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Not a 'hard' salary cap...

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Old
07-02-2009, 01:38 PM
  #1
One Man Rock Band
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Not a 'hard' salary cap...

I was watching NHL Live and Bob McKenzie was on. He said something about this year isn't a *HARD CAP* and something about how bonuses for entry level deals or veterans pretty much gives teams an extra $2M-$3M for the year.

He made it seem like you can spend to the cap and bonuses could GO OVER the cap and not change anything.

Anyone else hear this or know what was meant?

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Old
07-02-2009, 01:39 PM
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Teemu
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Wait, so they're doing away with the bonus cushion?

That's huge news for teams like the Hawks if so. An extra $4M to spend on this year's RFAs.

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07-02-2009, 01:40 PM
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I didn't hear it or see it, but I'm guessing he is talking about the performance bonus cushion built in.

I'm too lazy right now to write a big explanation, so check this thread out from earlier (if this is what the situation is - I could be wrong.): http://hfboards.com/showthread.php?t=658830

Good explanations of the cushion that allows teams to spend over the cap.

Last year the cushion was not in place, so it was a hard cap.

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07-02-2009, 01:41 PM
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from my understanding bonuses don't auto count against the cap, and only count if they actually hit the bonus requirements

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07-02-2009, 01:44 PM
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you may not spend over the cap in generall. But there's a "special" rule in the cba, that you may go 5% over the cap, if these 5% come from bonoces (player must be rookes or 35 or older when they sign the contract, that you may include bonoces).

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07-02-2009, 01:45 PM
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kdb209
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Quote:
Originally Posted by Loopy17 View Post
I didn't hear it or see it, but I'm guessing he is talking about the performance bonus cushion built in.

I'm too lazy right now to write a big explanation, so check this thread out from earlier (if this is what the situation is - I could be wrong.): http://hfboards.com/showthread.php?t=658830

Good explanations of the cushion that allows teams to spend over the cap.

Last year the cushion was not in place, so it was a hard cap.
Cut-and-paste from that thread:

Quote:
Originally Posted by kdb209
Actually - it is the opposite. Bonuses count against the cap until they become impossible to achieve.

All potential Performance Bonuses (earned or not) count against the cap - the cap hit is the average of all salary and bonuses (total salary and bonuses divided by number of years).

If a bonus becomes impossible to achieve, then the team receives a cap credit back (for the remainder of that year only) for the cash value of the unachieved bonus. That bonus is still included in the cap average for any future years of the contract.

However - a team is permitted to exceed the cap by up to 7.5% due to Performance Bonuses. If the actual bonuses earned at the end of the year put a team over the cap - then that excess is applied to the next years cap. The Performance Bonus Cushion is in effect in all years except for the final year of the CBA. It is in effect this year, but was not in effect last season because the NHLPA had an option to terminate the CBA - so technically last season could have been the last CBA season.

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07-02-2009, 01:45 PM
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TheHotRock
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wouldn't the bonuses roll over to the following year and create dead cap space?

say my team is a mil under the cap and i sign some 35 year old vet for a mil plus 2 in bonuses which he hit....wouldn't my team have 2 mil in dead cap space next season?

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07-02-2009, 01:46 PM
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Quote:
Originally Posted by Loopy17 View Post
I didn't hear it or see it, but I'm guessing he is talking about the performance bonus cushion built in.

I'm too lazy right now to write a big explanation, so check this thread out from earlier (if this is what the situation is - I could be wrong.): http://hfboards.com/showthread.php?t=658830

Good explanations of the cushion that allows teams to spend over the cap.

Last year the cushion was not in place, so it was a hard cap.
I'm not going to read the whole thing, but the last line is exactly what Bobby Mac said.

That last year was a hard cap and this year isn't.

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07-02-2009, 01:50 PM
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then it increased from 5% to 7.5%....I could swear it was 5% last year..

