When a player is released (or retires), the team is relieved of having the pay the player’s base salary (P5) and any Roster Bonus that may become due after that, but still will need to account for any Signing or Option Bonus prorations that haven’t yet counted against the Salary Cap.
Using the contract example above, if the player was released in year 4 of the deal, the team would not have to pay that Roster Bonus or the player’s base salary (P5) of $7M (or any base salaries thereafter). However, the year 4 Bonus pro-rations ($2M + $1M) would still count and the year 5 Bonus prorations ($2M + $1M) would accelerate and immediately count against the Cap in year 4. So, the team would still have to account for $6M of the player’s remaining Bonus prorations. Since he was expected to count $10M against the Cap had he been on the team (his Cap number), the team would realize a Cap savings of $4M due to his release and have to carry $6M in “dead money” against the Salary Cap in year 4.
Since the prorations from year 5 accelerated against the Cap, there will be no future Cap implications from the release.
The retirement of a player is treated the same as the release of a player.