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SALARY CAP FAQ
- click on the hyperlink to go to the
specific section [updated for the 2008-09 season] Under the terms of the new CBA, each team is required to spend a minimum amount on player salaries (the Lower Limit) but no more than a maximum amount (the Upper Limit). For the 2008-09 season, the Lower Limit is $40.7 million and the Upper Limit is $56.7 million. Each player's salary for the purpose of the salary cap (the player's cap figure) is calculated as the average salary he would earn over the life of his contract; for contracts signed prior to the lockout, only those years starting with the 2005-06 season are counted [after the 24% rollback in salaries for contract signed prior to the lockout]. This includes all potential bonuses paid by the team (whether the bonuses are in fact earned or not) and any potential option years (even if the option is not exercised). It does not include potential buyout amounts [of which Jaromir Jagr was the last]. -- Example: A player has a post-rollback salary of $2 million for '06-07, $2.1 million for 07-08 and $2.5 million for 08-09. His cap number would be $2.2 million for '06-07, '07-08, and '08-09. If there was an option year for $3 million for '09-10 with a buyout option for $300,000, his cap figure would then be $2.4 million - count the salary due if the option is exercised, don't count the payment made if the option is not exercised. (However, if the option is declined that $300,000 payment would count against the team in '08-09. Ignore the fact that this contract would not have been subject to the 24% rollback and obviously would not have an option year under this CBA - it's merely an illustration.)
-- Example: A player signs for $1 million for '08-09, but can earn up to $2 million in bonuses if the team wins the Stanley Cup. His cap figure would be $3 million for '08-09.
Note that a player's cap count is NOT his salary in a given year. A lot of people get confused on this - some sites show only the player's salary for the current year and people think it's the player's cap number. It's not - see the first example above. CALCULATING THE TEAM CAP COUNT To understand how each team's cap count is calculated, think of a bank account. For the 2007-08 season, teams got a "deposit" of about $268,984 each day which they can spend on player salaries. (This is $50.3 million divided by 187 days, the length of the ’07-08 season; the season is deemed to have started on October 3, 2007 even though there were two regular-season games played in London.) The difference left over is the "payroll room", the amount that can be used in the future - so each team's cap count can go up or down on a daily basis. The amount of "payroll room" can never fall below zero - so teams can't borrow from the future to pay for today.
Who counts
against the cap?
DURING THE SEASON
In addition, 50.5(d)(i)(B)(5) states
the following: So if a 35-year old player signs a 3-year contract and meets the criteria set above, his average salary would count against the team's cap for the 2nd and 3rd years of the contract regardless of where (or if) the player is playing. If that player plays in the minors, then his Averaged Club Salary less $100,000 would count.
NOTE: This does NOT mean that a player who is over the age of 35 in the current League Year counts against the Upper Limit. If a player signed a 5-year contract at the age of 32 and is now 35, he can be sent to the minors and will not count against the Upper Limit. The first requirement is that the player must be 35 or older in the League Year when the SPC first becomes effective. The current popular example: even though Darius Kasparaitis turned 35 during the 2007-08 season, he did not count against the Upper Limit after being assigned to Hartford (AHL) because he was only 29 when he signed his contract with the Rangers in 2001. Even if he had signed a 2-year deal for 2007-08 and 2008-09, he still would not count for '08-09 while in Hartford because he was 34 on June 30, 2007.
Players on a team's Active Roster, Injured Reserve, Injured Non Roster or Non Roster as of 5:00pm New York time on a particular day count toward the team's Upper Limit; in addition, if a player practices or travels with his NHL team or plays in an NHL game prior to 5:00pm and is then assigned to the minors, he will still count for that day.
DURING THE OFFSEASON
In the offseason,
the following players count:
-- Example: A player with an averaged
salary of $500,000 and signed to a 2-way contract was on an NHL roster
for 94 days in the previous season, which was 188 days long. During the
offseason, he will count $500,000 x 94/188 = $250,000. During the
season, he will count only while he is on an NHL roster.
