ESPN's Jeff Darlington reported Tuesday on Get Up! the Cowboys will "probably" use the franchise tag on Prescott, who'd otherwise become an unrestricted free agent, for the second straight year if no agreement is reached by the March 9 deadline to utilize the tag.
"Very important to point out here, though, speaking with people on both sides of this thing, it does not sound as if any progress has been made in a long-term extension for Dak Prescott," Darlington said.
Jane Slater of NFL Network later reported the Cowboys will not franchise-tag Prescott on Tuesday. Slater added the two sides have held talks, though "nothing meaningful" has taken place.
The 27-year-old Mississippi State product played the 2020 season under a one-year, $31.4 million contract after being given the franchise tag by the Cowboys.
If tagged again, he'll receive a 20 percent raise to $37.7 million on another one-year deal for 2021.
Prescott was off to another strong start in 2020 with a 68 percent completion rate for 1,856 yards with nine touchdowns and four interceptions through five appearances before suffering a season-ending ankle injury. He also tallied three rushing scores.
The two-time Pro Bowl selection hadn't missed any time over his first four seasons because of injury and ranks tied for seventh with the Tampa Bay Buccaneers' Tom Brady in career passer rating (97.3) among active signal-callers.
In January, Cowboys owner Jerry Jones said Prescott held a lot of the cards as the sides headed toward the negotiation table.
"I don't know how you could have any more leverage," Jones said on 105.3 The Fan. "Dak might be a picture postcard, so to speak. His evolving into an NFL quarterback has been nothing short of a perfect picture."
A long-term deal would likely be better for Dallas' short-term financial outlook since a $37.7 million cap hit in a year where the salary cap is expected to decline isn't ideal. But there are also risks associated with a lucrative extension for a player who's coming off a major injury.
The bottom line is the Cowboys can't allow Prescott to leave without a succession plan in place at the sport's most important position. The front office will have little choice beyond using the tag again if the sides can't reach a deal in the next two weeks.
Garrett Gilbert, Cooper Rush and Ben DiNucci are the team's other quarterbacks under contract for 2021 with veteran backup Andy Dalton set to become a free agent.