NFL economics: Why waiting to pay Dak Prescott is not costing the Cowboys more cap space

“Why are the Cowboys waiting so long to pay Dak Prescott?” – almost every Cowboys fan

It’s a weird thing. The front office of the Dallas Cowboys loves Dak Prescott. The front office also loves cap space. So, why would such a frugal organization take so long to re-up on their franchise quarterback when he’s only becoming more expensive? It just doesn’t make sense. Today, we’ll shed some light on the puzzling modus operandi of the Cowboys front office.

When Prescott signs his new deal, he will become the highest-paid player in NFL history, surpassing Joe Burrow who signed a five-year, $275 million deal last offseason. When the news breaks, some will complain about Dak’s playoff history and how he doesn’t deserve as much as Burrow, while others will point out that the Cowboys could’ve gotten him much cheaper if they had just been a little more proactive.

Before we tackle this topic, we wanted to point out that this isn’t going to be about whether or not Prescott is worth the money. We all have opinions about that and there’s no point in re-hashing it. Instead, we wanted to explain that waiting a little bit longer does not actually hurt the Cowboys. That may not seem very plausible, but we’re going to get into some numbers and help clarify this.

Prescott’s contract will be larger. His signing bonus, guaranteed money, and average annual salary will all be larger than it would have been had the Cowboys signed him this time last year. That clearly makes him more expensive, right?

Not so fast.

What we must take into consideration is the economy, the NFL economy. The salary cap continues to rise. That’s because the NFL is a profitable business that brings in money hand over fist and with greater revenue comes a greater share for the players. The profits took a hit back in 2021 because of the fallout from COVID-19, but for the most part, we see a steady increase in revenue. Here’s a chart showing the salary cap values since the 2011 season.

You can see a linear representation of the cap values that is almost a straight line from 2013 to 2020 and again from 2021 to 2024. Using linear regression, we can project future cap costs.

The cap currently sits at $255.4 million and over the next five years, that amount is projected to grow another $100 million. These numbers match what spotrac.com uses for their estimates. Keep in mind these are just estimates as the exact figures will be different. The key thing to take from this is that the cap is increasing, and when the cap increases, so do the salaries of NFL players.

This is important because even though the price of a player’s contract is larger, this quarterback “inflation” we think we are seeing doesn’t actually decrease the purchasing power of NFL teams because they have more cap space. Let’s get to some numbers so we can better explain this.

Last offseason, we saw four franchise quarterbacks take turns becoming the highest-paid quarterback in the league. Let’s review…

• April 17th, Jalen Hurts, $255 million (average annual salary = $51 million)
• April 27th, Lamar Jackson, $260 million (average annual salary = $52 million)
• July 25th, Justin Herbert, $262.5 million (average annual salary = $52.5 million)

You see what’s going on here? Oh wait, we’re not done…

• September 7th, Joe Burrow, $275 million, (average annual salary = $55 million)

This is what is meant by the dominoes falling or leaves falling if you are (hint, hint) planning to do your business in the fall. Teams that got a jump on re-signing their QB saved some money as each new contract created a new baseline for the next one. The smartest players/agents will be the ones who can hold their breath the longest.

For the player, getting a big number is important. For the organization, maintaining its purchasing power is important. The Cowboys don’t care about paying Prescott more overall money if it doesn’t affect their purchasing power. To understand this, we need to look at total QB cost vs. total cap space for the duration of their contract. And because we can project future cap costs, we can calculate how much of their team’s allotted space they will take up.

Now, money will be moved around and cap % will change from year to year, but if these quarterbacks play out their contract, they’ll cost roughly 19 to 20% of their team’s cap space over those five years.

So, what does this mean for the Cowboys and Dak Prescott? It means that Prescott could become the highest-paid player in the NFL, exceeding Burrow’s $55 million annual average salary, and still be more affordable to the Cowboys unless he hits the $60 million mark. Here is a breakdown of some potential new deals for Prescott and how they compare to recent quarterbacks.

Now, could Prescott command a $60+ million deal right now? Some think yes while others think that might be a tad high. If he does, then the Cowboys’ front office will have cost them some spending power by dragging that out, but it would take a contract that large to do it. Here are the projected annual average salaries of franchise quarterbacks that would provide their team the same level of purchasing power from year to year.

Understanding these relative costs is important because it makes more sense why the Cowboys front office isn’t in a hurry. And when we hear things like, “The price just went up!” we now know that’s not always the case.

And one final thing we wanted to discuss before we put a bow on this. Leverage. We’ve heard ad nauseam that Dak has all the leverage. Is that true or is this just another fallacy? The leverage Prescott has is about as strong as it can get. The Cowboys absolutely do not want him to hit the open market. With no option to franchise tag him, Prescott’s cost next offseason would elevate even more if he has multiple teams interested in him, and he would have that. That’s basic supply and demand. The Cowboys do not want that to happen.

At the same time, there are reasons Prescott might want to get a new deal done too. These include new money, more guaranteed money, and long-term security protecting him from injury which might resonate with him considering the last time he was in a contract year he suffered a gruesome foot injury. Additionally, Prescott’s stock is rather high right now coming off an MVP-like season, so there’s not much he can do that would move the needle forward, except for having some post-season success. So yeah, Dak’s got leverage, but both sides have plenty to gain by getting a deal done and even more to lose.

A new deal is right around the corner. Don’t be floored by the astronomical numbers you see. When determining if the Cowboys got a good/bad deal or not, remember these three important factors:

1. A quarterback’s price is their price. There is not much wiggle room for negotiations.
2. Contract prices rise from year to year without affecting the purchasing power of NFL teams.
3. The cost over the entire length of the contract must be taken into account.

So, just because Prescott will command a contract exceeding the annual average salary of Burrow doesn’t mean it will hurt the Cowboys and their allowed cap resources.