Is there a penalty to ending contracts early. Do you take a hit on cap for the years of the contract? If I let a guy go it seems to free up the same exact amount of cap space without any repercussions

There is an option under league options to set a contract cut cost. It is that percentage each year for the remaining years on the deal. For example if the cap cut cost is 10% and a player has a contract at $1m per year for 4 years you will suffer a 100k cap hit for 4 years.

Thanks man better simulates guaranteed money