Each team gets 150 contract points a year, THE FIRST YEAR YOU GET 80, AND CAN RESIGN NEEDED PLAYERS FOR FREE(read in resignings). These points are used to sign free agent's and resign player's from your roster. Here is how the contract points work, for example someone is signing a 85 overall to a 3 year contract and this is the team's first person signed by the team:
You take the overall (85), divide it by ten (8.5), multiply that number by the amount of years you want to sign them to (8.5*3=25.5 total points). Now the team would have 124.5 points remaining to sign other players.