Shea Weber's Cap recapture

[Osprey]

I just posted this on the main board:

The current CBA ends in 2022, when Weber will be 36 and unlikely to have retired yet. In the next CBA, they can, if they want to, completely re-write the rules that govern recapture penalties. I imagine that they will specifically because of the situation that Nashville could be in with the $24.5M recapture penalty. What I imagine that they'll do is keep the penalty, but change how it's spread out. For example, Nashville accrued that $24.5M cap advantage over 4 years, so they should at least get to spread it out over that. So, if Weber retires at 39, instead of being hit with a 1-year, $24.5M penalty, they'll be hit with $6.125M per year for 4 years. That's far more fair and how they should've structured the penalty in the first place. I think that they'll realize that and change the rule to something like that before the penalty has a chance to happen.

 

[Street Hawk]

I just posted this on the main board:

The current CBA ends in 2022, when Weber will be 36 and unlikely to have retired yet. In the next CBA, they can, if they want to, completely re-write the rules that govern recapture penalties. I imagine that they will specifically because of the situation that Nashville could be in with the $24.5M recapture penalty. What I imagine that they'll do is keep the penalty, but change how it's spread out. For example, Nashville accrued that $24.5M cap advantage over 4 years, so they should at least get to spread it out over that. So, if Weber retires at 39, instead of being hit with a 1-year, $24.5M penalty, they'll be hit with $6.125M per year for 4 years. That's far more fair and how they should've structured the penalty in the first place. I think that they'll realize that and change the rule to something like that before the penalty has a chance to happen.

Given that Weber's salary drops to $3 million in year 11 of his deal and $1 million each in years 12-14 of his contract, it is doubtful he plays out those years.

So, nashville will have 4 years to take on that cap penalty. Minnesota is in the same boat with Parise and Suter.

What will be interesting is to follow is how Chicago deals with Hossa after this coming season. His salary drops from $7 plus million down to $4 million, then it's 4 years at $1 million per season. So, this seems like it will be Hossa's final year.

No one other than NJ, due to Kovy leaving for the KHL and Richards having his deal terminated and thus re-capture starting has dealt with a player deciding to retire from hockey on these long term back diving deals.

Hosea will be first, then, I suspect Luongo.

Guys like Pronger, Savard, Franzen are on LTIR, while Richards, Bryz, Erhroff were all bought out.

 

[Cyclones Rock]

The New Jersey Devils are only being charged $3 million ($250,000 per year for 12 years) on the Kovalchuk contract. Something must have been worked out between the league and the NJD and the NHLPA for this to have happened.

https://www.capfriendly.com/players/ilya-kovalchuk

I wouldn't lose a minute of sleep thinking that the Preds would be on the hook for the full $24 million of recapture should Weber retire a few years before his contract ends. Something would be worked out which wouldn't put the franchise in cap purgatory.

 

[Fish on The Sand]

Forgive me if this has already been mentioned, however I believe the cap recapture kicks in with a buy out as well. That means if Weber is totally useless by the time hes's 37, 38 the habs could just buy out the final years of his contract for practically nothing while the Preds get hammered hard, regardless of whether or not Weber decides to retire. I could be wrong, but I assume the buy out counts the same as a retirement.

 

[Osprey]

The New Jersey Devils are only being charged $3 million ($250,000 per year for 12 years) on the Kovalchuk contract. Something must have been worked out between the league and the NJD and the NHLPA for this to have happened.

The Kovalchuk penalty seems to follow the same rules outlined in the CBA that are being discussed regarding Weber and the Preds. Kovalchuk defected after 3 seasons, by which time he had been paid $23M (6+6+11) while counting only $20M (6.66x3) against the cap. 23 minus 20 equals only $3M that the Devils are penalized for, and since he defected with 12 years left, that $3M gets spread out over 12 years.

The reason why the penalty would be so much bigger for the Preds is two-fold. First, there was a whopping $24.5M difference between his salary and his cap hit that the Preds benefited from over the last 4 years ((14-7.85)x4=24.5), rather than the measly savings of $3M that the Devils had. Second, Weber hasn't defected or retired yet, so the Preds can't start spreading out that $24.5M cap recapture penalty immediately like the Devils can. If he were to retire today, they could spread out the $24.5M over 10 seasons, but he's not likely to retire until there are 3 or fewer years left, meaning that that $24.5M penalty will have to be spread out over 3 or fewer years.

