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Cowboys Face Salary Cap Crunch After Playoff Loss

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  Published in Business and Finance on Friday, February 20th 2026 at 14:15 GMT by Dallas Morning News
      Locales: Texas, New Jersey, UNITED STATES

Frisco, TX - February 20, 2026 - The sting of the playoff loss to the Detroit Lions is still palpable in Dallas, but the Dallas Cowboys front office has quickly pivoted to the daunting task of navigating a complex salary cap situation as they prepare for the 2026 NFL season. While aspirations for a Super Bowl run remain high, the current financial landscape presents significant hurdles, demanding shrewd decision-making and potentially painful cuts.

Currently, the Cowboys find themselves with approximately $15.8 million in cap space, a figure considerably lower than the initially projected $30 million. This shrinking cushion is primarily attributed to the escalating costs associated with retaining established, high-performing players - a common challenge for teams consistently competing at a high level. However, in Dallas, the situation is particularly acute, demanding proactive measures before the free agency period opens.

Dak Prescott's Contract: The Elephant in the Room

The single largest factor impacting the Cowboys' cap flexibility is the massive contract of quarterback Dak Prescott. Set to earn $55 million in 2026, Prescott's salary ranks second-highest in the NFL, behind only Patrick Mahomes. While Prescott maintains he's a top-tier signal caller - a sentiment many fans share despite recent playoff shortcomings - his financial burden demands immediate attention.

Simply cutting Prescott is not a viable option, both due to the immense dead cap hit it would incur and the lack of readily available, proven replacements. Therefore, a contract restructuring is almost certain. Potential restructuring moves could include converting salary into signing bonuses, extending the length of the contract (spreading out the cap hit), or a combination of both. However, these are short-term fixes that push the problem further down the road. The Cowboys must carefully balance present-day cap relief with long-term financial sustainability. Analysts predict that the team will attempt to shave off at least $10-15 million from Prescott's immediate cap figure.

Key Free Agent Decisions: Lawrence & Smith

Beyond Prescott, the Cowboys face critical decisions regarding several key players hitting free agency. Veteran defensive end DeMarcus Lawrence and Pro Bowl left tackle Tyrion Smith top the list. Both have been cornerstones of the Cowboys' success for years, but their age and price tags raise difficult questions.

Lawrence, while still a disruptive force, has shown signs of slowing down, and his contract demands could be excessive. Smith, consistently one of the league's best at his position when healthy, has battled injuries in recent seasons, casting doubt on his long-term reliability. Re-signing both is unlikely given the cap constraints. The Cowboys will need to assess whether their contributions justify the cost, or if it's time to invest in younger, more affordable replacements. Losing either player would create a significant void, but retaining both might prove financially unsustainable.

Addressing Defensive Weaknesses

The Cowboys' defensive performance in 2025 was a clear weak point, contributing heavily to their playoff exit. A revamped defensive strategy and personnel upgrades are paramount. The team can pursue improvements through free agency, targeting proven veterans at positions of need - particularly linebacker and safety. However, the free agent market is often inflated, and the Cowboys may find better value in the 2026 NFL Draft.

The draft class is expected to be deep with defensive talent, offering the Cowboys the opportunity to address multiple needs with high-potential prospects. A combination of free agent signings and draft picks is the most likely scenario, allowing them to shore up the defense without completely emptying their coffers.

Difficult Choices Ahead: Restructuring & Potential Releases

To maximize cap space, the Cowboys are likely to explore restructuring additional contracts beyond Prescott's. Players like Zack Martin and CeeDee Lamb, while vital to the team's success, could be asked to take on modified deals. However, even with widespread restructuring, further cuts might be necessary. This could involve releasing veteran players with sizable contracts, even those who remain productive.

These decisions will undoubtedly be difficult, as they involve parting ways with players who have contributed to the Cowboys' legacy. However, the financial realities of the NFL necessitate tough choices. The Cowboys' front office faces a delicate balancing act: maintaining a competitive roster while ensuring long-term financial health. The next few weeks will be crucial in shaping the Cowboys' fortunes for the 2026 season and beyond.