Orton's 'Cut' Clarifies Cowboys Finances

Orton's 'Cut' Clarifies Cowboys Finances

The Cowboys have made a decision, and have chosen not to wait any longer for Orton to show up. CowboysHQ speaks to Stephen Jones for the official word.

The Cowboys blinked. Then winked.

The offseason-long saga about a backup quarterback with a questionable skillset comes to an end with the word that the Dallas Cowboys are releasing quarterback Kyle Orton from his contract. The team is set to report for training camp in just seven days, and apparently have decided that the game of chicken had exhausted its entertainment value.

The move actually saves the Cowboys space against the 2014 cap and brings their available money to just under $11 million. Dallas is already in negotiations with WR Dez Bryant and LT Tyron Smith about extensions to their rookie deals.

Orton started exactly one game in his Cowboys career, and was paid quite handsomely for it. Dallas signed the former Bear, Bronco and Chief to a three-year, $10.5 million contract prior to the 2012 season to be the “starter-quality” backup to Tony Romo. He had performed mop-up duty in a three games prior to last season’s NFC East Championship game that the team lost to the Philadelphia Eagles. Dallas was down by two with the ball when Orton threw behind Miles Austin for an interception.

After the season was over, Orton apparently told the team that he was contemplating retirement. Whether or not the team believed Orton or considered it a move to gain his freedom, a la Jay Ratliff’s injury situation, is uncertain. However, the Cowboys seemed to be highly interested in a clause in the CBA that allows teams to recoup money given to a player for salary cap purposes.

Orton’s 2012 deal was structured as follows: $5 million signing bonus, $900,000 base salary in 2012, $1.35 million base salary in 2013 and $3.25 million base salary for 2014. Prior to the 2013 season, Orton’s deal was restructured to create cap space like so many other Dallas contracts. That converted $510,000 of his 2013 base salary into signing bonus.

The reason for that is simple. For accounting purposes, signing bonuses can be spread evenly over the remaining years of a contract, up to a maximum of five years. So while Orton was paid $5.9m during the 2012 season, his cap hit was actually only $2.57m at the time. When the team moved some of his base salary to bonus in 2013, they employed a method of spreading the signing bonus out even more, called voidable years. Dallas added two years, 2015 and 2016 to Orton’s deal; years that didn’t really exist because a clause was written in the contract that he wouldn’t actually play for the team in those seasons.

What that move does is allow the original bonus to now be allocated over five years ($5 million over 5 years = $1 million hit per year). Also, the new bonus of $510,000 would be spread over the remaining four years (2013-2016) evenly, at a cost at $127,500 per season.

All that adds up to the Cowboys, due to the CBA clause mentioned earlier, to be entitled to demand repayment of the bonus money allocated to years 2014, 2015 and 2016. That would be $1,127,500 x 3, or $3,382,500.

That’s where the game of chicken comes into play. Dallas would love to recoup the cash from the transaction if Orton had officially retired. However, they were in a position of little leverage considering the probably couldn’t have kept him on an active roster to wait him out. They could have gone through training camp and it’s expanded rosters, but would they have cut “Mr. 53” to force Orton’s hand?

So in the end, they have released Orton. If he had played, Orton would have counted $4.3775m against the 2014 cap. With his release, there is no base salary to pay, so only his prorated signing bonuses count against the cap. With a cap hit of $1.1275m, the move actually gives Dallas $3.25 million of more space. However, the remaining unamortized bonus that was to be charged to 2015 and 2016 ($1.1275m respectively) now hits the 2015 cap as “dead money”, totaling $2.255m.

If Orton had retired, Dallas would have gained $4.3775 million of 2014 space, and had no future dead money. But CowboysHQ's Mike Fisher spoke to Cowboys COO Stephen Jones immediately following the initial ESPN report, heard him use the word "cut," and notes that Stephen didn't seem very happy about it.

It will be interesting to see how the Cowboys classify Orton's release, and if they do it in a way to prevent his signing with another club; something they seemed to be concerned with. It’s a strange day when the biggest offseason “controversy” around the Dallas Cowboys circles around their backup quarterback, but now that drama is over. Brandon Weeden is the undisputed backup for Tony Romo and his yet-to-be-tested surgically repaired back.

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