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Has this CBA put an end to back-loaded cap circumvention contracts in the future?

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Old
01-06-2013, 10:04 PM
  #51
Street Hawk
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Quote:
Originally Posted by tarheelhockey View Post
I'm not really worried about players faking injuries to go on LTIR, abruptly retiring after signing a massive contract, or heading off to Europe to give his team a cap break. Those are far-fetched scenarios that would require cooperation from the player, and would certainly not become an epidemic even if someone somehow pulled it off one time.

The major problem, circumvention by putting a "tail" of several underpaid seasons at the end of a contract, is effectively gone. That's the major step that was needed here and it appears to be resolved.
That was always the issue. For most reasonable people, they look at the deals of Hossa, Parise, Crosby, Luongo, Kovy and say, no way that player plays when they are 39/40 making $1 million or whatever.

Have other guys done that? Yes, but they sign deals on a year to year basis.

Kipper from Calgary, his salary this year will be prorated at $5 million, but next season, his salary drops to $1 million? Will he play? Unlike Alfie in Ottawa, Kipper's deal will not bind the Flames to a $5.5 million cap hit. Kipper was under 35 when he signed his deal. If Alfie didn't return this season, the Sens take the $5 million cap hit for Alfie regardless.

If Kipper retires, was it fair for the Flames to have had about $1 million less in salary cap hit per season during his contract up to this point?

From a player's POV it doesn't matter. Their escrow payments, or what is used to calculate their % of HRR is based off their salary. So, if you have a salary of 10 million, but a cap hit of $7 million, the $10 million is used to calculate the player's share of HRR. If it's above their share of the pie, players don't get back part of their escrow payments.

It's more about a fairness from a competitive POV. Whatever a player is paid in salary should be applied against the salary cap. Whether it's done right now or deferred to a future year, all money paid to a player should count against the salary cap.

If a player can't honor years 11/12/13 of their contract, they should not have signed one for that long of a term. But, each one who has signed this type of deal says that they are happy with the term and look forward to being a X player for the next 12 or whatever years.


Last edited by mouser: 01-07-2013 at 09:45 AM. Reason: quote tags fixed
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01-07-2013, 06:59 AM
  #52
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and how about if the player starts a foundation for a particular cause? Or a family trust? If the team pays the family trust or the wife of the player would that count against the cap since it is not a contract between the team and the player?

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01-07-2013, 07:09 AM
  #53
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Originally Posted by Freudian View Post
The cap hit still stays even if the player retires, if I understand correctly. That's the big hit to cap circumvention.

Teams may try to get around it by claiming players are injured in the latter years so the cap hit doesn't count, but the league won't take a teams word for it and anyone trying to trick the system can be sure to be punished severely.
Haven't heard any changes to existing 35 year old contract rule. I know it was being discussed, as was having the team originally signing the player retaining the cap hit. Have you heard any confirmation that either of these rules are in the new CBA?

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01-07-2013, 07:34 AM
  #54
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does that include bonuses?

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01-07-2013, 08:09 AM
  #55
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Just to reiterate, it's only IF the players retire and dont play the years on the low tail end of the contract that there would be circumvention. And usually, players have to be forced into retirement kicking and screaming, always thinking they still have one more year in them. It’s not usually a case where they are eagerly looking to get out of the 9-5 grind and retire. That’s not a common profile I recognize.

And if that was the case, the cap space recapture system would seem to be the appropriate mechanism for dealing with that, not preventing normal declining contracts over time.

Just because a contract starts at the cap maximum and diminishes over time doesn’t make it a circumventing contract - it makes it a normal contract. A trade off - pay me now or pay me later. Young RFA’s will see rising contracts over the years, and older payers are more likely to see declining contracts. Setting up a contract structure like the owners suggested with 10% variance would lead to structures like: 10 9 8 7 6 5 4 for a $7mil cap hit. Now what scenario of player would that contract structure fit? None that I can think of, its unnatural and pointless.

