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Bonus and cap space

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Old
10-04-2006, 07:50 AM
  #1
Foredeck
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Bonus and cap space

From what I understand, if a player can reach a bonus, it has to be counted towards the cap space.

But, lets imagine two scenarios. #1, half way through the season, it's obvious he won't make the bonus, and #2, at the end of the season, it's clear he won't get any bonus at all.

Will his cap space change at all during the season, or will it always be what it was at the beginning of the year?

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10-04-2006, 08:46 AM
  #2
Irish Blues
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Quote:
Originally Posted by Foredeck View Post
From what I understand, if a player can reach a bonus, it has to be counted towards the cap space.

But, lets imagine two scenarios. #1, half way through the season, it's obvious he won't make the bonus, and #2, at the end of the season, it's clear he won't get any bonus at all.

Will his cap space change at all during the season, or will it always be what it was at the beginning of the year?
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?

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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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05-28-2010, 11:34 AM
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Call of the loonie
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Sorry to bump an old thread, but this thread is referenced in the stickied CBA FAQ thread.

I was hoping that someone could explain the status of the rookie bonus cushion for the upcoming season and beyond. It's my understanding that the CBA is extended on a year-by-year basis now which would effectively cancel the bonus cushion clause. Can anyone shed some light on this?

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05-28-2010, 12:19 PM
  #5
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Quote:
Originally Posted by Call of the loonie View Post
Sorry to bump an old thread, but this thread is referenced in the stickied CBA FAQ thread.

I was hoping that someone could explain the status of the rookie bonus cushion for the upcoming season and beyond. It's my understanding that the CBA is extended on a year-by-year basis now which would effectively cancel the bonus cushion clause. Can anyone shed some light on this?
Basically, the Performance Bonus Cushion is not in effect in any League Year which could be the final year of the CBA - since there would be no defined "next year" to carry over any excess bonus amounts to.

From '05-'06 thru '07-'08 the Performance Bonus Cushion was in effect.

The NHLPA had an option to early terminate the CBA in Sept 2009 - because of that '08-'09 was treated as a final season and the Performance Bonus Cushion was not in effect.

In '09-'10 the Performance Bonus Cushion was in effect.

'10-'11 is the last year of the CBA, so the Performance Bonus Cushion will not be in effect - with one caveat.

The NHLPA has the option to extend the CBA for one year - through '11-'12. They must exercise that option by 120 days prior to Sept 15, 2011. If they exercise that option before the start of this season, then the Performance Bonus Cushion will be in effect this season, but would not be in effect in '11-'12. It is unclear what would happen if the NHLPA exercised the option during this season (the deadline is in May) - the Cushion would not be in effect before they exercised, and it might or might not go back into effect after. Based on what happened in '08-'09, I'm guessing it would not go into effect - although there are differences between the NHLPA's elections in '08-'09 and '10-'11 (a negitive election vs a positive one). In any case, the NHL & NHLPA could decide at that point how they wish to handle it - and go to the System Arbiter if there is a disagreement.

Note that this NHLPA option to extend is a one time option for '11-'12. They cannot extend it beyond that.

Quote:
Originally Posted by CBA Article 50.5(h)(iii)
(A) For the 2008-09 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.

(C) If the NHLPA exercises its option to extend this Agreement
to September 15, 2012, consistent with Section 3.1(b) of
this Agreement, then for the 2011-12 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).
Now, after '10-'11 or '11-'12, the NHL & NHLPA have the option to continue playing year-to-year under the terms of the last year of the CBA - either side can terminate the agreement at that point. Under those conditions, the Performance Bonus Cushion would not be in effect.

Quote:
Originally Posted by CBA Article 3 Duration of Agreement
ARTICLE 3
DURATION OF AGREEMENT

3.1 Term.

(a) This Agreement is effective retroactive to September 16, 2004 (the
“Effective Date”), and shall remain in full force and effect until midnight New York time
on September 15, 2011, and shall remain in effect from year to year thereafter unless and
until either party shall deliver to the other a written notice of termination of this
Agreement at least 120 days prior to September 15, 2011 or not less than a like period in
any year thereafter.

(b) Notwithstanding anything to the contrary set forth in subparagraph 3.1(a),
the NHLPA shall have the right: (i) to terminate this Agreement as of September 15,
2009 by delivery of written notice of termination to the NHL at least 120 days prior to
September 15, 2009; or (ii) to extend this Agreement for one additional year to
September 15, 2012 by delivery of written notice to the NHL of such election to extend at
least 120 days prior to September 15, 2011.
Note that even after the agreement is terminated - assuming there is no strike or lockout - the NHL and NHLPA can (under US labor law) continue to play under the terms of the expired CBA.


Last edited by kdb209: 05-28-2010 at 12:58 PM. Reason: added Article 3
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Old
05-28-2010, 12:20 PM
  #6
LadyStanley
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Not just *rookie* bonuses, but all bonuses are effected if there is no roll over allowed.

Until the CBA is re-negotiated or extended multiple years, the NHL (unilaterally, without NHLPA input) may require no roll over. (So a hard/fast cap WRT bonuses)

(Just like what happened a couple of seasons ago before the NHLPA declined to terminate CBA early. In that case, even though the notification came in the middle of the season, the NHL still did not allow bonus roll overs to happen.)

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Old
05-28-2010, 12:23 PM
  #7
mouser
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Quote:
Originally Posted by Call of the loonie View Post
Sorry to bump an old thread, but this thread is referenced in the stickied CBA FAQ thread.

I was hoping that someone could explain the status of the rookie bonus cushion for the upcoming season and beyond. It's my understanding that the CBA is extended on a year-by-year basis now which would effectively cancel the bonus cushion clause. Can anyone shed some light on this?
That is correct. The NHLPA has a unilateral option to extend the CBA into 2011-2012, in following seasons both the NHL and NHLPA have an option to cancel.

Here's a thread with more detail:
http://hfboards.com/showthread.php?t=734344

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