teams use (and often abuse) as a way to continuously defer salary cap charges to the future. The rules regarding signing bonuses allows a team to prorate the cap charges associated with the bonus up to a maximum of five years. Rarely do player contracts run more than five years so any restructure can only be prorated up to the maximum number of years remaining in most of these contracts. To avoid this teams add dummy years to a contract to allow for added years for prorating money. The way this works is the team puts an added year onto a contract just like any other year. The year, however, voids on a certain date prior to the start of the league year.
In Prescott’s case Dallas added two void years to the contract, one in 2025 and another in 2026. To see how this benefitted Dallas we can look back at the 2023 season. Dallas restructured his contract last year converting $29.3 million of salary into a bonus. If the void years did not exist Dallas would have only saved $14.65 million on the cap. Instead Dallas saved $21.975 million because they were now able to park salary cap charges in those void years.
The danger of this strategy comes from when the player’s contract expires. If the team allows the deal to void all of the cap charges parked on the salary cap count on the salary cap. Prescott’s contract will void on the last day of the 2024 league year (that will be sometime in mid March of 2025). If that happens Dallas will take on $36.46 million in cap charges for Prescott.
Can Prescott be Franchised in 2025?
No. Prescott has a no tag provision in his contract so Dallas is unable to tag him in 2025. This is a blanket no tag that covers every possible tag that Dallas could use on him so if he is not extended prior to that void date mentioned above he will be a free agent. The maximum return on a player lost in free agency next year would be a 3rd round draft pick in the 2026 NFL draft.
Does Dallas Have to Extend Prescott?
No, they do not. While Dallas probably should extend him the team could determine that 2024 is their “put up or shut up” year with the team considering a reset if they do not improve in 2024. A reset would probably mean a new QB and a new coach in 2025 while dealing with the salary cap fallout of Prescott’s void years in 2025. If Dallas is considering this as an option it would probably make sense for them to draft a QB in the 1st or 2nd round this year so they at least have an option on the team for 2025.
Does Prescott have Leverage over the Cowboys?
Yes. Even though his salary is not guaranteed the nature of his contract and his salary cap situation gives him a lot of leverage over Dallas in a negotiation. The fact of the matter is if Dallas does not touch his contract this year they will have minimal cap space to improve their roster, would have no ability to control Prescott’s rights after the year, would be left with $36 million in salary cap charges, and would only maybe get a 3rd round comp pick in a league where the Broncos paid a ransom for Russell Wilson.
Odds are that Dallas will need to further restructure Prescott’s contract this year for cap relief which will only increase the dead money in 2025 which only makes it more difficult for Dallas to deal with the salary cap fallout.
For the Cowboys fans old enough to remember Tony Romo the quarterback rather than Tony Romo the announcer this may sound familiar because it was the same situation that Dallas found themselves in about a decade ago. Dallas had used the same kind of voids with Romo and even though there were questions about how far they could go with him were kind of in a position where they were backed into a corner with his cap hits and contract charges.
Should Dallas Extend Prescott?
I think it is a hard decision and perhaps the lessons from the Romo extension may come into play here. Romo had one superb year with Dallas following his extension and then his body gave out on him and he played just five games in two years. Ultimately, Dallas took on about $62 million in additional cap charges for what amounted to a 12 win season and a divisional round playoff loss. Dallas only came out of the Romo deal ok because they wound up with the rookie contract benefit of Prescott to offset the cap hits of Romo.
While the injury risk is probably lower with Prescott you do have to ask yourself what I think was the biggest underlying issue with Romo: if you can not win with Prescott making $40 million a year what makes you think you can win with him at $60 million a year? Really this gets down to an underlying issue of a team not looking for other options at the position so they have a different option, but that is a topic for another day.
If Dallas is going to extend Prescott they probably need to re-evaluate some of the things they are doing with roster building. Given the magnitude of the contract Dallas probably should put all the chips in the middle of the table for 2024 and 2025 when it comes to salary cap structure and actually begin taking more risks in free agency to improve the overall roster. Dallas is typically at the top of the NFL in homegrown players, but if you need a boost sometimes you have to take those outside risks, and then deal with the cap fallout later on. Extending Prescott and just going business as usual wouldn’t seem to make much sense.
Now if Dallas is going to extend him no matter what circumstance, they may as well do it this February. This will allow the team to roll the existing $34 million salary into part of the “guarantee” package and also maximize whatever cap benefits there are by having five years to prorate money. Waiting a year just for the sake of it is pointless. If they are honestly thinking about splitting with him and want to see how things play out then waiting is fine, but the last time Dallas was in this scenario they tagged him, he played a few games and got hurt and then they ended up doing a massive contract anyway. There was almost no point to the wait unless they felt Prescott would never agree to a five year contract.
If it were me I think I would try to draft a QB, restructure Prescott’s contract only as needed (you can restructure as many times as you want so do it whenever you need cap room), and then see how the year goes. There is a good chance that Dallas will have a new head coach in 2025 and even though the GM is not going to change I would much rather have the input of a new coach on my QB situation rather than forcing a QB on him. While the prospect of not having my veteran QB is scary the odds are going to be more in your favor of winning especially in the long term with an affordable QB than an aging, above average but not special one who will earn more than anyone else in the league.