There is currently a proposed mechanism for trading cap space, so like Jagr last time, a player can be traded but only half his cap hit. That is not going to also be seen as circumvention then?

Circumvention was never causing problems as there was linkage. Salary costs were fixed and pegged to revenues and contained with 3 salary caps. Why did they need to make any changes to contract term and variance when they have that recapture system now. Had they not made any changes to that, there would be no changes to the amount of teams in financial peril. Some may have to make tough financial decisions on contracts , but that is normal and will continue, and if they do it properly will prevent teams losing a mil or two from losing it if that’s what that owner wants.

Most hilarious is the idea that next on the owner/fan to do list is to get rid of guaranteed contracts. Allow rich teams each year to dump any of last years ufa’s they got and sign the latest and greatest better ones as they become available. Kind of legislating cap circumvention right into the cba permanently. I guess once that victory is achieved, no one will ever complain about circumventing again.

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01-07-2013, 12:41 PM
  #56
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Quote:
Originally Posted by Mandala View Post
and how about if the player starts a foundation for a particular cause? Or a family trust? If the team pays the family trust or the wife of the player would that count against the cap since it is not a contract between the team and the player?
There were already rules against that in the old CBA. I'm sure they are still there.

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01-07-2013, 02:42 PM
  #57
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Originally Posted by LeftCoast View Post
There is no way they retroactively go after contracts that were legal under the old CBA. All new contracts will have to abide by the new variance rules, but just as the existing long term contracts that exceed the new length limit will be grandfathered, so will the existing front loaded contracts.

The new CBA does allow front loading of contracts, but has much tighter limits on overall term and variance from year to year. I think this is a reasonable compromise as it allows teams some leeway in how they structure their contracts.
We will have to wait for details, but rumours suggest there will be cap recapture provisions...
https://mobile.twitter.com/mirtle/st...14425461575681

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01-09-2013, 12:36 AM
  #58
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Originally Posted by Evileye View Post
We will have to wait for details, but rumours suggest there will be cap recapture provisions...
https://mobile.twitter.com/mirtle/st...14425461575681
Seems like a straight forward way to figure out any cap charges should a player retire is to:

1) Add up all of the salary paid to the player
2) Add up all of the years of the cap hit
3) Any difference between the 1 and 2 are allocated evenly over the remaining years of the contract.

So, if you saved $10 million in cap space up to the time the player retired, but he has 2 more years left on his deal, you should take a $5 million cap hit each season for the years the player retired early.

Logical because the cap is based on the average salary of the player over the term of the deal. If the term is shorter than was expected, should recalculate the cap charge to capture all of the cap hit that should have been applied against the team for that player.

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03-06-2013, 04:48 PM
  #59
lush
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Capgeek released a calculator for this today in case anybody is interested:

http://www.capgeek.com/recapture-cal...aded_year=2013

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03-06-2013, 07:22 PM
  #60
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Quote:
Originally Posted by lush View Post
Capgeek released a calculator for this today in case anybody is interested:

http://www.capgeek.com/recapture-cal...aded_year=2013
Wow. If I'm reading this right that's really mindblowing they are ignoring the natural cap recapture rules like that (ie ones were the the player is paid less than the cap hit and only using years where the salary is more than the cap hit. That makes no sense.

Imagine a scenario

5m 5m 10m 10m 7.5m 7.5m

after 4 years the player's wife gets sick and he retires to spend time with her figuring he has enough money.

that team has paid out 30m in cap and 30m in salary but gets 2.5m +2.5m in cap recapture penalties.

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03-06-2013, 11:21 PM
  #61
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All this tap-dancing and what-if'ing would be easily eliminated, if you simply had Cap Hit Equals Actual Salary Paid, with the only exception being a pro-rated deduction for any time spent on LTIR.

