question: In the sporting world, what is a salary cap? How is it determined? And what are the pros and cons for both the athlete and the team they play for?
comment: Salary caps exist for the NFL, NBA, and NHL but MLB does not have one. A cap is an amount of money under which teams need to keep their total roster payroll. It is usually set annually based on a % of league revenue from the previous year. The purpose is to try and maintain an even level of competition by forcing all teams to spend about the same amount of money on player salaries. Some leagues have a soft cap, which set a cap number but have ways that teams can go over that number -- for example, in order to retain their own free agent player rather than seeing that player jump to another team. Leagues with soft caps have luxury taxes to prevent too high of spending, with teams having to pay the league per dollar sums once they get too far over the salary cap. The NHL has a hard cap, meaning all teams have to stay under a certain level -- even if that means trading players or losing players to free agency. The pros are even competition, while the cons are keeping salaries down vs. an open market. It can especially squeeze marginal players as teams find money to pay their stars at the expense of the bottom of the roster. So salary caps are mostly to benefit the ownership, because it caps the payroll expense of their business.
passages: BULLET::::- Derrick Rose (signed with the Chicago Bulls; was later traded to the New York Knicks during the last year on that deal) until 2017 (qualified by winning the 2011 MVP award)
  
  BULLET::::- Blake Griffin (signed with the L.A. Clippers; was later traded to the Detroit Pistons in 2018) signed through 2018 (qualified by making the All-NBA second team in 2011–12 and 2012–13)
  
  BULLET::::- Paul George (signed with Indiana Pacers; since has been traded to the Oklahoma City Thunder) signed until 2019 (qualified by making the All-NBA third team in 2012–13 and 2013–14)
   BULLET::::- Five players on each team could be paid $30,000 each per season by team sponsors; this amount was not included in the team cap.
  
  BULLET::::- The maximum cap charge for a non-Australian player was $137,000, regardless of his actual wages.
   BULLET::::- Roster spots 19 and 20 are not required to be filled, and teams may spread their salary budget across only 18 players. A minimum salary budget charge ($67,500 in 2018) will be imputed against a team's salary budget for each unfilled senior roster spot below 18.
  
  BULLET::::- The maximum salary for any non-designated player is $504,375.
  
  BULLET::::- A designated player counts $504,375 against a team's cap. However, if a player joins his team in the middle of the season, the charge against the budget will be $252,187.
   The National Women's Soccer League, launched in 2013, was initially planned to have a team cap of $500,000, but that was later lowered to $200,000. However, the sport's three North American national federations—the United States Soccer Federation, which runs the league; the Canadian Soccer Association; and the Mexican Football Federation—committed to paying the league salaries of many national team players. For the league's first season, 23 US players, plus 16 players each from Canada and Mexico, had their salaries paid by their respective federations; these players' salaries do not count against the team cap. In a player allocation held before the inaugural season, each of the eight charter teams received two Canadian and two Mexican internationals; seven of the eight teams received three US internationals and the Western New York Flash received two.
   An example of disparity in sports is Portuguese Liga, the top-flight professional football (soccer) league in Portugal, where three clubs have accounted for 75 of the 77 championships in league history.
  
  Salary cap limits set a maximum amount of money that may be spent on athletes' contracts. These limits exist to different extents in several other leagues as well. For example, Major League Baseball (MLB) in the U.S. does not have a cap, but charges a luxury tax beyond a certain level.
   BULLET::::- Players who are in the roster spots from 21–30 will not count against a team's cap. They will be known as off-budget players.
  
  BULLET::::- Those in roster slots 21–24 must be a senior minimum salary player ($65,000 base salary – will increase to $67,500 in 2018) or Generation adidas player.
  
  BULLET::::- Those in slots 25–30 must be a reserve minimum salary player ($53,000 base salary – will increase to $54,500 in 2018). Additionally, those who earn the lowest possible league salary must be 24 or younger during the 2017 calendar year.
   Section::::In Australia and New Zealand.:Netball.
  
