1. How much is the cap?
Each team starts with a $67.4 million salary cap, and it is a hard cap. Salaries are broken into three parts -- signing bonus prorations, base salaries and incentives, including roster and reporting bonuses.
2. What does signing bonus proration means?
That is the key to understanding the cap. A signing bonus is prorated or averaged over the length of the contract. For example, a $4 million signing bonus on a four-year contract counts as $1 million in each year of the cap. If a player has a $4 million signing bonus on a four-year deal that has a $440,000 base salary and a $250,000 roster bonus, his cap number for the year is $1.69 million.
3. What is a cap hit?
If a team releases or trades a player during the offseason, they have to accelerate the remaining portion of the prorated signing bonus. Let's say that the team cuts a player May 1 in the second year of a four-year contract that has a $4 million signing bonus. They have to take a $3 million cap hit that year. If they release such a player and he is claimed on waivers, the same formula applies. There is a benefit to releasing a player after June 1. After June 1, the team only has to take the $1 million portion of the signing bonus applied to this year's cap. They can then take the remaining $2 million hit next year. But if that player is claimed on waivers, the cap hit comes this year.
4. How do teams create cap room?
They create cap room by replacing base salary with a signing bonus. Let's say a player has a $4 million base salary in the second year of a four-year contract that has a $4 million signing bonus. His cap number is $5 million. A team can give the player a $3.6 million signing bonus on a three-year deal and reduce his base salary to $400,000. That lowers his cap number to $2.6 million, which is a savings of $2.4 million.
5. Is the cap treated differently during different times of the year?
Yes. Up until opening Sunday, teams only have to count the contracts of their top 51 players. In doing so, a team can increase their roster to the 80-man limit as long as the 51st highest-paid player doesn't put the team over the cap. Starting Sunday, all their contracts must count against the cap and they must be under.
John Clayton is the senior NFL writer for ESPN.com.