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03-06-2013, 11:36 PM
  #62
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One more question, and this appears to be the appropriate thread. Does the Jets' payment of part of Mark Scheifele's salary count against their cap hit?
  • His entry level salary is $1,594,167 for an 82-game season
  • He was only suited up for 3 games, before being sent back down to the juniors
  • However, he was on the roster for the team's first 10 games
  • He would draw $1,594,167 * 10 / 82 = $194,410.61. Not very many 19-year-olds see that type of money. And people were whing about "how badly the Jets were treating him".
To get back to the original question, would that count against the Jets' cap hit, and the NHLPA's percantage of HRR? I feel that cap hit should always equal salary paid, but there seem to be so many loopholes, that I take nothing for granted.

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03-07-2013, 09:00 AM
  #63
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Quote:
Originally Posted by me2 View Post
Wow. If I'm reading this right that's really mindblowing they are ignoring the natural cap recapture rules like that (ie ones were the the player is paid less than the cap hit and only using years where the salary is more than the cap hit. That makes no sense.

Imagine a scenario

5m 5m 10m 10m 7.5m 7.5m

after 4 years the player's wife gets sick and he retires to spend time with her figuring he has enough money.

that team has paid out 30m in cap and 30m in salary but gets 2.5m +2.5m in cap recapture penalties.
That's not correct. They would have no penalties. The cap recapture only occurs when in aggregate they paid out more money than the associated cap hit.

The blurb on capgeek referring to not receiving a negative credit is talking about, if in your above example the player retires after year 2. The team would have paid $5 per year in salary but had a $7.5 per year in cap hit. Thats a total of $5 million negative cap hit which they wouldn't receive credit for.



If this calculator is in fact correct, if the Preds trade Weber in 2018 (the year in which is salary starts to be below his cap hit) and then he subsequently retires with one year left on his contract, the Preds would have a cap hit of $32MM for that last year.....

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03-07-2013, 09:14 AM
  #64
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Quote:
Originally Posted by knorthern knight View Post
One more question, and this appears to be the appropriate thread. Does the Jets' payment of part of Mark Scheifele's salary count against their cap hit?
  • His entry level salary is $1,594,167 for an 82-game season
  • He was only suited up for 3 games, before being sent back down to the juniors
  • However, he was on the roster for the team's first 10 games
  • He would draw $1,594,167 * 10 / 82 = $194,410.61. Not very many 19-year-olds see that type of money. And people were whing about "how badly the Jets were treating him".
To get back to the original question, would that count against the Jets' cap hit, and the NHLPA's percantage of HRR? I feel that cap hit should always equal salary paid, but there seem to be so many loopholes, that I take nothing for granted.
Tio answer your question yes it does. Well his cap hit does, not actual salary paid. Salary paid is rarely equal to cap hit. The associated cap hit of a player is his average salary over the length of his cotract not the actual salary he gets paid.

Some other problems with your understanding. The 1.5MM you quote as his salary is including bonuses which he wouldn;t have received. His actual salary is $950K. Also in the new CBA those bonuses aren't included in the cap hit.

Also I'm not 100% certain on this point, but I'm pretty sure salary paid is based on days on the roster not games. So if the season is 200 days in length for example, and he was on the roster for 20 days, 1/10 of his cap hit would go to the Jets and he would get paid 1/10 of his salary.

Players share of HRR is based on actual salary paid. Cap hit is not. A players cap hit could be much higher or lower than his actual salary. Also certain players dumped in the minors would have a cap hit associated with their contract but their salary would not count against the players share.

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03-07-2013, 09:49 AM
  #65
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You can avoid the "Over 35" rule and the "Cap Advantage Recapture" rule by signing a 34 year old to a 6 year retirement contract. The Contract Variability rules are as follows:

1. Year to year increase/decrease may not exceed 35% of Y1 salary.
2. Max variance between highest paid year and lowest paid year may not exceed 50%.

