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Old
07-16-2013, 09:05 AM
  #1
bootscraper
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Cap-Recapture

I was just wondering why the cap-recapture penalty is so ridiculous say, if richards retired. Why isn't this the case with Kovalchuk ? They are only being charged 300k as a penalty. If anyone could explain this, it would be great.

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07-16-2013, 09:12 AM
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Quote:
Originally Posted by bootscraper View Post
I was just wondering why the cap-recapture penalty is so ridiculous say, if richards retired. Why isn't this the case with Kovalchuk ? They are only being charged 300k as a penalty. If anyone could explain this, it would be great.
Because the first 2 years of Kovy's contract paid him 6 mil per year, which was less than his cap hit. It wasn't until year 3 that his salary exceeded his cap hit.

Richard's contract pays him MUCH more than his cap hit in the first 5 years. That's what the cap recapture is designed to fix.

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07-16-2013, 09:16 AM
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At the end of every NHL contract, the actual salary paid should be equal to the aggregate cap hit the team experienced. If a player retires early in a backdiving contract, the cap benefit recapture mechanism kicks in to assure that the team experiences an aggregate cap hit that matches what they ended up paying the player over the life of the contract. People think the cap benefit recapture clause is a penalty. It's better to think of it as a readjustment tool.

The Devils paid Kovalchuk $12m over the past two years while his aggregate cap hit over the same time was $13.34m.

The Rangers paid Richards $24m over the past two years while his aggregate cap hit over the same time was $13.34m.

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07-16-2013, 10:43 AM
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Brian Boyle
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Kovalchuk's big money years on his Devils contract were ahead of him, not behind him.

2010-11 $6,000,000
2011-12 $6,000,000
2012-13 $11,000,000
2013-14 $11,300,000
2014-15 $11,300,000
2015-16 $11,600,000
2016-17 $11,800,000
2017-18 $10,000,000
2018-19 $7,000,000
2019-20 $4,000,000
2020-21 $1,000,000
2021-22 $1,000,000
2022-23 $1,000,000
2023-24 $3,000,000
2024-25 $4,000,000

If he would have retired after the 2018-19 season, his cap penalty would have been $5.2 million for 5 seasons [(86M - 60M)/5].

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07-16-2013, 10:49 AM
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Quote:
Originally Posted by Crease View Post
People think the cap benefit recapture clause is a penalty. It's better to think of it as a readjustment tool.
This. So much this.

It's like you have two kids, and one of them stole the other one's juice box. If the next day you give the one kid two juices boxes and the offending child none, you're just correcting the injustice (cap benefit recapture).

If you chain the kid to a pipe in the crawlspace that's a penalty (like the Devils forfeiting a first round pick).

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07-16-2013, 11:03 AM
  #6
MugatuNYR
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Here are the penalties if Richards were to retire in any one off-season until his contract expires:

2013: $1,523,810
2014: $2,166,667
2015: $2,966,667
2016: $4,166,667
2017: $5,666,667
2018: $5,666,667
2019: $5,666,667

The penalties would be active from the time he retires until 2019-20 season, when his original contract was set to expire. So if he were to retire in the summer of 2015, the Rangers would carry a nearly $3 million cap-recapture cap hit penalty from 2015-16 until 2019-20. This has probably been covered before but no harm in reiterating...

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07-16-2013, 12:53 PM
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bootscraper
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Understood, thank you folks.

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07-16-2013, 04:01 PM
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Quote:
Originally Posted by Crease View Post
to think of it as a readjustment tool.
No, it's a penalty. If it is a "readjustment tool," this would be used on all contracts and it also wouldn't be used if a player retires in middle of the contract. The cap hit should be determined by the players' salary in the given year. That only makes sense.

How come this is only used on contracts 7 years or longer that were signed before the CBA? Players still sign deals that long.

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07-16-2013, 04:11 PM
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NYRFAN218
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Quote:
Originally Posted by Parker McDonald View Post
No, it's a penalty. If it is a "readjustment tool," this would be used on all contracts and it also wouldn't be used if a player retires in middle of the contract. The cap hit should be determined by the players' salary in the given year. That only makes sense.

How come this is only used on contracts 7 years or longer that were signed before the CBA? Players still sign deals that long.
The salary variance in the new CBA basically makes it impossible to hand out those cheating contracts now.

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07-16-2013, 04:39 PM
  #10
Brian Boyle
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This is about the biggest back-diving contract they can give out in the new CBA:

12,860,000
12,860,000
12,860,000
12,860,000
8,359,000
6,430,000
6,430,000
6,430,000

For a net cap benefit of $3,456,125 per season if he retired during the last three years. And that player would have to walk away from over $6 million.

