Now that teams have for the most part completed the team-building portion of their season, it's a good time to assess just how much damage they've done in terms of dead money against their salary cap.
What is Dead Money?
Simply speaking, dead money refers to the money guaranteed to a player (in terms of base salary, signing bonus, option bonus) that has yet to be charged to the team's salary cap. For example, if a player receives a 5 year contract with a $10 million signing bonus, each of the 5 years will contain $2 million in pro-rated signing bonus against the salary cap. If that player is cut or traded prior to the 4th season, $4 million of that signing bonus still remains in terms of cap-allocation, and turns into "dead money".
Can this money be split?
If a player is cut/traded prior to June 1st his remaining dead money will accelerate entirely into the current season's salary cap. The only exception to this comes from a recently added "June 1st Designation" clause, which allows teams to designate two players they've cut before June 1st, as a June 1st release. Why is this important?
Any cut/trade on or after June 1st allows the dead money to split over two years, the current and the next. Any bonus pro-ration for the current season stays in the current season. Any guaranteed salary (from any remaining year of the deal) also accelerates into the current season's salary cap. Any remaining bonus pro-ration can be pushed into next year's salary cap.
Trent Richardson's Dead Money
The most recent major example of this comes from the Trent Richardson trade. Richardson's $20.4 million contract with the Browns was fully guaranteed, and carried a $13.341 million signing bonus. This bonus splits into $3,335,250 each season according to the salary cap. Because his 2013 base salary of $1,321,354 is fully guaranteed, the two weeks he's played as a Brown this season also becomes a factor in terms of dead money.
2013 Dead Money:
$3,335,250 (signing bonus pro-ration) + $1,321,354/17 weeks in a season * 2 weeks played
2014 Dead Money:
$3,335,250 (2014 signing bonus pro-ration) + $3,335,250 (2015 signing bonus pro-ration)