Each year, clubs that exceed a predetermined payroll threshold are subject to a Competitive Balance Tax -- which is commonly referred to as a "luxury tax." Those who carry payrolls above that threshold are taxed on each dollar above the threshold, with the tax rate increasing based on the number of consecutive years a club has exceeded the threshold.

A team's Competitive Balance Tax figure is determined using the average annual value of each player's contract on the 40-man roster, plus any additional player benefits. Every team's final CBT figure is calculated at the end of each season. (Note: If a player signs a contract extension that doesn't kick in until a later season, his AAV for the purposes of the CBT doesn't change until the new deal begins.)

In the National Football League (NFL), the franchise tag is a designation a team may apply to a player scheduled to become an unrestricted free agent. The tag binds the player to the team for one year if certain conditions are met. Each team has one franchise tag (of either the exclusive or non-exclusive forms) and one transition tag per year. The transition tag can only be used if the team does not use a franchise tag; however, Article 10 of the Collective Bargaining Agreement (CBA) signed in 2011 stipulates that, in the Final League Year, teams are allowed to use both the franchise tag and transition tag for the 2020 NFL season.[1]

The tag option allows NFL franchises to retain a "franchise player" who is valuable to a franchise. The one-year, guaranteed contract that is offered to the player is a known, non-negotiated salary. If a designated player does not sign the offer and is unable or unwilling to negotiate an alternative contract before week 10 of the designated season, the player is unable to sign or negotiate a contract in the NFL for the remainder of the season.

The franchise tag provides general managers and owners a strategic way to manage salary costs and limit exposure to the financial risks associated with a long-term contract. Unsurprisingly, many designated players have criticized the use of the franchise tag by teams when it restricts their perceived ability to negotiate a more lucrative contract.

The most important number for any club in MLS is $4.9 million: that is the salary cap, or salary budget, imposed on all 27 clubs in the league, which will be in place for the 2021 and 2022 season before an incremental increase over the course of the remainder of the collective bargaining agreement to $7 million by 2027. This money is the amount teams can spend on salaries for the 20 players inscribed on their senior rosters over the course of a single season. However, MLS teams have the option to use only 18 players on their senior roster, leaving slots 19 and 20 open, thereby being able to spend their entire salary budget on 18 players.

The NHL’s ‘flat cap’ could soon become a thing of the past.

Sportsnet’s Elliotte Friedman and Rory Boylen reported Tuesday that multiple sources shared guidance that NHL teams have received from the league about salary-cap projections over the next four seasons.

With a strong caveat that these are forecasts and are subject to change, here’s where the cap ceiling is projected to land