Salary Cap 101

[Cage]

I'm still trying to figure out some things about how the salary cap works in hockey... so here's a hypothetical

 

Christian Erhoff signed for 10 year / $40M front-loaded contract. Here is the breakdown of that contract

 

http://www.usatoday.com/sports/hockey/nhl/sabres/2011-06-30-ehrhoff-signs-with-sabres_n.htm

 

Lets assume that the Sabres were to trade him after year #3. According to the article above if I'm reading it correctly, they would have paid out the following:

Year 1 -- $2M Salary / $8M Bonus

Year 2 -- $8M Salary / $5M Bonus

Year 3 -- $4M Salary

Total 3 Year payout is $27M with $13M remaining on the contract

Sabres Salary cap hit is $4M/year over the life of the contract

 

If they were to trade him after that what are the salary cap implications for the Sabres and for the receiving team? I don't have a clue?

 

IF this was Football I believe the accelerated cap hit to the Sabres would be $15M in year 4 to net the difference between what they paid and were charged to cap over first 3 years. Then the receiving team would assume the remainder of the contract and take a $13M/7years charge for the remainder of it, which is less than $2M per year

 

Any education on how this works in the NHL would be appreciated...

[spndnchz]

I'm still trying to figure out some things about how the salary cap works in hockey... so here's a hypothetical

 

Christian Erhoff signed for 10 year / $40M front-loaded contract. Here is the breakdown of that contract

 

http://www.usatoday....th-sabres_n.htm

 

Lets assume that the Sabres were to trade him after year #3. According to the article above if I'm reading it correctly, they would have paid out the following:

Year 1 -- $2M Salary / $8M Bonus

Year 2 -- $8M Salary / $5M Bonus

Year 3 -- $4M Salary

Total 3 Year payout is $27M with $13M remaining on the contract

Sabres Salary cap hit is $4M/year over the life of the contract

 

If they were to trade him after that what are the salary cap implications for the Sabres and for the receiving team? I don't have a clue?

 

IF this was Football I believe the accelerated cap hit to the Sabres would be $15M in year 4 to net the difference between what they paid and were charged to cap over first 3 years. Then the receiving team would assume the remainder of the contract and take a $13M/7years charge for the remainder of it, which is less than $2M per year

 

Any education on how this works in the NHL would be appreciated...

 

To put it simply, any acquiring team would pay his SALARY and would retain the original cap hit.

[Cage]

To put it simply, any acquiring team would pay his SALARY and would retain the original cap hit.

 

Really? That's a strange way of doing it. So I guess that's the potential penalty of creating these types of contracts. Five years from now if someone's not working out, they essentially become unmoveable.

 

The Erhoff example was just convenient and not meant as any slight toward him specifically.

[Sabres Fan in NS]

Really? That's a strange way of doing it. So I guess that's the potential penalty of creating these types of contracts. Five years from now if someone's not working out, they essentially become unmoveable.

 

The Erhoff example was just convenient and not meant as any slight toward him specifically.

 

The beauty of this deal, in my humble opinion (and I believe it's been expressed on this board often), is ...

 

The front loading makes him very moveable after a few years to a team low on actual cash, but needing a nice cap hit to reach the salary cap floor (assuming the new CBA works the same way as the current one). The salary starts to be in the $2 million range at some point, but the cap hit remains $4 million ... perfect for a team without cash, but needing a cap hit.

[Cage]

The beauty of this deal, in my humble opinion (and I believe it's been expressed on this board often), is ...

 

The front loading makes him very moveable after a few years to a team low on actual cash, but needing a nice cap hit to reach the salary cap floor (assuming the new CBA works the same way as the current one). The salary starts to be in the $2 million range at some point, but the cap hit remains $4 million ... perfect for a team without cash, but needing a cap hit.

 

ahh, now that's an interesting perspective I hadn't thought about...thx!

[inkman]

So when did "aquiring someone to get to the cap floor" surpass "a pick and a prospect for a teams best player" and "he's from WNY, so let trade for him" among fans for most overused and implausible ideas?

[Cereal]

So when did "aquiring someone to get to the cap floor" surpass "a pick and a prospect for a teams best player" and "he's from WNY, so let trade for him" among fans for most overused and implausible ideas?

 

Well, I think it does seem plausible that acquiring a player with a $4M cap hit for a $2M actual salary could make sense for a team that is strapped for actual cash (not necessarily "to reach the cap floor") or simply running itself as a profitable business (see: Tommy G, although I don't know whether he's ever made a move of this nature, but you get the point).

 

Not that I disagree with the grounds of your inquiry. :lol:

[Cage]

Well, I think it does seem plausible that acquiring a player with a $4M cap hit for a $2M actual salary could make sense for a team that is strapped for actual cash (not necessarily "to reach the cap floor") or simply running itself as a profitable business (see: Tommy G, although I don't know whether he's ever made a move of this nature, but you get the point).

 

Not that I disagree with the grounds of your inquiry. :lol:

 

I don't think its happened yet, but if the cap works that way its entirely plausible for teams to consider. Definitely a paradigm shift though...