Part 6/9:
To mitigate the risk associated with backloaded contracts, players often negotiate signing bonuses. These upfront payments, while counted against the salary cap, allow teams to spread the cap hit over the contract duration. For instance, a $15 million signing bonus for a three-year deal would result in a cap hit of $5 million per season, vastly improving the team’s financial flexibility.
However, if a player is released before the contract concludes, the remaining unamortized bonus is charged to the salary cap in the next season, often leading to a phenomenon known as dead cap space.