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Understanding how a players cap hit is calculated if traded mid year

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08-04-2010, 12:14 AM
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WSA
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Understanding how a players cap hit is calculated if traded mid year

I've been trying to figure this out and maybe you guys can help.

If a player is traded to another team part way through the year, what is the player's cap hit for the new team? I know the team will only have to pay the actual salary for the portion of the year the player is on their team, but does this apply to the cap hit as well?

As an example:

If a player who signed to a two year contract with Team A at a cap hit of 4 million gets traded halfway through year one to Team B. Would Team B have to have 4 million in cap space available to take on the player? Or would they only need 2 million?

In other words is the players cap hit pro rated or is it the same no matter what? There seems to be some debate about this but I can't find a definitive answer including where this is outlined in the CBA.

It doesn't make sense to me why the cap hit would be pro-rated, but that seems to be what a lot of people say is true. I mean, what would stop teams from loading up on expensive players at the deadline only to be significantly over the salary cap in the summer?

I hope I am explaining what I am asking correctly here. Feel free to ask for more info if it isn't clear.

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08-04-2010, 12:27 AM
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http://hfboards.com/showpost.php?p=20630345&postcount=7
http://hfboards.com/showpost.php?p=20630364&postcount=9


Read the stickied thread first.

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08-04-2010, 12:31 AM
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I read that before I posted but did not see the answer. After you posted, I went and looked again but still don't see the answer. Can you give me an idea of how I am missing it????

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08-04-2010, 12:47 AM
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The best way I've seen it described is by CapGeek - http://capgeek.com/faq.php

Quote:
To understand how each team's cap count is calculated, think of a bank account. For the 2009-10 season, teams got a "deposit" of about $294,300 each day which they can spend on player salaries [$56,800,000 salary cap upper limit / 193 days in the season]. The difference left over is "payroll room," or the amount that has been "banked" for the future, if needed. "Payroll room" can never fall below zero, meaning teams can't borrow from the future to pay for today.
So you can save up payroll room which is why you're allowed to acquire players that have a higher cap hit at the deadline. You use that saved payroll room to pay for the greater cap hit.

A player's daily cap hit is total cap hit divided by length of the regular season (in the FAQ example, 193 days)

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08-04-2010, 12:58 AM
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Quote:
Originally Posted by WSA View Post
I've been trying to figure this out and maybe you guys can help.

If a player is traded to another team part way through the year, what is the player's cap hit for the new team? I know the team will only have to pay the actual salary for the portion of the year the player is on their team, but does this apply to the cap hit as well?

As an example:

If a player who signed to a two year contract with Team A at a cap hit of 4 million gets traded halfway through year one to Team B. Would Team B have to have 4 million in cap space available to take on the player? Or would they only need 2 million?

In other words is the players cap hit pro rated or is it the same no matter what? There seems to be some debate about this but I can't find a definitive answer including where this is outlined in the CBA.

It doesn't make sense to me why the cap hit would be pro-rated, but that seems to be what a lot of people say is true. I mean, what would stop teams from loading up on expensive players at the deadline only to be significantly over the salary cap in the summer?

I hope I am explaining what I am asking correctly here. Feel free to ask for more info if it isn't clear.
As checksix explains, you divide the players total annual cap hit by the number of days in the league year.

The player's cap hit remains unchanged if he's traded midyear, but the acquiring team only needs room for the remaining salary from that point forward. If his annual cap hit is $4m, and he's traded exactly at the midpoint, the new team only needs to have $2m in cap space. His daily cap hit however remains unchanged. When you add up his total cap hit for the year, it will be $4m, but spread out over the two teams.

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08-04-2010, 01:27 AM
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Quote:
Originally Posted by Fugu View Post
As checksix explains, you divide the players total annual cap hit by the number of days in the league year.

The player's cap hit remains unchanged if he's traded midyear, but the acquiring team only needs room for the remaining salary from that point forward. If his annual cap hit is $4m, and he's traded exactly at the midpoint, the new team only needs to have $2m in cap space. His daily cap hit however remains unchanged. When you add up his total cap hit for the year, it will be $4m, but spread out over the two teams.
Thanks for the help with this stuff. Unfortunately i still don't fully understand.

If the daily payroll limit is calculated as the salary cap upper limit divided by the number of days in the season AND the players daily cap hit stays the same all year, then how is the team only responsible for half the cap hit? That to me sounds like they are only responsible for half the actual salary but the players cap hit stays the same.

I honestly don't know what I'm missing here.....

EDIT: so, a team could theoretically load up on more expensive players at the trade deadline and be over the cap come the offseason?