  In netball's now-defunct ANZ Championship, which featured five teams each from Australia and New Zealand, each franchise was restricted to a NZ$380,000 salary cap (as of 2013) from which player salaries were paid. Salary amounts varied among players, but each player received a retainer of at least NZ$12,000 per season; high-profile players were expected to earn up to NZ$50,000.
   BULLET::::1. In this case, the maximum amount for the penalty clause, in the rescission of a labor contract during its effectiveness, is no longer of 100 times the annual remuneration, but increases to 200 times such value; and
  
  BULLET::::2. If at the end of the labor contract, for the period of 6 months as counted from the end of the contract, and provided the club continues paying that athlete’s wages, the amount for the penalty clause can be up to 150 times the contracted annual remuneration.
  
  Section::::The original aspects of Pelé law.:Arena (broadcast rights).
   Since the 2011 CBA, the signed player must have been on the roster of his previous team at the end of the last regular season. Previous agreements allowed teams to sign-and-trade any player to whom they held Bird rights, which do not automatically disappear with a player's retirement—for example, in July 2012, the Los Angeles Lakers still held Bird rights to John Salley, who had not played since . In the , two teams used sign-and-trades on players who had been out of the league. The Dallas Mavericks signed Keith Van Horn out of retirement as part of a package to acquire Jason Kidd, and the Lakers did the same with Aaron McKie to facilitate their deal for Pau Gasol.
   Section::::Adoption.
  
  Salary caps are used by the following major sports leagues around the world:
  
  BULLET::::- North America
  
  BULLET::::- The National Football League, National Hockey League, Major League Soccer, Canadian Football League, National Lacrosse League, National Women's Soccer League and minor leagues in various sports.
  
  BULLET::::- The National Basketball Association uses soft cap + luxury tax system, while the Major League Baseball doesn't have any salary cap and instead implements a luxury tax only (see below).
  
  BULLET::::- United Kingdom:
   BULLET::::- Karl-Anthony Towns (signed with Minnesota Timberwolves) through 2024 (qualified by making the All-NBA third team in 2017–18)
  
  Section::::Individual contracts under the CBA.:Designated Player.:"Derrick Rose" Rule.:5/25% Contracts.
  
  In addition the following players are known to have signed 5 year/25% contracts:
  
  BULLET::::- Joel Embiid (Philadelphia 76ers) until 2023
  
  BULLET::::- Russell Westbrook (Oklahoma City Thunder) until 2017
  
  BULLET::::- Anthony Davis (New Orleans Pelicans) until 2021
  
  BULLET::::- John Wall (Washington Wizards) until 2019
  
  BULLET::::- James Harden (Houston Rockets) until 2018
  
  BULLET::::- Kyrie Irving (Boston Celtics) until 2020
  
  BULLET::::- Damian Lillard (Portland Trail Blazers) until 2021
   Unlike the NFL and NHL, the NBA features a so-called soft cap, meaning that there are several significant exceptions that allow teams to exceed the salary cap to sign players. This is done to allow teams to keep their own players, which, in theory, fosters fan support in each individual city. By contrast, the NFL and NHL salary caps are considered hard, meaning that they offer relatively few (if any) circumstances under which teams can exceed the salary cap. The NBA and MLS version of the "soft" cap does, however, offer less leeway to teams than that of Major League Baseball. MLB does allow teams to spend as much as they want on salary, but it penalizes them a percentage of the amount by which they exceed the soft cap. The percentage increases as the number of consecutive years a team exceeds the cap grows, resetting only when a team falls under the cap. Other penalties related to the MLB draft, can also apply effective with the 2018 team payrolls.
   Section::::Individual contracts under the CBA.:Designated Player.:"Supermax" Rule.
   BULLET::::- The National Rugby League (rugby league), A-League (association football) and National Basketball League, each of which is based in Australia but has one team in New Zealand.
  
