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Salary Retention in trade + Early Retirement

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01-12-2013, 05:03 AM
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disgruntleddave
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Salary Retention in trade + Early Retirement

Let's say a guy like Luongo is traded, and in the trade vancouver retains 1M of his contract value. Luongo retires early, leaving his new team with a cap recapture penalty of 1M/year.

Is that penalty cap hit stuck with Vancouver or his new team? Is it split up evenly?

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01-12-2013, 05:30 AM
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SECRET SQUIRREL
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Edit: read this....

http://sports.yahoo.com/blogs/nhl-pu...7517--nhl.html


Last edited by SECRET SQUIRREL: 01-12-2013 at 05:47 AM. Reason: added link
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01-12-2013, 06:55 AM
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disgruntleddave
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Read my post :p

All the scenarios in your link do not include what happens when some of the salary is retained in a trade.

The question boils down to: Is the cap hit the team gets as a penalty for a back diving contract considered that retired player's cap hit? If so, does salary retention in a trade continue to pay towards such a penalty after the player retires?

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01-12-2013, 07:12 AM
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mapes
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Good question. Never thought of that. No clue what happens

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01-12-2013, 08:06 AM
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BaseballCoach
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Quote:
Originally Posted by disgruntleddave View Post
Read my post :p

All the scenarios in your link do not include what happens when some of the salary is retained in a trade.

The question boils down to: Is the cap hit the team gets as a penalty for a back diving contract considered that retired player's cap hit? If so, does salary retention in a trade continue to pay towards such a penalty after the player retires?
Well, if Vancouver for example were to retain salary on Luongo and that would serve to REDUCE their recapture, then logically this same move should INCREASE the recapture of Toronto or whoever traded for him. How does THAT make sense? It doesn't.

The retention provision is supposed to give the acquiring team a tangible benefit. It cannot logically be AUTOMATICALLY taken back by this formula!

I believe in fact it is the opposite, the original team will get MORE of the recapture, as they should, since they are agreeing to take part of the cap hit for the acquiring team.

Take a contract that goes like this
10-10-10-7-7-5-5-1-1-1
Total dollars committed 57, cap hit 5.7

Say the guy plays for Team-1 for 2 years, and Team-2 for 5 years, and suppose that Team-1 retained 20% of remaining salary and cap hit. Then, this is what I think SHOULD happen.

First let us look at what happens if there is no salary/cap retention in the trade.

Team-1 gets a frozen cap recapture of $8.6M, because they paid $20M and had a cap hit of $11.4M, over two years.
Team 2 paid $34M and got hit with cap of $28.5M, so they have a recapture of $5.5M.

Now the player retires, three years early. Team-1 will have a cap adjustment of $2.867M for each of three years, while Team-2 will have a cap adjustment of $1.833M for each of three years.

Let us now add the 20% retention clause.

Team-1 has now paid the following
10-10-2-1.4-1.4-1-1 for a Total $26.8M
and has absorbed cap hits of
5.7-5.7.-1.14-1.14-1.14-1.14-1.14 for a Total $17.1M

Team-1 now has a cap recapture of $9.7, which is $1.1M more than they had in the first case, which is correct, since $1.1M is 20% of the $5.5M recapture that Team-2 would have had.

Team-2 has now paid the following
8-5.6-5.6-4-4 for a Total $27.2M
and has absorbed cap hits of
4.56 x 5 for a Total $22.8M

Team-2 now has a cap recapture of $4.4M, which is $1.1M less than they had in the first case, which is correct, since $1.1M is 20% of the $5.5M recapture that Team-2 would have had.


Last edited by BaseballCoach: 01-12-2013 at 08:28 AM.
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