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10-04-2006, 02:27 PM
  #3
kdb209
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Quote:
Originally Posted by Irish Blues View Post
1. At the point in time where the bonus becomes impossible to earn, it comes off the cap number for that season only and the team gains the resulting payroll room ... again, for that season only.
-- Reference: 50.5(h)(i)

2. Same as #1.

I can already see a scenario where a player has a cap number lower than his current year salary and has performance bonuses - which would imply that if he couldn't reach the bonuses this year, his cap number would be reduced and his cap number would be even lower than his actual salary.

kdb, a little help here - am I reading that last part correctly?
Yes, although to have a cap number lower than current salary and have performance bonuses would require a front-loaded multi year deal, so only an ELS deal could qualify - all other SPCs eligible for bonuses are 1 yr deals.

And there is one funky side effect of how bonuses on a multi year SPC are calculated for cap purposes - the total bonuses are averaged out over the life of the SPC for calculating their annual cap hit as part of the players Averaged Salary, but the credit back for any impossible to achieve bonuses is the actual cash (unaveraged) value of the bonus that year.

So for example if an ELS player has $600K in bonuses in his 3 year ELS SPC, all in year 1, his cap hit for those bonuses is actually $200K/yr. If those bonuses become impossible to achieve during year 1, his team receives the full $600K in extra cap room for the remainder that year (even though they took only a $200K cap hit in the first place). His team will still take the full $200K/yr hit in years 2 and 3 even though the year 1 bonuses were not earned and their are no further bonuses in years 2 and 3.

This could theoretically open up a cap loophole where a team signs a player to an ELS deal with performance bonuses that can become impossible to achieve early in year 1. They get a cap credit back for the remainder of year 1 in excess of their actual cap hit - effectively transferring some cap space from years 2 & 3 to year 1.

This is not really much of a loophole, since the amount and types of performance bonuses that can be awarded to multi year ELS deals are explicitly defined in Exhibit 5, and there aren't many bonuses that can become impossible to achieve.

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