Sports may generate a lot of revenue, especially if we talk about the most important competitions such as NFL, NBA, or MLB. The high incomes that these leagues produce enables them to invest in great assets to keep being attractive competitions.
Franchises also work similarly, they produce a lot of sales as fans purchase tickets, jerseys, and spend money on many other things that increase a team's budget. That way, every organization is capable of paying for their players and employees who help them to be competitive.
However, there are rules to prevent some teams to have a lot of advantage at the moment of signing players. Salary cap exists because of that issue, and franchises have to shape their rosters according to that rule. Find out more about how this works.
How does salary cap works in NFL?
The salary cap sets a limit to the amount of money that every team can spend on salaries for their players. That way, the NFL avoids franchises with larger budgets from taking too much advantage to the ones with less money, and it is an attempt to make a fairer competition.
That's why there are teams who can't bring in certain players or sometimes release big names, to empty some cap space. The NFL states a certain amount of money that each team can spend in the season. The only way in which a team can exceed that cap hit is by employing unused cap space from the last year, but for that, they have to notify the league the day after their final regular-season game.
For the first time since its inception in 1994, the NFL announced a lower salary cap from the previous season. In 2020, the cap was of $198.2 million, and in 2021 it will be of $182.5 million. Teams will have to adjust their roster to this cap hit.