In professional sport, the effective of clubs depend on the salary cap of them. If your salary cap is high, so that you will have more money to buy good players, and with high salary, players of your club will be sastified, they will play better. But do not many clubs have a lucky like Chelsea football club, the club has a boss - Roman Abramovich - who doesn't care about the salary cap. Most of manager must think how to use the salary cap effectively. One of the popular way for solve this problem is signing bonuses.
"A signing bonus incentive to join that company or sign-on bonus is a sum of money paid to a new employee by a company as an . Signing bonuses are almost exclusively only given to full-time salaried employees of a company, as opposed to a temp-hire or intern. These are often given as a way of making a compensation package more attractive to the employee e.g. if the annual salary is lower than he or she desires. It also lowers the risk to the company as it is a one-time payment: if the employee does not meet expectations, the company has not committed to a high salary. Signing bonuses are often used in professional sports, and to recruit graduate into their first jobs" . For example about the signing bonus, you are a football player, and have a 50 million pounds contract for 5 years. Let's say that the boss will give you 10 million pounds for signing bonus, which is all paid out in the first year but gets factored into the cap ( 10 million/ 5 years = 2 million per year). If we suppose that our player's contract is structured so that he has a base salary of $2-million the first year, with higher base salaries in the final two years of the contract, the 7 million (salary and signing bonus) paid out in the first year appears as 4 million to the cap.
