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I'm not 100% sure but this is how it looks to me.
Available for Free Agents - This is the budget amount remaining for THIS year. If you have $1 million budget room this year, you can sign a free agent for up to $1 million this year.
Contract Extensions - This looks forward and calculates the expected team salaries for the period of the extension including existing contracts, minimum contracts and expected arbitration results to what the expected budget will be. Please note all the "expecteds" used. This makes this a pretty arbitrary number and a moving target with every deal you make.
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