- John Clayton, NFL senior writer
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Salary cap: The NFL has a hard salary cap of $123 million, although it might not seem so firm. Teams must be under the cap from Feb. 26 through the remainder of the year. The salary cap is calculated by adding the base salary plus any roster or reporting bonuses, a prorated part of each signing bonus and any incentives a player is likely to earn.
Prorated signing bonuses: This is the hardest thing to understand about the cap. For cap purposes, signing bonuses are spread throughout the length of the contract. For example, a $4 million signing bonus spread across a four-year contract counts $1 million against the cap each year. This explains why a team can pay a player $5 million in one season but have it count only $2 million against the cap. You add the $1 million base salary with the 2009 prorated part of the signing bonus and end up with a $2 million cap number.
Salary-cap hits: The prorated part of a signing bonus will always count toward that year's cap. But because every dollar counts toward the salary cap, teams must add the remainder of a signing bonus if they cut or trade a player. They do this in two ways. The rules are different in 2009 because there is no cap scheduled for 2010 unless there is a collective bargaining extension within the next year. If a player is cut in 2009, the team takes the entire salary-cap hit in 2009. If a player is cut before June 1, the cap hit occurs this year.
Take that $4 million signing bonus example. If that player who accepted a $4 million signing bonus in 2008 is cut this year, the team is on the books for the $1 million proration in 2009 but also must take a $2 million salary-cap hit this season. Thus, the released player would count $3 million under the 2009 cap, even though he's no longer on the team.
Why trades usually don't happen: Often, it's because of that prorated signing bonus hit. Unlike with releasing a player, there is no way that a team that trades a player can delay taking a salary-cap hit. Once a player is traded, the remaining proration is moved into that season. The same standard applies if a player is cut. Trading can begin Feb. 27.
Unrestricted free agency: These are the players who are completely free and can sign with any team.
Restricted free agency: From Feb. 27 until a week before April's NFL draft, players with three years of experience can shop their services, but teams that sign them might have to pay a price related to the round in which the player was picked when he came into the league. For example, a former third-round choice requires third-round compensation from the signing team. The team that could lose a restricted free agent has a week to match a restricted offer sheet. Restricted free agents are offered a one-year tender at $1.010 million. A team can further restrict movement of this type of free agent by increasing the tender. By offering $1.545 million, the team can't lose that player unless it receives a first-round draft choice. For $2.198 million, the team puts the player's price at first- and third-round choices. A tender of $2.792 million can net a team first- and third-round choices if another team signs him. A more exclusive tender has been created to prevent movement of a player with three years' experience, but it's rarely used.
Transition tags: A transition tag gives a team a right to match an offer within seven days. If a player is offered the average of the top 10 salary-cap numbers at his position in a one-year tender, he has to wait seven days to see whether the team will match that offer. If it doesn't, it won't receive any draft-choice compensation if the player signs elsewhere.
Franchise tags: These are more restrictive. Teams offer players the average of the top five cap numbers at their position to restrict their movement. If a team signs a franchise player, it might have to give the player's former team two first-round choices or work out a trade considered satisfactory to that team. One problem with the franchise tag is that teams like to keep the tag year in and year out. A player who receives the franchise tag has until mid-July to sign a long-term deal. If no long-term deal is signed by the middle of July, the team has to watch him play out the season at that contract. Signing a franchise player to a long-term deal after the middle of July would prevent that team from franchising a future player the length of that contract. There is an exclusive franchise designation that prohibits a player from going to another team. Like the regular franchise tag, the one-year tender is determined by the top five cap numbers at the player's position from the previous season, but the number can increase.
Minimum salaries: Here is the league wage scale -- rookies: $310,000, second-year players: $385,000, third-year players: $460,000, fourth-year players: $535,000, fifth- through seventh-year players: $620,000, eighth through tenth-year players: $745,000. Players who have 10 credited seasons will make $845,000.
Cap relief for veterans: The league has created a cap-relief category that allows teams to sign players with more than four years of experience and have those one-year contracts count for only $460,000 toward the cap. Let's say a 10-year veteran who is entering his 11th season signs a one-year deal. He will make $845,000, but the team that signs him has to count only $460,000 against its cap. Any player receiving this benefit can receive a maximum signing bonus of $50,000. If he receives the $50,000 signing bonus, the cap number would be $510,000.
John Clayton is a senior writer for ESPN.com.
What's an unrestricted free agent? How about a franchise player? Check out our glossary of free-agency terms.