The NFL offseason is full of draft speculation, trade rumors, and a ridiculous amount of “fancy” contract terms that can be quite confusing. Understanding ” dead cap ” and other financial NFL terminology will make the football chatter sound less like a foreign language.

This article will list out and define terms often found in NFL language and answer questions like “what is dead cap money ? “

What Does Dead Cap Mean in NFL?

Imagine a scenario where your team signs a star player to a massive contract with a hefty signing bonus. That bonus is typically spread out over the length of the deal for salary cap purposes. But what happens if that player underperforms and you need to cut them before their contract is up?

This illustrates a dead cap hit…..

Dead Cap Vs Dead Money

Simply put, the “dead cap” is the the space allotted to cut player contracts within the salary cap. “Dead money” is the actual money paid out . The terms are pretty similar and could be used interchangeably.

READ MORE: WHAT IS THE NFL MINIMUM SALARY?

NFL Contract Definitions

The NFL throws around a lot of terms that can leave fans scratching their heads. Since I have you here learning a bit more about one common term utilized in the NFL, you might as well learn a few extra words while you’re here.

Key Contract Language

• Unrestricted Free Agent (UFA): A player with at least four seasons under their belt and an expired contract. They can freely negotiate and sign with any team.
• Restricted Free Agent (RFA): A player with three seasons played and an expired contract. Their current team has the right to match any offer sheet they receive from another team.
• Dead Money/Dead Cap: Money a team allocates against the salary cap for a player who is no longer on the roster, but has guaranteed money remaining on their contract (like signing bonuses). It’s basically “wasted” cap space that season.
• Signing Bonus: A lump sum of money paid upfront to a player as part of their contract. It’s enticing for players, but creates dead money if they’re cut before the contract ends.
• Roster Bonus: Extra money a player earns by being on a team’s active roster on a specific date. These bonuses count fully against the team’s salary cap for that season, unless they were fully guaranteed when the player first signed their contract. Teams use roster bonuses instead of signing bonuses to avoid spreading the salary cap hit over multiple future seasons if the player leaves the team. Roster bonuses allow the cap charge to be contained in one season.
• Option Bonus: An option bonus allows a team or player to extend their current contract for one or more additional seasons by paying a bonus. Like a signing bonus, the option bonus money gets spread out over the remaining years on the contract, up to a maximum of 5 seasons, for salary cap purposes. It gives both sides the choice each year to keep the existing contract going by exercising and paying the option bonus. This provides flexibility to continue or end the deal without having to negotiate an entirely new contract.
• Workout Bonus: A workout bonus is extra money a player can earn by attending a certain percentage of their team’s offseason workout program. The rules state that a player can miss up to 5 out of every 32 scheduled workouts and still get their full bonus. Teams use these bonuses to incentivize players to participate in the voluntary offseason training sessions leading up to the regular season. As long as players meet the minimum attendance requirement set in their contract, they receive the workout bonus pay.
• Reporting Bonus: Earned by reporting to team activities by a specified date.

• Base Salary: The yearly amount a player is paid, not including bonuses.
• Franchise Tag (Exclusive): A team can designate one player a UFA as an exclusive franchise player. This forces the player to play for them that year on a one-year contract at a specific value (usually the top average salary for their position). The player can’t negotiate with other teams.
• Franchise Tag (Non-Exclusive): Similar to the exclusive tag, but the player can negotiate with other teams. If another team signs them to an offer sheet, the original team has the right to match it or let the player go (and receive compensation).
• Guaranteed Money: A portion of a player’s contract that the team is obligated to pay, regardless of roster status (often includes signing bonus and some salary).
• Cap Hit: The total amount of money a player’s contract counts against the team’s salary cap in a given year. This includes base salary, signing bonus (spread out over the contract), and any guaranteed money for that year.
• Offset Language: A clause in a contract that allows a player’s new team to subtract any guaranteed money they receive from their old team’s salary cap hit if they’re released.
• Veteran Minimum: The minimum salary a player with a certain amount of experience can be paid according to the NFL’s collective bargaining agreement.
• Veteran Salary Benefit: The veteran salary benefit allows teams to sign players with 4+ years of NFL experience to a 1-year contract paying them the minimum salary for their experience level, plus $137,500 in bonuses/incentives. Instead of counting their full veteran minimum salary against the salary cap, the cap hit for these “qualifying contracts” is calculated as if the player only had 2 years of experience. This benefit makes it cheaper against the salary cap for teams to sign veteran players compared to their normal rates. The tradeoff for the veterans is taking a 1-year, incentive-laded deal below their market value. It’s a way for teams to add experience at reduced cap costs, while vets can prove themselves for another contract.
• Four-year qualifying contract: Teams can sign a maximum of two players who have been on their roster for 4+ straight years to a 1-year deal with a cap hit far below the normal veteran rate. To qualify, the player must have 4+ accredited seasons and their expiring contract covered 4+ consecutive years with that same team while being on the active/inactive roster for every game. It allows teams to re-sign tenured vets at a steep discount against the salary cap for up to two players per year.
• Waviers: Waivers allow teams to claim players who were recently released by another team, before those players become free agents. For players with less than 4 seasons in the league, their contract always goes through waivers when released. The team with the highest waiver priority gets the first chance to claim that player. For veterans with 4+ seasons, it depends on the time of year. Right after the Super Bowl until the trade deadline, they become free agents immediately when released. But during the rest of the season, even vets have to pass through waivers unclaimed before becoming free agents. Waivers give teams an option to pick up released players still under contract before they can sign elsewhere as free agents.
• Contract Incentives: Bonuses a player can earn for achieving specific performance goals during the season (yards gained, touchdowns, etc.).
• Salary Escalators: Salary escalators raise a player’s base salary in future years of their contract if they meet certain performance goals in the current season. The raise only applies if the player is still on the roster for those future seasons. If cut before the escalated years, the raise is voided. Some contracts also have de-escalators that reduce future salaries if performance declines. Escalators are incentives that provide potential salary bumps rather than immediate bonus money.
• Proven Performance Escalator (PPE): The PPE allows teams to give higher salary raises to late-round draft picks who massively outperform expectations early in their careers. It’s an exception to the normal limits (25% Rule) on increasing rookie contracts. The PPE lets teams compensate these overachieving non-first rounders closer to their proven ability level. It’s a performance-based salary escalator specifically for rookie deals of players drafted after the 1st round who become elite starters very quickly.

• Fifth- Year options: All first-round draft picks have a 5th-year team option built into their rookie contracts. Teams can unilaterally extend these deals for one extra season by exercising this option during a set window after the player’s 3rd year. The 5th-year salary is pre-determined and not negotiable, based on performance and position. It allows teams extra time to evaluate their first-round picks before a second contract while retaining control for an additional year.

Free Agency Designation Glossary

So…..now we are all aware of the meaning of dead cap and a ton of other random phrases, let’s discuss a few more. Some of the terminology related to contracts and salaries overlaps with standard concepts found in “free agency” , like unrestricted and restricted free agent but here are some additional terms.