Who doesn't
count against the cap? During the offseason: players signed to a 2-way contract but who were not on an NHL roster at any point during the previous season, and any player not under contract. That's it - everyone else counts as described above. When can teams exceed the Upper Limit? From the last day of training camp until June 30, the only time teams may exceed the Upper Limit is if a player has a LTI and replacing the player would put the team over the Upper Limit. In past years, teams could also exceed the Upper Limit due to performance bonuses in a player's contract as long as the team didn't exceed the Upper Limit by more than 7.5% [the "Performance Bonus Cushion"] ... meaning that after stripping out bonuses, no team could exceed the Upper Limit. For the 2008-09 season, the Upper Limit of $56.7 million is a hard cap - the 7.5% allowance is not allowed, and thus no team can carry over any overage to the 2009-10 season. In addition, from July 1 to the last day of training camp, teams may exceed the Upper Limit by no more than 10%. For 2008-09, the absolute highest teams can go during the offseason (from July 1 to the end of training camp) is $62.37 million. Players who finished the prior season on LTIR are excluded for the purpose of offseason calculations. A team is considered to be in compliance with the salary cap if it has not spent more than the allowable limit to date, and if it could carry its current roster of active players (including players injured but not designated as having a long-term injury) and stay within the Lower and Upper Limits. Thus a team could carry $44 million until the trade deadline, then load up with players whose total cap hits were $40 million for the playoffs - as long as at the end of the season the team would not exceed the Upper Limit. With a few exceptions, players may only earn roster, reporting, or signing bonuses under the new CBA. Entry-level players may earn bonuses for certain awards and performance (Exhibit 5) bonuses. (Page of those bonuses coming shortly.) Players 35 and older as of June 30 who sign a contract for the immediately following League Year may earn performance bonuses, as well as players with 400 or more games played and who spent 100 or more days on injured reserve in the last year of their most recent contract; however, in these two cases, performance bonuses are only allowed for 1-year contracts. If players in these two categories sign a multi-year contract, they cannot earn performance bonuses. When teams calculate how much room they have under the cap to add players, any potential bonuses that a player can earn must be included in the player's cap count. For 2005-06 through 2007-08, teams could exceed the Upper Limit by up to 7.5% [the "Performance Bonus Cushion"] in order to pay such bonuses (for 2007-08, teams could effectively have an Upper Limit of $54,072,500) with the provision that any team doing this would have its Upper Limit reduced for the following season by the amount it exceeds the current year's Upper Limit. If the bonus is not paid, no penalty is imposed. [As mentioned above, the Performance Bonus Cushion is not available in 2008-09.] As the season progresses, if a player becomes ineligible for a bonus it will come off the player's cap count and that amount will become available to the team - but only for that season. For bonuses contracted before the new CBA that are to be paid under the new CBA, those bonuses do not count toward the team's salary cap and are not considered in the calculation of a player's cap number. Only bonuses contracted under the new CBA will count toward the team's salary cap and will be considered in the calculation of a player's cap number. A player is considered to have a bona-fide long-term injury if, in the opinion of the team, the player has an injury which will cause him to miss at least 10 games and 24 days. Even in such cases, the player's salary will continue to count against the team's Upper Limit. This is mentioned at least three times in the CBA, and is repeated in Article 50.10(a): All Player Salary and Bonuses paid to Players on an NHL Active Roster, Injured Reserve or Non Roster that are Unfit to Play – being either injured or suffering from an illness – shall be counted against a Club's Upper Limit, Actual Club Salary and Averaged Club Salary, as well as against the Players' Share. For players that the team has filed an LTI exception, the team is allowed to exceed the cap by up to the amount of the injured player's salary with as many replacement players as needed, provided that when the injured player is activated the team comes into compliance with the cap immediately. The team does not get to automatically tack on the amount of the injured player's salary to the Upper Limit - an example as illustrated in Article 50.10(d) of the CBA illustrates this point: (a) Illustration: A Player with a Player Salary of $1.5 million becomes unfit to play for more than 24 days and 10 games. At the time the Player becomes unfit to play, the Club has an Averaged Club Salary of $39.5 million, and the Upper Limit is $40 million. The Club may replace the unfit-to-play Player with another Player of Players with an aggregate Player Salary and Bonuses of up to $1.5 million. The first $500,000 of such replacement salary and bonuses shall count toward the Club's Average Club Salary, bringing the Averaged Club Salary to the Upper Limit. The Club may then exceed the Upper Limit by up to another $1 million as a result of the replacement salary and bonuses. However, if the unfit-to-play Player once again becomes fit to play, and the Club has not otherwise created any Payroll Room during the interim period, then the Player shall not be permitted to rejoin the Club until such time as the Club reduces its Averaged Club Salary to below the Upper Limit. So - just because a player has a long-term injury does not automatically grant the team extra cap space. A team with a payroll of $44 million that has a player making $4 million get injured doesn't gain any extra cap space as a result; a team at $54 million and a player at $4 million only gains $1,300,000 (all pro-rated, of course). Relief toward the salary cap only comes if replacing an injured player's salary would push the team over the cap, and the amount of relief is limited to the amount the team would go over the cap - not the entire amount of the injured player's salary. When two teams trade players, the cap figures of each player immediately become the responsibility of the other team. The new CBA prevents teams from picking up any part of a player's salary for another team in the future, or including cash in any transaction between teams. Any such agreements in the past are still valid, with the new team only counting the portion of the player's salary they are responsible for paying against the team cap. An example of this is Jaromir Jagr of the New York Rangers, who is paid $8.36 million in '07-08 but only counts $4.94 million (the portion the Rangers pay) against the Rangers team cap; the difference is paid by Washington but does not count against their team cap. To answer an often-asked question: when a player is traded from one team to another, his cap number DOES NOT change. Thus, if Bryan McCabe is traded from Toronto to the Islanders in the 2008-09 offseason, his cap number with the Islanders remains $5,750,000 - it does not recalculate based on the remaining years of the contract. Players who meet the criteria set forth in the new CBA for waivers must clear before being assigned to the minors. Additionally, the new CBA states that any player making more than the following amounts in the minors who is recalled must clear waivers again before joining the parent club.