  BULLET::::- The countries' national netball leagues—Suncorp Super Netball in Australia and the ANZ Premiership in New Zealand—are capped. The trans-Tasman predecessor to both leagues, the ANZ Championship, was also capped.
   Section::::Exceptions.:Larry Bird exception.:Early Bird exception.
   Since the 2012 season, the cap number for designated players has depended on the players' ages. Since the 2013 season, players 20 or younger have counted $150,000 against the cap and those age 21 to 23 have counted $200,000, with older players remaining at the standard cap number ($368,750 for 2013, $387,500 for 2014, $436,250 for 2015, $457,500 for 2016, $480,625 for 2017, and $504,375 for 2018). For the purpose of determining a cap number, the player's age is determined solely by his year of birth.
  
  Section::::In North American leagues.:Canadian Football League.
   An example of the bi-annual exception was the Los Angeles Lakers' signing of Karl Malone to a contract before the 2003–04 season.
  
  The exception was eliminated for teams above the tax apron following the 2011 NBA lockout as many high spending teams were using this as a tool to gain top paid players.
   Allows a team that is over the cap to acquire a replacement for a disabled player who will be out for either the remainder of that season (for in-season injuries/deaths) or the next season (if the disability occurs during the offseason). The maximum salary of the replacement player is either 50% of the injured player's salary, or the mid-level exception for a non-taxpaying team, whichever is less. This exception requires an NBA-designated doctor to verify the extent of the injury. Under the 2005 CBA, a team could sign a player under this exception for five years; since the 2011 CBA, it has been allowed only for one year.
   Section::::Exceptions.:Larry Bird exception.
   The most recent player to qualify for a supermax contract is Anthony Davis, who has played his entire NBA career to date with the New Orleans Pelicans. He qualified by being named to the All-NBA first team in , enabling the Pelicans to offer him a five-year extension worth up to $230 million, effective with the 2019–20 season. Davis also became the first player to turn down a supermax offer, notifying the Pelicans during the 2018–19 season that he would not accept a supermax deal and also requesting a trade.
  
  Section::::Individual contracts under the CBA.:Designated Player.:"Supermax" Rule.:Supermax contracts.
   The first player to sign a supermax contract was Stephen Curry, who agreed to a new five-year DVPE deal with the Warriors, worth $201 million, that runs through the 2021–22 season. Curry signed the contract once the NBA's free agency moratorium ended on July 6, 2017.
  
  Shortly thereafter, James Harden agreed on a DVPE with the Rockets. At the time of signing, his current contract had two years remaining with total pay of $59 million; the extension will add another $170 million over four seasons, ending in 2022–23.
   BULLET::::- John Wall, Washington Wizards
  
  BULLET::::- Russell Westbrook, Oklahoma City Thunder (met DVPE criteria before the 2016–17 season)
  
  Harden and Westbrook would not have qualified under the standard DVPE criteria because both signed extensions to their contracts in the 2016 offseason, Harden for two years and Westbrook for one. The players' union and owners negotiated a special dispensation allowing them to sign DVPE contracts should they otherwise qualify.
   On May 9, 2014, in order to help attract high-calibre imports or offer financial incentive for local stars considering overseas opportunities, the NBL introduced a marquee player rule. It originally allowed a team to nominate one player whose salary was paid outside the cap, with a 25% Marquee Player levy applied to any payment made above the salary cap. The levy still applies to non-local marquee players (i.e., players who are neither Australians nor New Zealanders), with one exception introduced in 2016–17.
   The salary cap of the first Arena Football League was $1.82 million per team in its final season in 2008. In 2005, the Tampa Bay Storm were fined $125,000 for salary cap violations and their head coach Tim Marcum was suspended for four games (last two of the 2005 season and first two of the 2006 season) and fined $25,250; Marcum was suspended for a fifth game the next day for criticizing the decision at a press conference.
   Before the 2005 CBA, the original team could only use an exception to re-sign a player who had been drafted in the first round. The 2005 CBA allowed teams to use exceptions on non-first-round picks, with the extension named the "Gilbert Arenas Rule". In 2003, Gilbert Arenas, who had been a second-round pick in 2001, signed a six-year, $60 million contract with the Washington Wizards after his original team, the Golden State Warriors, were unable to match the offer since they were over the salary cap.
  
  Section::::Free agency.:Free agency moratorium.
  