Dak Prescott signed a new four-year contract with the Dallas Cowboys on Monday night, and the news hit like the finale of a TV show that everyone stopped watching years ago. Even though this saga has been going on for almost three seasons—with Prescott being given the franchise tag last year—there was little chance Dak was going to leave, and little chance the Cowboys weren’t going to give him a substantial deal. As far back as May 2018, Cowboys team president Stephen Jones told reporters Prescott was going to get paid. “At that [quarterback] position, [the money] kind of is what it is,” Jones said.
Fast-forward three Super Bowls, two election cycles, and one global pandemic, and the deal finally got done. Prescott signed a four-year contract extension worth $160 million. That includes a $66 million signing bonus, which is the largest in NFL history. It also includes $126 million guaranteed at signing, which is another league record. Prescott will earn an average of $40 million annually, making him the second-highest-paid player in the NFL. But even that is underselling the magnitude of this deal. Between his signing bonus and new salary, Prescott will make $75 million in 2021 alone, which is more than Patrick Mahomes will make over the first two years of his so-called half-a-billion-dollar deal. Everything is bigger in Texas, and that apparently includes quarterback contracts.
But while Prescott is finally getting his payday, he’s also just a few years removed from being the league’s most underpaid player. In 2018, Prescott earned $630,000. In 2019, that number bumped up to $2.2 million. This year, his cash flow will be more than 100 times what he made in 2018. Here’s a graph of Dak’s earnings since entering the NFL:
And here’s a graph of the price of bitcoin over the same time period.
How did this happen? Why on earth is Dak making more this year than Mahomes will between 2022 and 2023 combined? And what can we learn from this experience? Here are three takeaways from the Dak Prescott contract saga.
1. Don’t let your good quarterback get anywhere near free agency.
The Cowboys screwed up years ago and are now paying the price. Literally. For four seasons, Prescott was perhaps the best bargain in football. He was the most important player on the most valuable sports franchise on earth, and he made less than $4 million during a period in which the Cowboys franchise value rose by more than a billion dollars.
But Prescott was so underpaid that he became unwilling to accept the extension offers the Cowboys tossed his way. And that forced Dallas to use its “break glass in case of emergency” box last season and apply the franchise tag to Prescott to keep him for 2020. But that glass is not supposed to get broken multiple times. Tagging players gets more expensive each year (to discourage teams from doing it forever). So had the Cowboys tagged Prescott for 2021—the second year in a row—they would have had to pay him $38 million. Tagging him again in 2022 would have cost an astounding $54 million. That means that had Prescott not even bothered to negotiate with the Cowboys—not show up, not log on to team Zooms, nothing—he would have gotten either $38 million this year, or gone into free agency and likely gotten even more. So $38 million annually was the floor in these negotiations. All because Dallas let this drag out for almost three years.
“I don’t know how you could have any more leverage,” Cowboys owner Jerry Jones said on 105.3 The Fan in January, via The Dallas Morning News’s Michael Gehlken.
Prescott got that leverage because he was willing to take a risk. The way the NFL is set up, it’s incredibly difficult for good players—especially quarterbacks—to reach free agency. Teams have franchise and transition tags to keep players around longer than their contracts dictate, and they go to great lengths to sign their good players to contract extensions before they hit free agency. Players, meanwhile, are usually happy to take money that’s being dangled in front of them, even if it’s less than they could make in free agency, because football is a brutal and violent sport. Injuries can make future earnings disappear in the blink of an eye.
But Prescott was seemingly unafraid of these risks. He played on the franchise tag without signing a long-term deal, cushioned by the money he made from endorsements, like Campbell’s soup and those weird mattress commercials. And what additionally helped Prescott sleep easy were the insurance policies he took out that would pay him if he suffered an injury that affected his future earnings. And Prescott did suffer an injury last October, a compound ankle fracture that ended his season. But that fact did not end up significantly affecting this contract.
Prescott bet on himself and won. But just as importantly, the Cowboys bet their starting quarterback would fold, and the team lost. Other teams should see this as a lesson that reaffirms what they already knew: Don’t let your quarterbacks get anywhere near the door.
2. The Cowboys do business emotionally—for better or for worse.
When Jerry Jones bought the Cowboys franchise in 1989, he said he was going to be involved in everything, including “jocks and socks.” In 2021, he’s still the most involved owner in the sport. The gift and curse of the Cowboys is that Jerry wants to win, but he also wants to do it his way with his guys. This has led Dallas to often pay (and sometimes overpay) its own talent to keep them on the team.
Sometimes it works great. Signing left tackle Tyron Smith, right guard Zack Martin, and center Travis Frederick to long-term deals worked out well for the team. But other times—like in the cases of running back Ezekiel Elliott and linebacker Jaylon Smith—these deals start to look dated quickly. Regardless, the Joneses seem intent on keeping their guys, and that was most true for Prescott.
“Listen, Dak is the quarterback of the Dallas Cowboys,” Jerry Jones told 105.3 The Fan in November 2018. “He’s young, and he’s going to get extended.”
This wasn’t just about Dak being young—it was also about Jerry getting older. The 78-year-old has spoken often about how his age means he is hungrier for a Super Bowl than ever. “I don’t have time to have a bad time,” Jones told reporters in 2019. Surely Jones was thinking about that after Prescott’s injury forced the Cowboys to trot out Andy Dalton, Garrett Gilbert, and Ben DiNucci at quarterback across the 2020 season. It’s hard to watch those performances and then let Dak leave, especially when the QB was on pace to surpass the single-season passing yardage record before he got hurt.
3. Dallas paid Dak … but at what cost?
Stephen Jones noted in 2018 that every dollar the team gives to Dak is a dollar that does not go to other players. “The deal’s got to be right for Dak, it’s got to be right for us,” Jones said on Pro Football Talk’s podcast that year. “As you know, the salary cap makes this a zero-sum game for owners. This is not something where Jerry and myself are trying to save money so the Cowboys can make more money for the Jones family. We’re just trying to do our very best ... to really divide up the pie in the best way possible to win a Super Bowl.”
An early look at the financial implications of this deal suggests the Cowboys did a good job dividing that pie. Despite the fact that Prescott will get $75 million this year, his cap hit for this season will be just $22 million (accounting is black magic). That $22 million figure is pretty reasonable. In fact, it’s actually 30 percent lower than Prescott’s cap hit last year ($31 million). The NFL salary cap is declining this year for just the second time since it was invented in 1994, and as a result, many teams entered this spring in a cap crunch. But Prescott’s cap hit is actually declining at a larger percentage in 2021 than the Cowboys’ overall budget.
Even with that accounting wizardry, though, Dallas still has a lot of hard choices to make. This team needs to add depth on the offensive line, an interior defensive lineman, and multiple players in the secondary. None of those things will come cheap. Dallas may lose cornerback Chidobe Awuzie in free agency, leaving little talent behind last year’s second-round pick, Trevon Diggs. Free safety is a position of need for what feels like the 20th year in a row. The team got a huge 2020 season from defensive end Aldon Smith, but the Cowboys need a defensive tackle or two on the inside. And they need offensive line help. Rookie center Tyler Biadasz disappointed last year, and Joe Looney is scheduled to hit free agency. Tackles Tyron Smith and La’el Collins are elite when healthy, but have been injured enough in recent seasons to show the Cowboys need a solid third-string tackle at all times.
Even so, having Prescott locked down trumps all of those other ailments. When it comes to paying a quarterback, the price is what it is. And the Cowboys are paying an all-time-high price for Prescott’s services.