Dead cap, or dead money, is salary cap space charged to a team for players who are no longer on its roster.
Where It Comes From
Almost all of it traces to signing bonuses. A bonus is paid up front but charged against the cap in equal slices across the contract. If the player leaves before the deal ends, the slices he has not yet been charged for do not disappear. They accelerate onto the cap immediately.
The team has already spent the cash. The accounting simply catches up.
A Simple Example
A player signs for five years with a $25 million signing bonus, charged at $5 million a year. He is released after two seasons. The team has accounted for $10 million; the remaining $15 million hits the cap at once, for a player who will not take a snap for them again.
Why Teams Accept It
Sometimes the alternative is worse. Carrying a declining player at a large salary can cost more in cap space and roster spot than absorbing the dead charge and moving on. Teams also take dead money deliberately in a rebuilding year, clearing future books at the expense of the current one.
Reducing the Damage
A post-June 1 release splits the charge across two years rather than taking it all at once. Teams get two such designations a year. Trading a player rather than releasing him does not avoid the acceleration, though it may return a draft pick in exchange.
Why It Matters
Dead money is space that buys nothing. A team carrying a large amount is effectively operating under a lower cap than its rivals, which is why front offices are judged partly on how little of it they accumulate.
Related
How the cap works · What the cap is · The franchise tag
The Bottom Line
Cap space charged for players who are gone, created when unamortized signing bonus accelerates after a release or trade. It buys nothing and cannot be wished away.