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What you need to know about COVID-19: August 7, 2020
Seven years after it was created, the NHL salary cap recapture penalty still lives on as a thorn in the side of the Vancouver Canucks’ payroll structure.
The tentative collective bargaining agreement that the NHL and the NHL Players’ Association ironed out this week features a new wrinkle to the cap recapture penalty system, which was imposed after the 2012-13 lockout as a disincentive against player contracts including low-wage years tacked on to the end of big-dollar contracts to reduce the contract per-season cap hit.
The penalty was also designed to apply retroactively to contracts that were already in place, like against Roberto Luongo’s deal.
It meant that if players retired before their deal expired, a formula was used to reapply “savings” made over the life of the contract to the team’s salary cap as a penalty over what would have been the remaining years of the initial contract. In some cases, this would actually end up being a bigger cap hit than the original contract called for.
This penalty has been applied twice. The first was on a smaller scale to the Los Angeles Kings for Mike Richards’ contract.
The second time, as Canucks fans know, it was applied to Roberto Luongo’s contract. Under the funky math of cap recapture it was deemed to have “saved” $9 million against the cap.
The former Canucks goalie retired last year after playing five seasons with the Florida Panthers, but the bulk of the penalty was still applied to the Canucks’ cap, just over $3 million for each of the three remaining seasons on Luongo’s contract.
If, however, Luongo had retired with just one season left on his deal, the cap penalty under the old rules would have been $9 million over the one season.
Under the new rules, this hit would have been reduced to the annual cap hit of $5.3 million. The difference, $3.7 million, would be applied as a penalty on the following season’s cap hit.
The purpose of this penalty rejigging is clear: there are a few contracts still in force that could see the players retire with many low-wage years left on their deals, making for massive penalties on future cap years for the teams they play for.
The best-known examples are the Minnesota Wilds’ Zach Parise and Ryan Suter, and the Montreal Canadiens’ Shea Weber.
The total of Weber’s cap recapture penalty, should he retire before it expires in 2026, is $24.57 million. Parise and Suter have identical deals and each carry a total penalty of $19.37 million should they retire early. Under the old rules, those figures would be divided between how ever many years were left in their deals.
If Weber were to retire with three years left on his deal — he’d be 38 at that point — the new rules would bring down the maximum penalty to his annual cap hit of $7.857 million, with the excess applied to future years. It’s still a big ticket, but still not quite the poison pill it might have been, since if he’d retired with one or two seasons left on his deal, the huge number of the penalty being divided over so few seasons would have left the Canadiens’ cap in ruins.
Recapture didn’t crush the Canucks, but we knew it could cause damage to the Habs and Minnesota Wild. It would just have been easier to repeal this folly of a rule.
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