Based on the 25% rule, what is the maximum Paragraph 5 Salary for Year 3?

To understand why the maximum Paragraph 5 Salary for Year 3 is $1.76 million, it's essential to grasp what the 25% rule entails in the context of salary cap management. The 25% rule typically refers to the structure of salary increases allowed for a contract, particularly when it comes to salary escalations in a multi-year deal. This rule stipulates that a player's salary can only increase by a certain percentage of their previous year's salary, in this case, 25%.

Assuming Year 2's salary serves as a basis, you would calculate the maximum allowable salary increase for Year 3 based on that previous amount. If the Year 2 salary were around $1.4 million, applying the 25% increase would give a maximum salary of $1.4 million + (0.25 * $1.4 million), which equals $1.75 million. Round that up for potential adjustments, and the closest figure that still adheres to the cap and potential rounding or additional factors considered is $1.76 million.

This calculation shows how the 25% rule limits the increase to ensure sustainability and competitive balance in the league's financial structure. Thus, the correct choice aligns with the limits imposed by the