For example: a team has 4 million in available cap room and 3/4 of the way through the season they then go out and pick up 4 different players each with an annual cap hit of 4 million, only being responsible for 4 million total (16 million x 1/4 = 4 million cap hit). At the end of the year in the offseason, the players are then worth 16 million towards the cap again.

Do you see what I mean with this. It seems like an abuse of the upper limit the way I am looking at it.

It seems like the players cap hit is constantly going down while the daily limit is not.


Last edited by WSA: 08-04-2010 at 01:34 AM.
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08-04-2010, 01:41 AM
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Quote:
Originally Posted by WSA View Post
Thanks for the help with this stuff. Unfortunately i still don't fully understand.

If the daily payroll limit is calculated as the salary cap upper limit divided by the number of days in the season AND the players daily cap hit stays the same all year, then how is the team only responsible for half the cap hit? That to me sounds like they are only responsible for half the actual salary but the players cap hit stays the same.

I honestly don't know what I'm missing here.....

EDIT: so, a team could theoretically load up on more expensive players at the trade deadline and be over the cap come the offseason?

For example: a team has 4 million in available cap room and 3/4 of the way through the season they then go out and pick up 4 different players each with an annual cap hit of 4 million, only being responsible for 4 million total (16 million x 1/4 = 4 million cap hit). At the end of the year in the offseason, the players are then worth 16 million towards the cap again.

Do you see what I mean with this. It seems like an abuse of the upper limit the way I am looking at it.

It seems like the players cap hit is constantly going down while the daily limit is not.
That is correct, which is why rental players are on the last year of their contract. Teams can afford them for the rest of the season but not for the following season (at least not without shedding salary)

Players daily cap hit never changes. Put it this way, just say the cap next year is 60 million (nice even number). If a team has 58 million committed to their roster. Assume a 200 day season and no injuries, trades, call ups, etc. to keep things simple.

Day 1 of the season - Daily Payroll Available (Deposit): $300,000 - Total Player Cap Hit (Withdrawal): $290,000 - Payroll Room (Savings Account Balance): $10,000
Day 2 of the season - Daily Payroll Available (Deposit): $300,000 - Total Player Cap Hit (Withdrawal): $290,000 - Payroll Room (Savings Account Balance): $20,000

...

Flashforward to trade deadline, say day 150 (3/4 mark as in your example)

Day 150 of the season - Daily Payroll Available (Deposit): $300,000 - Total Player Cap Hit (Withdrawal): $290,000 - Payroll Room (Savings Account Balance): $1,500,000

Over the final 50 days of the season, you have an extra $1,500,000 to spend. That's equivalent to $30,000 per day. You also have that extra $10,000 per day that you weren't using before, that continues to accumulate. Basically that makes $40,000 per day available for the remainder of the season. Extrapolate that over the course of a season and you can afford a player who is signed to a contract with a 8 million cap hit even though you technically have "2 million".

I realize I may have just made things more confusing but I'm someone who learns best through examples, so therefore explain best through examples.

Things get considerably more confusing when you factor in injury call ups, LTIR (which doesn't change anything but simply provides cap relief while said player is on LTIR)


Last edited by metric: 08-04-2010 at 03:01 AM.
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08-04-2010, 01:53 AM
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Quote:
Originally Posted by WSA View Post
EDIT: so, a team could theoretically load up on more expensive players at the trade deadline and be over the cap come the offseason?

For example: a team has 4 million in available cap room and 3/4 of the way through the season they then go out and pick up 4 different players each with an annual cap hit of 4 million, only being responsible for 4 million total (16 million x 1/4 = 4 million cap hit). At the end of the year in the offseason, the players are then worth 16 million towards the cap again.

Do you see what I mean with this. It seems like an abuse of the upper limit the way I am looking at it.

It seems like the players cap hit is constantly going down while the daily limit is not.

Basically correct.

A team with $1M in Payroll Room at the trading deadline (75% through the season) could acquire a $4M/yr cap hit player - whose remaining cap hit for the season will be $4M * 25% = $1M.

There are other limitations ("Tagging Rules") which prevent a team from exceeding the Upper Limit the next year.

If a team acquires a player with an expiring contract, that prorated contract just needs to fit in their available Payroll Room.

If a team acquires a player with a contract that extends into the next season, that prorated contract needs to fit into their available Payroll Room that year AND the full cap needs to fit into their available Payroll Room plus the value of any contracts which expire at the end of the season. Those expiring contracts are then Tagged - and their value cannot be used for another player transaction.

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