2005-06: $75,000 This is called "recall waivers" - if the player is not claimed, he joins the parent club. If he is claimed (as Ron Hainsey was on November 29, 2005), the acquiring team is only responsible for half of the player's salary and the player's former team is responsible for the other half - which counts against the team cap for the duration of the player's contract. [If a player has signed an extension, it is not considered for the splitting of cap hits and salary - see the definition of an extension below.] In addition to players who are exempt from waivers (explanation coming shortly), any skater who have played 320 or more professional games in North America (NHL, AHL, or ECHL) or goalies who have played 180 or more professional games in North America (NHL, AHL, or ECHL) and (A) who have not been on an NHL roster for 80 or more games over the last two seasons OR (B) who have not spent more than 40 games on an NHL roster in the immediately prior season, are exempt from recall waivers. If a player subject to recall waivers is assigned to the minors by Team A and claimed on recall by Team B, then both A and B split the salary and cap hit; if B then waives the player for assignment but Team C claims the player, then both A and C split the salary and cap hit. If B successfully waives the player and assigns him to the minors [A and B split his salary, but he carries no cap hit unless he's subject to the "35 and older" clause] and then B recalls the player and he's claimed by Team C, then B and C will split the salary and cap hit and A has no further obligation. From Article 50.6 in the CBA: (a) No SPC may provide for a total aggregate Player Salary and Bonuses that is in excess of twenty (20) percent of the Upper Limit for any League Year (the "Maximum Player Salary and Bonuses"). For a Player signing a multi-year SPC pursuant to which he receives the Maximum Player Salary and Bonuses in any League Year during the term of such SPC, the Maximum Player Salary and Bonuses for every League Year covered by the multi-year SPC shall be based upon the Upper Limit at the time the SPC was signed. Illustration: Assume the Upper Limit is $40 million, and a Player signs a three-year SPC. The Player cannot receive more than $8 million in aggregate Player Salary and Bonuses (twenty (20) percent of the Upper Limit) in any year of that SPC, even if the Upper Limit in Year 2 or 3 actually exceeds $40 million, because any multi-year SPC providing the maximum allowable total aggregate Player Salary and Bonuses shall have the Upper Limit for the year in which the SPC is signed imputed across all years of the SPC. No contract signed between July 1, 2008 and June 30, 2009 may contain a total salary and bonuses in any year which pays more than $11.34 million. This does not prevent a player from taking up more than 20% of his team's Upper Limit. The provision in (a) above applies only at the time the contract is signed. The CBA does not contain a provision prohibiting a player from taking up more than 20% of the Upper Limit in any year ... so in the event that the Upper Limit declines, a player could in fact take up more than 20% of the Upper Limit and could earn more than 20% of the Upper Limit.
The minimum player salary by year is as
follows: Previously, the requirements for becoming a Unrestricted Free Agent were pretty strict - the player had to be at least 31 years old as of July 1 and have a certain amount of experience; players who had played 10 professional seasons and were paid less than the Average League Salary could choose to become UFA's as well. These requirements are changed to the following: 2006-07: Players must be at least 29 years of age as of June 30, 2006, or have 8 accrued seasons 2007-08: Players must be at least 28 years of age as of June 30, 2007, or have 7 accrued seasons; 2008-09 and on: Players must be at least 27 years of age as of June 30, 2008, or have 7 accrued seasons.
The requirement for electing Group V Free Agency remains at 10 professional seasons and making less than the Average League Salary in the last year of their contract; players who are eligible may elect for Group V once and only once during their career; however, with the minimum age for UFA dropping to 27 starting with the 2008-09 season, effectively the Group V category will cease to exist. Players must have been on a team's NHL roster (including Injured Reserve) for least 40 NHL games in a season (30 games if the player is a goalie) to receive credit for an accrued season; players are also given credit for the 2004-05 year if they were signed to a contract for the 2003-04 season.
