Okay, since so many of you are asking about what to do if you go over the cap at any point (during the draft, through a trade, etc.), here's what happens:
If you go over in a trade:
The trade will stand. You will have 12 hours to either buy-out or waive players to get under the cap, or make another trade to get under.
During the draft:
Same as trading, you'll have 12 hours after the conclusion of the draft to get under via waivers, buy-outs, trades, etc.
After signing a FA:
The signing will be voided and the player will be back as a FA, available for any team to sign.
The way the buy-outs and waivers work:
Each team has two "amnesty" buy-outs, usable at any point throughout the game. The team drops the bought-out player's entire contract, and that player is now a UFA.
Waivers are a bit unique here. If the player is making >3M a year and they are claimed though waivers, the team that dropped the player and the team that claimed the player will split the cap hit 50/50. If the player is unclaimed, they simply become a UFA, no one is responsible for the cap hit except whoever signs him in FA. If they're making <3M, the player's new team, claimed or signed, is responsible for 100% of the cap hit.
Again, if you go over the cap and are not under within 12 hours, you'll be removed as a GM and replaced.
Hope that helps.