Question regarding Buyouts, 35, and Cap hits..
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07-05-2006, 06:45 PM
Join Date: Sep 2002
Originally Posted by
Does anyone know the rationale for the over 35 rules? I don't see much point to it and it basicaly turns the NHL into Logan's Run for players.
The NHL worried that a team would frontload a contract for older players that were nearing retirement since the cap hit is averaged out over the full length of the contract.
For example, say you sign a player to a 5m contract spread out over 5 years. That's a cap hit of 1m/year. But let's say you structure that salary so that it pays 3.2m in the first year, and 450K in the final 4 years. If you also have a gentleman's agreement that the player will retire after the first year or the player knew he only had one year left in the tank and told the GM that upfront. The GM gets a 3.2m player for a cap hit of 1m.
Even if the GM were to buy the player out after the first year, the yearly cap hit on buying out such a contract would be about 150k/year, and even though it would be for 8 years in that scenario, 150k is still less than it would cost to buy out a $1m player (should be 333k)
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