What is a cap penalty?

A cap penalty refers to a financial disadvantage imposed on a team that exceeds the salary cap limits established for player contracts. When a team violates these rules, it can face serious repercussions, such as forfeiting draft picks, incurring fines, or being restricted in future player transactions. This penalty serves as a deterrent to ensure that all teams adhere to the salary cap regulations, which are designed to promote parity and fairness within the league.

In contrast to the correct choice, the options that suggest rewards or fees do not accurately reflect what a cap penalty represents. A cap penalty is only a consequence of mismanagement of salary—there are no rewards for exceeding limits or straightforward fees connected to free agency that would count as a penalty. Instead, it is a mechanism that maintains competitive balance in professional sports by keeping teams from unfairly exceeding their financial limits.