A salary cap is a limit on the amount of money that a professional sports team is allowed to spend on player salaries in a given year. Salary caps are used to promote competitive balance among teams by preventing wealthier teams from outspending their competitors for the best players. The cap can be a fixed amount or tied to league revenues or other financial metrics.
Violating the salary cap can result in penalties for the team, including fines and restrictions on player signings. Salary caps can vary by league and may include different types, such as soft caps, which allow for exceptions and adjustments, and hard caps, which strictly enforce the limit without exceptions.
The implementation of salary caps is a common practice in leagues such as the NFL, NBA, and NHL to ensure that all teams have a fair chance of competing for championships while managing overall league financial health.
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