I was recently involved in a discussion where all parties wondered how much dead money factors into team success. The general theory from those involved in the discussion seemed to be that teams who have less dead money, and therefore more of the salary cap to spend on players, should fare better, but nobody had any numbers to back this notion up.
Since I wasn’t able to find more than anecdotal data about the relationship between dead money and team success, I decided to look into it myself. Using data from Spotrac, which dates back to 2011, I looked at dead money (as a percentage of the total cap for that year, to correct for cap inflation) and team winning percentage. This gave me 128 data points-4 seasons each for 32 teams-that I could use to determine how strong the correlation between dead money and winning percentage is.
As you can see in the chart below, I found that there was no appreciable relationship between the amount of dead money a team had and their on-field success that season.
The overall correlation between dead money and winning percentage was completely negligible at 0.004. This indicates that there is absolutely no relationship between the amount of dead money a team carries on their cap and their winning percentage that season.
Team by team
Of course, looking at only one year at a time can be dangerous, as sometimes dead money in one season sets up success in the next (or vice-versa), and winning percentage can fluctuate by a healthy amount based on luck in a short NFL season. In order to try and reduce the noise in the data, I looked at the average amount of dead money and average winning percentage for each NFL team from 2011-2014. This data, now containing only 32 points, can be seen in the chart below.
Once again, we see no real relationship between dead money and winning percentage. The correlation has improved by a factor of about 20, likely a function of reduced noise, but is still extremely low at only 0.08, far below any reasonable threshold for saying there is a clear relationship between the two data sets.
Finally I looked at addressing a 3rd question: what happens the year after significant dead money comes off the books? Do teams see improvement the year after they swallow a lot of dead money, when they are free to spend more to upgrade the talent on their roster?
I had a bit of a difficult time answering this question. First I looked at the relationship between the change in dead money and the change in winning percentage. This reduced the data set from 4 points per team to 3, since I had no previous year to compare to for 2011, and can be seen in the graph below.
Once again, we see basically no correlation, indicating no significant relationship. But what happens if I select out specifically the teams that had a significant decrease in dead money? Do those teams improve their performance?
Looking at all teams with a drop of at least 5% in dead cap space from one year to the next is the closest I could reasonably come to answering this question without getting too small of a sample size. As it is, I was left with a sample size of only 9, which makes getting a significant correlation difficult.
Unsurprisingly, it the correlation was once again low enough to be meaningless (0.0066), and the average change in win percentage for these 9 teams was actually negative, so there is certainly no evidence to suggest that teams are due for a rebound after significant amounts of dead money come off their cap.
Pretty much any way you look at it, the evidence strongly suggests that there is no relationship between dead money and team success. Teams like Seattle and New England have been among the best in the NFL the last few years despite consistently high amounts of dead money, while teams like Green Bay and San Francisco find consistent success while managing the cap carefully to avoid dead money.
What this ultimately suggests is that other factors, such as the ability to draft and develop talent and find players to fit your system, have a much greater influence on team success. Getting a number of quality contributors on rookie contracts more than makes up for large amounts of dead money, as we have seen with the Colts and Seahawks in recent years. Top-notch quarterback play carries you through a number of obstacles, as we have seen in New England, Denver, and Green Bay. Good coaching turns teams around in a hurry, as we have seen recently in San Francisco and Arizona, while bad coaching can ruin teams, as we just saw in Chicago.
There are any number of factors that influence team success in the NFL, which is one of the reasons it is so much fun to follow, but the data says that dead money is not one of them.