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07-16-2013, 04:40 PM
  #11
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Quote:
Originally Posted by NYRFAN218 View Post
The salary variance in the new CBA basically makes it impossible to hand out those cheating contracts now.
I'm pretty sure this contract would be allowed today:

Year 1: $6MM
Year 2: $6
Year 3: $10
Year 4: $11
Year 5: $12
Year 6: $9
Year 7: $9
Year 8: $7

Cap hit: $8.75MM

For whatever crazy reason why, the player could retire after Year 7, in which the player made a total of $63MM, the total cap hit was $61.25MM. That means they saved $1.75MM. If this contract was signed before the CBA, that would go against the cap. If this contract was signed after the CBA, it wouldn't.

Edit - I could change Year 8 to $6MM to make it even more of a benefit.

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07-16-2013, 05:00 PM
  #12
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There will always be loopholes until the NHL decides to define a players cap hit as the actual salary paid for that season.

As for why the NHL decided to make only 7+ year backdiving contracts eligible for the Cap Benefit Recapture, it's probably because they felt those contracts were the ones most likely negotiated in bad faith. IMO it's still a corrective tool, not a penalty.

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07-16-2013, 05:02 PM
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Quote:
Originally Posted by Crease View Post
There will always be loopholes until the NHL decides to define a players cap hit as the actual salary paid for that season.

As for why the NHL decided to make only 7+ year backdiving contracts eligible for the Cap Benefit Recapture, it's probably because they felt those contracts were the ones most likely negotiated in bad faith. IMO it's still a corrective tool, not a penalty.
Then how come this corrective tool only applies to players who retire in middle of the contract? If some contracts need correcting, why can't they correct all of them, even after the contract expires?

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07-16-2013, 05:04 PM
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Quote:
Originally Posted by Parker McDonald View Post
Then how come this corrective tool only applies to players who retire in middle of the contract? If some contracts need correcting, why can't they correct all of them, even after the contract expires?
At the end of the contract, the total cap hit will always equal the total amount paid. What kind of correction would be required?

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07-16-2013, 05:04 PM
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Quote:
Originally Posted by Parker McDonald View Post
Then how come this corrective tool only applies to players who retire in middle of the contract? If some contracts need correcting, why can't they correct all of them, even after the contract expires?
Is there a circumstance in which a player doesn't retire early but the contract needs to be corrected?

EDIT: 31 beat me to it.

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07-16-2013, 05:08 PM
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Kane One
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Quote:
Originally Posted by -31- View Post
At the end of the contract, the total cap hit will always equal the total amount paid. What kind of correction would be required?
Quote:
Originally Posted by Crease View Post
Is there a circumstance in which a player doesn't retire early but the contract needs to be corrected?

EDIT: 31 beat me to it.
No correction at all.


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07-16-2013, 05:10 PM
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Quote:
Originally Posted by Parker McDonald View Post
No correction at all.

Hey, it's our off-season, too.

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07-16-2013, 05:16 PM
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Originally Posted by -31- View Post
Hey, it's our off-season, too.
But still, that figure I just showed still makes no sense.

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07-16-2013, 05:26 PM
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Brian Boyle
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I don't know why they chose not to enforce it on contracts signed during this CBA, but the possibility for manipulation is too small for me to lose any sleep over.

This:
Year 1: $6MM
Year 2: $6
Year 3: $10
Year 4: $11
Year 5: $12
Year 6: $9
Year 7: $9
Year 8: $7

Sure looks a hell of a lot better than this:

$12,000,000
$12,000,000
$11,000,000
$9,000,000
$9,000,000
$9,000,000
$9,000,000
$9,000,000
$8,000,000
$6,000,000
$2,000,000
$1,000,000
$1,000,000

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07-16-2013, 05:57 PM
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Minor nit but in your first example, 31, the variance between Y2 and Y3 is greater than 35%.

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07-16-2013, 06:07 PM
  #21
Brian Boyle
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Quote:
Originally Posted by Crease View Post
Minor nit but in your first example, 31, the variance between Y2 and Y3 is greater than 35%.
Well that was Parker's example so blame him.

Also I just learned that the rules apply for salary increases as well as decreases for back-diving contracts.

edit: actually that contract wouldn't even be considered a front-loaded contract, so it would be ok.

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07-16-2013, 06:15 PM
  #22
Kane One
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Quote:
Originally Posted by Crease View Post
Minor nit but in your first example, 31, the variance between Y2 and Y3 is greater than 35%.
Quote:
Front-loaded contracts where the average of salary plus bonuses over the first half of the contract exceeds the cap hit, variability rules apply.
http://www.capgeek.com/new-cba/

The average salary in the first half of this contract does not exceed the cap hit.

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07-16-2013, 06:21 PM
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Good call guys. Didn't realize that applied only to front-loaded deals, per section 50.7 of the new CBA.

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