CONTRACT RENEGOTIATIONS, EXTENSIONS, AND OPTION YEARS Players may not renegotiate contracts at any point during the life of the contract. Players may only be signed to contract extensions provided that the player is in the last year of his contract and the player has not signed a 1-year contract. If a player signs a 1-year contract, he is not allowed to negotiate an extension until January 1. By definition, an "extension" is a new contract that becomes effective immediately upon the expiration of the current contract. As such, for purposes of calculating a player's cap number the value of the extension is not considered for the current year. Thus a player whose cap number is $750,000 for 2007-08 and who signs a 3-year, $6 million extension has cap numbers by year of:
2007-08: $750,000 Option years are prohibited under the new CBA, as are voidable years of any type. Teams
were given a one-time chance to buy-out players for 2/3rds of the
remaining value of the contract between July 23 and July 29, 2005
without the buy-out counting against the salary cap. In future years,
teams may still buy-out player contracts for a portion of the remaining
value of the contract paid over twice the remaining length of the
contract. If the player is This is set forth in 13(d) of the Standard Player Contract (Exhibit 1 in the CBA). The remainder of this explanation applies to buyouts that took place after July 29, 2005, and assumes the player was not 35 or older when signing his SPC (in which case a buyout does not reduce the cap hit). When a player is bought out, the team still takes a cap hit for the player over twice the remaining length of the contract. The amount of the cap hit (by year) is determined as follows:
1. Take the actual salary due
for each remaining year. NOTE: This calculation has to be done for each year - meaning that the cap hit on a buyout will not necessarily be the same for all years (see examples below). It can even be negative (meaning the team gets a credit). However, it’s critical to have the correct information for #1 and #2 to get the correct cap hit. The cap hit on a buyout is only the same for all affected years if the remaining yearly salary is the same for all years. If it varies, then the cap hit on a buyout will vary. Examples: 1. A player has a 3-year SPC paying $1.5M per year. After 2 years, his team decides to buy him out.
2. A player has a 3-year SPC paying him $1.5M per year. After 1 year, his team decides to buy him out.
3. A player has a 4-year SPC paying $1M, $2M, $2M and $3M. After 3 years, his team decides to buy him out.
4. A player has a 3-year SPC paying $2M, $4M and $6M. After 1 year, his team decides to buy him out.
5. A player has a 4-year SPC paying $4M, $3M, $2M, and $1M. After 2 years, his team decides to buy him out.
Article 50.7: The difference between the stated Player Salary and Bonuses in the first two League Years of an SPC cannot exceed the amount of the lower of the two League Years. Thereafter, in all subsequent League Years of the SPC, (i) any increase in Player Salary and Bonuses from one League Year to another may not exceed the amount of the lower of the first two League Years of the SPC (or, if such amounts are the same, that same amount); and (ii) any decrease in Player Salary and Bonuses from one League Year to another may not exceed 50 percent of the Player Salary and Bonuses of the lower of the first two League Years of the SPC (or, if such amounts are the same, 50 percent of the same amount). Example 1: An SPC provides for $2M in Year 1. The player can earn up to $4M in Year 2 and up to $6M in Year 3, but not less than $1M in Year 2 and not less than $500K in Year 3. Example 2: An SPC provides for $1M in Year 1 and $2M in Year 2. The lower of these two amounts is $1M, so Year 3 cannot provide for more than $3M or less than $1.5M. Example 3: An SPC provides for $1M in Year 1 and $1M in Year 2. The lower of these two amounts is $1M, so Year 3 cannot provide for more than $2M or less than $500K. Example 4: An SPC provides for $750K in Year 1 and $1.1M in Year 2. The lower of these two amounts is $750K, so Year 3 cannot provide for more than $1.85M or less than $725K. Example 5: An SPC provides for $2.5M in Year 1 and $1.5M in Year 2. The lower of these two amounts is $1.5M, so Year 3 cannot provide for more than $3M, nor less than $750K. NOTE: this does not mean "change in salary is limited to 50% of the prior year's salary" - it's 50 percent of the lower of the first 2 years of an SPC. This means that a team cannot sign a player to a contract averaging $4 million per year by making the 1st year $16 million, and the other 4 years $1 million (or anything else that looks like this) - because it's a violation of the 100 Percent Rule. It does mean that a team can sign a player to a contract averaging $4 million per year by structuring it as $8 million, $6 million, $4 million, $1 million, and $1 million. |