http://www.ootpdevelopments.com/boar...xtensions.html
I explain in that thread how the game determines money for Free Agents and Extensions. This is very similar. Let's say you have a budget of $10M. You have eight players on your team, each one making $1M. Your budget room for this year is therefore $2M (disregarding staff and other miscellaneous expenses). Now let's say that all eight players are under contract for next year, but four of them are due $2M instead of $1M. Your players' contracts thus total $12M, and if your projected budget is still $10M, you're going to have a -$2M projected budget room.