SO WHAT IS A SALARY CAP AND A LUXURY TAX?

 Now the salary cap   and the luxury tax  is used in the U.S.A for N.H.L and, Baseball and Basketball clubs.

 Each club  has a salary cap  ,it is calculated on their debt, income and on their expenditure as well..

 So once their salary cap s fixed for a year they will have to trim down their wages  by one way or other  , by say selling players. And it will change yearly.

 Now if the club has gone and spent one million Euros over the salary cap, then one million Euros to a common basket. And at the end of the year these fines called luxury tax will be devided equally between all the clubs