The salary cap is made up of base salary, bonuses, and dead money. All of which are important as well as cap space to understand how the salary cap works.
Bonuses also count against the cap and are amounts of money awarded to players to incentivize a signing or their performance on the team.
Cap space refers to the amount of space a team has left before reaching the salary cap. This money may be used on more salaries or bonuses.
To further your understanding of how the four pieces interact, the image below shows how potential dead money (base + bonus) decreases as the player plays out their contract.
There are several different types of salary caps used in major sports, hard, soft, and unrestricted caps. The NFL uses a hard cap, but once during the 2010 season had to have an unrestricted salary cap.
The NFL employs a hard cap meaning that a team's spending cannot exceed the agreed upon salary cap.
In 2010 the NFL was forced to have a year without a salary cap due to players opting out of the collective bargaining agreement (CBA). There was no limit to how much teams could spend on their salary that year, however in order to maintain control the NFL told teams not to backload contracts.
When talking about the salary cap it is impossible not to mention free agency. Teams compete to sign players to contracts, but must keep their per year total under the salary cap.
Players sign contracts with teams, and one strategy teams use to keep those totals under the salary cap is to weight certain years of the contract more than others.
A salary floor is a way to balance the league's competition and discourage the idea of tanking. It is the opposite of a salary cap and is a minimum dollar value a team must spend on its players per year.
The salary cap has steadily increased from year to year ever since its introduction in 1994. Given its popularity among Americans, football has been able to sign large contracts with TV companies.
TV channel companies looking to capitalize on America's interest pay lots of money to be able to broadcast NFL games. That number rises every year, and as a result so does the salary cap.