Here's a hypothetical six-year deal for a 34 year old player:

Y1: 10,000,000
Y2: 10,000,000
Y3: 6,500,000
Y4: 5,000,000
Y5: 5,000,000
Y6: 5,000,000

AAV: 6,920,000

Theoretically you could get two years out of the contract where the cap hit is lower than actual salary paid, then the player retires without penalty to the club. But that would assume the player is willing to leave quite a bit of money on the table in those retirement years. Also, chances are that a guy worth paying that much money to in one year is not ready to retire the next.

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03-07-2013, 01:28 PM
  #66
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Quote:
Originally Posted by me2 View Post
Wow. If I'm reading this right that's really mindblowing they are ignoring the natural cap recapture rules like that (ie ones were the the player is paid less than the cap hit and only using years where the salary is more than the cap hit. That makes no sense.

Imagine a scenario

5m 5m 10m 10m 7.5m 7.5m

after 4 years the player's wife gets sick and he retires to spend time with her figuring he has enough money.

that team has paid out 30m in cap and 30m in salary but gets 2.5m +2.5m in cap recapture penalties.
This salray scenario CANT HAPPEN....

Under the rules you can have no more than a 35% salary change from year to year...going for $5M to $10M is far more than 35%.

It does hold the max yr /min yr must be <=2 10/5=2.

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03-07-2013, 01:33 PM
  #67
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Originally Posted by cheswick View Post
Tio answer your question yes it does. Well his cap hit does, not actual salary paid. Salary paid is rarely equal to cap hit. The associated cap hit of a player is his average salary over the length of his cotract not the actual salary he gets paid.

Some other problems with your understanding. The 1.5MM you quote as his salary is including bonuses which he wouldn;t have received. His actual salary is $950K. Also in the new CBA those bonuses aren't included in the cap hit.

Also I'm not 100% certain on this point, but I'm pretty sure salary paid is based on days on the roster not games. So if the season is 200 days in length for example, and he was on the roster for 20 days, 1/10 of his cap hit would go to the Jets and he would get paid 1/10 of his salary.

Players share of HRR is based on actual salary paid. Cap hit is not. A players cap hit could be much higher or lower than his actual salary. Also certain players dumped in the minors would have a cap hit associated with their contract but their salary would not count against the players share.
For juniors eligibles ....I belive they are paid their per game rate if they play the game or sit in the pressbox (or if they were injured). But the game checks paid do not count against junior eligible status. Its only the games dressed to play count against the 9 games max per 82 game season.

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03-07-2013, 01:39 PM
  #68
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Originally Posted by Djp View Post
For juniors eligibles ....I belive they are paid their per game rate if they play the game or sit in the pressbox (or if they were injured). But the game checks paid do not count against junior eligible status. Its only the games dressed to play count against the 9 games max per 82 game season.
NHL salary is paid & prorated based on the number of days (not games) on an NHL Roster (or Injured Reserve).

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Old
03-08-2013, 08:01 AM
  #69
me2
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Quote:
Originally Posted by Djp View Post
This salray scenario CANT HAPPEN....

Under the rules you can have no more than a 35% salary change from year to year...going for $5M to $10M is far more than 35%.

It does hold the max yr /min yr must be <=2 10/5=2.
I know, I used nice big round numbers for to makes the example easier to add up.

So is capgeek wrong because they have Weber with $32.9m recapture penalty if he retires in his last year, that is illogical.

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03-08-2013, 09:18 AM
  #70
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Quote:
Originally Posted by Djp View Post
This salray scenario CANT HAPPEN....

Under the rules you can have no more than a 35% salary change from year to year...going for $5M to $10M is far more than 35%.

It does hold the max yr /min yr must be <=2 10/5=2.
He was simply using a made up example. And considering the cap recapture only applies to contracts signed under the last CBA the 35% rule need not apply in the example he orchastrated.

The reason his example wouldn't actually apply is because its only 6 years in length. The cap recapture only applies to contracts signed in the previous CBA 7 years or greater.

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