I can't stress this enough, not being a dick, but how the hell do you know this? lol I feel numbers should be so freaking easy, but each time I think 'EUREKA' it turns out I'm a confused as a three dollar bill!
I appreciate your patience and effort on this btw.
That's like asking me how I know NFL rules. I watch the game, and learn the rules and research stuff when it doesn't make sense to me. It probably also helps that I work in accounting. Like how do you know how to set up and develop a website? Oh, you work.in tech.
The cap is simply an accounting system set up by the NFL to spread signing bonuses equally over the first 5 year of contract signed. (Or less if the contract is less than 5 years).
If a players is released or traded, then 100% of the unaccounted for signing bonus (that was spread into future years) must be fully accounted for in the next following year.
With the exception if they use a post June destination when cutting said players (teams get two post June destination per year) or if the team actually waits until post June, then it must be fully accounted for in the next two years.
The NFL accounting is a hell lot simpler than GAAP accounting.
The really hard part is when media and fans start talking about Dead cap and Cap Hits, because it involves money that's already been paid out in years past but has not been accounted for.
People understand paid money that's been accounted for and unpaid money that has not been accounted for... as that's basically cash basis which is simply dealing with cash money.
It the accrual basis that confuses the hell out of people, which is simply money that was paid out at a previous time, but they have not yet accounted for it being paid out.
I remember on here, Julius Peppers had a cap hit for like $15 million, and people were demanding he take a reduction. One person said he needed to come down to $12 million for this year.
But here the thing, he's contract call for only $12 millions in new money for that year, with accounting for an additional $3 million in dead money which he was already paid and was basically his first year pay.
So for long term contracts, the first year pay is usually mostly wrapped up in signing bonus, which is the spread equally over the first 5 years of however long the contract is, which is why the deals are backloaded and you don't need as much money for the first year of an extension.