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07-02-2009, 03:20 PM
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Originally Posted by CapsWolverinesUSA View Post
That's a good question. My other question is this:

Does anyone know the amount of credit you get back once the bonus becomes unreachable? In other words, Player X has a $1m salary with a $2m bonus. Initially, that's a $3m cap hit. When the bonus can no longer be achieved, does his team get $2m of annual cap credit starting that day going forward, or is it retroactive to the start of the season since his team was being 'charged' against their cap for money they didn't spend?

If a bonus became unattainable the day before the trade deadline, it would be the difference between having the flexibility to add a $2m player via trade vs. a $6m+ player.
When a bonus becomes unachievable during the year, a team gets a cap credit in the cash amount of that bonus for the remainder of that year only. Their Averaged Club Salary (which is the number that is compared agaisnt the cap's Upper Limit) is reduced by the amount of the bonus.

If a player has a 1 yr deal ($1M salary + $2M bonus), then the player has a cap hit of $3M (accrued on a prorated daily basis). When the bonus becomes impossible to achieve, the team receives a cap credit of $2M, removing the accrued cap hit for the bonus up to that point in time and the projected effects of the cap hit going forward. The players daily cap hit is still unchanged - but the one time cap credit effectively cancels it out.

There are a couple of interesting corner cases.

A player can theoretically net a negative cap hit. A player on a 1 yr deal has a $1M in salary and $4M in bonuses and the bonus becomes impossible to achieve at the halfway point of the season - the player has accrued a prorated $2.5M against the cap. The team gets a $4M credit and then could waive/send down the player and accrue no further cap hit - giving an annual cap hit of negative $1.5M.

A team gets credit back for the actual cash value of the bonus, not the averaged value used to calculate the players cap hit. Imagine a 2 yr ELS deal with salary of $1M/yr (yes I know that's above the $900K ELS limit) and a $2M bonus in the first year only. The annual cap hit is $2M/yr (total salary and bonuses divided by the term). When the bonus becomes impossible to achieve in yr 1, the team gets a $2M credit, effectively giving the player a zero cap hit for year 1, but his cap hit in yr 2 (which includes the now unachieved bonus) is unchanged.

Originally Posted by CBA Article 50.5(h)(i)
(i) For the purposes of calculating a Club's Averaged Club Salary, the
Averaged Amount of Performance Bonuses (to the extent
permitted in accordance with Section 50.2(b)(i)(c) above) shall be
included as fully earned in the League Year in which they may be
earned. However, the unaveraged cash value of such Performance
Bonuses shall be calculated in a Player's SPC for purposes of the
100 Percent Rule, as set forth in Section 50.7 below. The cash
amount of any Performance Bonuses contained in an SPC that
becomes impossible to earn in a given League Year shall, at that
time, be deducted from the Club's Averaged Club Salary. Any
Payroll Room that may result will only be for the remainder of that
League Year and will not affect the Averaged Amount of a Player's
multi-year SPC or the inclusion of any Performance Bonuses in the
Averaged Amount of the future League Years of such SPC.

Last edited by kdb209: 07-02-2009 at 03:25 PM.
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