Salary cap

The salary cap is the agreement between the teams and the league about the money available for salaries. It suggests the team management can’t exceed this sum otherwise, it may fall under sanctions. However, some agreements may be flexible and allow the teams to regulate the finances.

For example, the NFL has a hard salary cap. But the salary in the contract doesn’t mean only a mathematical division of the guaranteed payments. The team tends to pay more later. It reduces the impact on the earlier years. If that fails or the payments are still against the cap, the team may release the player or renegotiate the contract. Luckily, the sum against the cap is the bonuses stimulating the candidate to sign the deal.