Its easier to understand if you think about it not like 'the last year of the contract' as the primary thing but rather it being the last year is just a secondary observation. I'll put it to you this way.
Whatever money goes from the Dolphins to Zach Thomas' bank account MUST be counted against the salary cap. For now we'll ignore such complicated matters as incentives and roster bonuses.
There are two forms of payment. Base salary, and signing bonus. The bonus as you know is paid UP FRONT. But, since teams don't want to count that entire bonus in the first year, the NFL relented and put it in the guidelines that the signing bonus could be spaced out in equal parts over the life of the contract.
So lets take a 5 year contract with a $5 million signing bonus. The base salary in the years would be as follows (because I say so, for sh!ts and giggles)
Base Salaries
Year 1: $1 million
Year 2: $2 million
Year 3: $3 million
Year 4: $4 million
Year 5: $5 million
But the $5 million signing bonus (paid upon signature) is broken up equally over the five years. So the amount of money against the cap that the signing bonus takes up is as follows
Year 1: $1 million
Year 2: $1 million
Year 3: $1 million
Year 4: $1 million
Year 5: $1 million
(sorry if I seem condescending I'm just trying to make this simple)
So the following would be the total cap figures of the player in all 5 years of the life of the contract (ie base salary + signing bonus prorate)
Year 1: $2 million
Year 2: $3 million
Year 3: $4 million
Year 4: $5 million
Year 5: $6 million
Now lets shake things up a bit. Lets say that the team cuts the player right before Year 3 is about to begin (ie before June 1st). Then we have a problem. There's $3 million of signing bonus that has yet to be fully counted against the salary cap of the team. The money in question has already changed hands from team to player so its not like we could just write it off and say we don't have to pay it! So by NFL guidelines that $3 million that has yet to be counted gets "accelerated" to the salary cap of the year they are cutting the guy.
But, the team no longer has to pay the player his BASE SALARY for that year either. So while you can whipe the Year 3 base salary of $3 million off the record books, you have to accelerate the $3 million of signing bonus that you've already paid the player when he signed but have yet to count against the salary cap ($2 million of the $5 million bonus have already been counted against the cap in years 1 and 2).
So basically, cutting the guy in Year 3 means you save $1 million because you are counting $3 million of accelerated bonus against the cap, and no base salary, where before you were counting $3 million of base salary and only $1 million of prorated bonus for a total of $4 million. So cutting the dude in Year 3 makes his total cap figure go down from $4 million, to $3 million.
Lets take it to Year 5 (ie the FINAL YEAR as per Zach's case). Base Salary of $5 million, plus the $1 million signing bonus prorate, means the total cap figure for that year is $6 million. But lets say you cut the dude because he's old and stupid and fat. Well, you still have $1 million of signing bonus left that hasn't been counted against the cap yet ....so its gotta be counted against this year's cap as if he was still on the roster. But there are no future years, so there is no prorated bonus to accelerate. So the CUT player has a total cap charge of just the $1 million signing bonus prorate. The $5 million base salary does not need to be paid, so the player's salary cap figure for Year 5 after being cut goes from $6 million, to $1 million.
Next week on PBS, we'll take a look at cutting guys after June 1st. Oh the drama....