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07-02-2009, 01:51 PM
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i was under the impression that for the past season the bonuses were counted against the cap since the CBA was on the last year . now that it's been extended it's like it was up to the last year and they could roll on to next year or something like that.

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07-02-2009, 01:59 PM
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Quote:
Originally Posted by kdb209 View Post
Cut-and-paste from that thread:

How does it work when it comes to accumilating cap space?

If team A is rubbing up against the cap, but 3mil is in bonuses, can they add 9mil of annual cap space at the deadline?(assuming bonuses can still be reached, but haven't yet) Or can they just add 3mil of annual cap hit?

(Assuming 2/3 of the NHL season has passed and team A would be responsible for 1/3 of the annual cap hit)


Quote:
Originally Posted by TheHotRock View Post
wouldn't the bonuses roll over to the following year and create dead cap space?

say my team is a mil under the cap and i sign some 35 year old vet for a mil plus 2 in bonuses which he hit....wouldn't my team have 2 mil in dead cap space next season?
Yes, it creates "dead cap space" the following year if the bonuses are hit. Everything over 56.8mil would be tacked onto the following year.

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Old
07-02-2009, 02:01 PM
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Originally Posted by Teemu View Post
Wait, so they're doing away with the bonus cushion?

That's huge news for teams like the Hawks if so. An extra $4M to spend on this year's RFAs.
Technically true, but with the cap going down and your free agents next year I don't think it makes sense to be adding any dead cap space.

Unless the bonus' your guys have are impossible, then go for it.

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07-02-2009, 02:05 PM
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Quote:
Originally Posted by Teemu View Post
Wait, so they're doing away with the bonus cushion?

That's huge news for teams like the Hawks if so. An extra $4M to spend on this year's RFAs.
No, exactly the opposite. The cushion is in place again.

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07-02-2009, 02:10 PM
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Quote:
Originally Posted by TheHotRock View Post
wouldn't the bonuses roll over to the following year and create dead cap space?

say my team is a mil under the cap and i sign some 35 year old vet for a mil plus 2 in bonuses which he hit....wouldn't my team have 2 mil in dead cap space next season?
The bonus would apply first against any unused cap space. So if you had 1 mil left in cap space at the end of the season, the bonus would use that up and the remainder would apply to the following season.

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07-02-2009, 02:13 PM
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CapsWolverinesUSA
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Quote:
Originally Posted by backs4mvp View Post
How does it work when it comes to accumilating cap space?

If team A is rubbing up against the cap, but 3mil is in bonuses, can they add 9mil of annual cap space at the deadline?(assuming bonuses can still be reached, but haven't yet) Or can they just add 3mil of annual cap hit?
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.

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07-02-2009, 02:18 PM
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Barney Gumble
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Quote:
Originally Posted by TheHotRock View Post
wouldn't the bonuses roll over to the following year and create dead cap space?

say my team is a mil under the cap and i sign some 35 year old vet for a mil plus 2 in bonuses which he hit....wouldn't my team have 2 mil in dead cap space next season?
That's how I understand it. Might not be a good move to shift too much over as the cap could drop as low as $50 million.

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Old
07-02-2009, 03:20 PM
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kdb209
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Quote:
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.

Quote:
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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Old
07-02-2009, 03:23 PM
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Quote:
Originally Posted by kdb209 View Post
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.
Delete this before Ken Holland reads it

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07-02-2009, 03:26 PM
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Delete this before Ken Holland reads it
Ken Holland wrote it. kdb=Ken da best

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Old
07-02-2009, 03:27 PM
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You get a 7.5% "Performance Bonus Cushion" for players with performance bonuses on entry level contracts. If they hit their bonus, and you are above the maximum limit for the season, that amount is subtracted from next season's cap. This will help Boston on Rask and Wheeler's contracts. They basically have an extra $3.5MM cap room, and it probably won't affect them the next season either, as they probably won't trigger their performance bonuses.

