“Dead money” is money guaranteed to a player. Since it’s guaranteed, the team still has to pay it even if they cut the player, so it still counts against the salary cap even though they’re not longer getting the player’s services.

Say you sign a player to a 3-year, $15 million contract. That’s a pretty simple calculation: $5 million per year, and the team can cut the player at any time and not have any dead money.

But the players push for things like signing bonuses, which are guaranteed. Same player: you sign him to a 3-year, $15 million contract, with $6 million of that total as the signing bonus. Salary cap rules allow you to pro-rate the signing bonus over the life of the contract, so if you cut him after year one, you’ll have $2 million in dead money for each year after you cut him.

Trades require the team to continue paying the contract as written, so dead money only becomes an issue if the new team cuts the player.

https://www.quora.com/How-exactly-d...s-to-that-money-if-they-cut-or-trade-a-player
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