a) The NFL has set the salary cap at $155.27 Million for 2016, therefore each team has a starting salary cap of $1,552.70 to reflect that number.
b) At no time between June 1st and the end of the regular season may a team’s total roster salaries exceed the cap. It is a Hard Cap. From January 1st through May 31st the league will be on a softcap.
c) The salary cap will be adjusted each year to reflect the NFL’s cap numbers. If for example the NFL salary cap goes up to $155 Million in 2020, the cap will go up to $1,550 for the 2020 season.
d) Impending free agents are automatically dropped by commissioner and each team must meet the salary cap requirements at this date.
e) If a team is in violation of the cap, the commissioners will use their best judgment to cut players in order to take the team under the cap with the commissioner decisions being final.
f) All players released because of salary cap issues will enter the free agent pool.
g) If a player is waived prior to his contract expiring; the team incurs a salary cap penalty for the remaining years of the contract. When the contract is cancelled, current year hit on the cap is 25%, with 25% penalty for each additional year. However, these additional contract years are also all penalized in the following year.
Therefore if there are:
2 years remaining on the contract, 50% is deducted in the following year.
3 years remaining on the contract, 75% is deducted in the following year.
4 years remaining on the contract, 100% is deducted in the following year.
As an example, the regular season just ended. You decide to cut LeSean McCoy’s, Salary $100 this year, who is on year 1 of a 3 year contract. 75% of cap hit stays in effect for the remainder of the current year for $75 (75% of $100). At March 1st the following year, year 2 of the contract is in effect. Since there were 4 years remaining when the cancellation took place, it’s also 75% of that $100 salary amount, $75 in year 2. In years 3, 4, and 5, there is no remaining cap hit.
h) The Inflation fee is not charged to contracts cut before March 1st.
i) When a player is dropped by a team and picked up by that team in the same season, the team reacquires the player at his original contract price. For Example: If a team drops Peyton Manning at $150 salary, and picks him up again on waivers for $15, the commissioner will reset his salary at $150 and erase the salary penalty of $75. The commissioner will also reset the contract years to the original contract amount.
j) Players that have been used by an owner for an entire season and then dropped at the end of the season will not have their year one cap hit count against the current season. It should count against the next season since the owner had the players services for the entire year. The deadline for dropping a player and having their first year cap hit count against the current year is the trade deadline. If a player is dropped after the trade deadline his year one cap hit won’t take place until the following season, however the current year will not be included in the penalties as the current year is over. Since we allow one WW extension, this will allow other owners to acquire the player and give them an extension. Owners will still be able to drop the players before the salary increases on March 1st, however it will count against the cap for the next season.
Example: I own Tony Romo at $100. If Romo had 3 years left on his contract and I dropped him before the salaries increased and contracts decreased, I would be responsible for $50 in 2016 and $75 in 2017. If I waited for the salaries to increase, I would be responsible for $60 in 2015 ($120 * 50%) and $60 in 2016 ($120 * 25% * 2 years).