From the NHL CBA:

Quote:
(h) Accounting for Performance Bonuses. No SPC may contain
Performance Bonuses except in accordance with Section 50.2(b)(i)(C) above. For
purposes of a Club's Upper Limit and Lower Limit, as well as the Players' Share, the
following rules shall apply with respect to those Performance Bonuses that are permitted:
(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.
(ii) A Club shall be permitted to have an Averaged Club Salary in
excess of the Upper Limit resulting from Performance Bonuses
solely to the extent that such excess results from the inclusion in
Averaged Club Salary of: (i) Exhibit 5 Individual "A"
Performance Bonuses and "B" Performance Bonuses paid by the
Club that may be earned by Players in the Entry Level System and
(ii) Performance Bonuses that may be earned by Players pursuant
217
to Section 50.2(b)(i)(C) above, provided that under no
circumstances may a Club's Averaged Club Salary so exceed the
Upper Limit by an amount greater than the result of seven-andone-
half (7.5) percent multiplied by the Upper Limit (the
"Performance Bonus Cushion").
(iii) At the conclusion of each League Year, the amount of
Performance Bonuses actually earned, including, without
limitation, and for purposes of clarity, (i) Exhibit 5 Individual "A"
Performance Bonuses and "B" Performance Bonuses paid by the
Club that may be earned by Players in the Entry Level System and
(ii) Performance Bonuses that may be earned by Players pursuant
to Section 50.2(b)(i)(C) above, shall be determined and shall be
charged against the Club's Upper Limit and Averaged Club Salary
for such League Year. To the extent a Club's Averaged Club
Salary exceeds its Upper Limit as a result of: (i) Exhibit 5
Individual "A" Performance Bonuses and "B" Performance
Bonuses paid by the Club that may be earned by Players in the
Entry Level System and (ii) Performance Bonuses that may be
earned by Players pursuant to Section 50.2(b)(i)(C) above, then the
Club's Upper Limit for the next League Year shall be reduced by
an amount equal to such excess.
(A) For the 2009-10 League Year, all of the above-described
Performance Bonuses that could be earned by the Players
under SPCs with a Club shall be counted against such
Club's Upper Limit for that League Year (with no
opportunity for the Clubs to "carry over" any charges to
their Upper Limit for the following League Year), unless
the NHLPA declines to terminate this Agreement as of
September 15, 2009, consistent with Section 3.1(b) of this
Agreement, in which case accounting for the abovedescribed
Performance Bonuses in the 2008-09 League
Year shall be treated as set forth in paragraph (ii) above.
(B) For the 2010-11 League Year, the above-described
Performance Bonuses that could be earned by the Players
under SPCs with a Club shall be counted against such
Club's Upper Limit for that League Year (with no
opportunity for the Clubs to "carry over" any charges to
their Upper Limit for the following League Year), unless
the NHLPA extends this Agreement for one additional year
to September 15, 2012, consistent with Section 3.1(b) of
this Agreement, in which case accounting for the abovedescribed
Performance Bonuses in the 2010-2011 League
Year shall be treated as set forth in paragraph (ii) above.

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Old
07-02-2009, 03:33 PM
  #21
mnwildfan79
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Ken Holland wrote it. kdb=Ken da best
I would not be surprised. If anything KDB is the Ken Holland of the BOH board.

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07-02-2009, 03:37 PM
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I got this fealing we are all going to be cba and cap experts again

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07-02-2009, 03:38 PM
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4.26M 'cusion'

what teams even have that much in bonuses?

edit: actually, boston may come damn close.

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07-02-2009, 03:47 PM
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Originally Posted by danishh View Post
4.26M 'cusion'

what teams even have that much in bonuses?

edit: actually, boston may come damn close.
Hawks have more than that in Toews & Kane, and maybe something for Beach if he makes the team.

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07-02-2009, 03:47 PM
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brs03
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Originally Posted by danishh View Post
4.26M 'cusion'

what teams even have that much in bonuses?

edit: actually, boston may come damn close.
Chicago? Kane + Toews would get you pretty darn close.

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