It's a nasty little consequence that probably wasn't foreseen or intended by the NHL, since contracts in the new CBA are limited to only 8 years and, with the few grandfathered-in, mega, retirement contracts like this, there was probably no imagination that a team like Nashville would trade such a player as Weber, especially so early in the contract. It's also backwards and not fair to the club that the player decides how painful the penalty is, rather than the club's own decisions. That's why I imagine that it won't be enforced as-is on the Preds. As I wrote above, the next CBA will probably fix the term that recapture can be spread out over and allow the Preds to spread out the $24.5M penalty over more years than just the years that Weber's contract runs. It would still be an awfully painful penalty (like, maybe, $6M per year), but not an utterly franchise crippling one.

 

[Goldorak]

He's not playing an NHL season at 38/39/40 for a lousy $1M. That's less than 1% of the contract's value and that even ignores the time value of money.

Worst case(and most likely IMO) scenario for the Preds is he retires summer of '23 leaving $8.2M x 3 in recapture. Second most likely IMO is he also foregoes the $3M season leaving $6.15M X 4 in recapture. Neither of these scenarios are enjoyable but they aren't crippling and should not require any type of rule change.

I guess your best hope is LTIR.

 

[mouser]

If NHL revenue growth is the same over the next 9 years as it was the past 9 then the cap in 2025-26 would be over $120m.

I don't necessarily think it will grow by the same amount, but that still gives some perspective on how much larger the cap might be towards the end of Weber's contract.

 

[token grinder]

I still have major major doubts about the recapture penalty. First, Weber has to retire and not get injured. Second, the league would have to feel comfortable enforcing a rule that:
A) Was written after this contract was signed (and the league approved)
B) written with The idea that a team is circumventing the cap, which in the Predators situation they were ...
C) Not attempting to circumvent the cap, just match an offer to keep their player and finally (which was designed as a poison pill for us with the upfront money).
D) I a curious how much true cap benefit we received as we never were a cap team ... And rarely close.

The league has been doing solids for teams all over the place. The Kovalchuk situation is crazy. How Mike Richards and the Kings situation played out is against the spirit of the CBA. Pronger is still on IR and working for the league ...

The rule, by letter, applies, but I am skeptical that it will ever apply in this situation

agreed on all this.

I think it gets bargained out though in the next two CBAs.

If he were to retire, with the rule being written after the fact, I would imagine the Preds franchise would take the Flyers franchise to court and tie it up until the league says, here take the cap hit medicine of the AAV for one year and make it go away. The NHL would cave

 

[tampa pred]

I'm not worried about it. Poile is smart enough to not make this trade before knowing all of the financial ramifications. Have to believe that he has assurances from the league that Weber's cap recapture will be largely forgiven (if not wiped out completely). The NHL generally enforces the intent of the rule instead of the letter of the law. The intent of this recapture rule is to prevent teams from structuring a contract with the purpose of circumventing the cap. Making the case that Weber's contract should not qualify would be very easy:

1. The Preds didn't write the contract. It was forced upon them.
2. The Flyers did not write the contract for the purpose of cap circumvention; they wrote it as a poison pill that Nashville couldn't match.
3. The contract was written prior to the rule.
4. Nashville was not a cap team, so the "cap benefit" was unrealized.

 

[mouser]

I'm not worried about it. Poile is smart enough to not make this trade before knowing all of the financial ramifications. Have to believe that he has assurances from the league that Weber's cap recapture will be largely forgiven (if not wiped out completely). The NHL generally enforces the intent of the rule instead of the letter of the law. The intent of this recapture rule is to prevent teams from structuring a contract with the purpose of circumventing the cap. Making the case that Weber's contract should not qualify would be very easy:

1. The Preds didn't write the contract. It was forced upon them.
2. The Flyers did not write the contract for the purpose of cap circumvention; they wrote it as a poison pill that Nashville couldn't match.
3. The contract was written prior to the rule.
4. Nashville was not a cap team, so the "cap benefit" was unrealized.

1. Really doesn't matter. The Preds wrote the contract. They were constrained to do so matching the terms of the offer sheet, but they definitely did choose to write the contract.

2. The Flyers wrote the offer sheet with both a poison pill and to be cap circumventing. Otherwise why tack on all the $1m/year seasons at the end?

3. Doesn't matter. Mike Richards' contract was written prior to the rule and LA was still assessed a recapture charge for it.

4. A novel argument, dunno how much weight the NHL would put in it. I'm not sure New Jersey actually used the space from Kovy's slightly front-loaded deal.

 

[triggrman]

And they reduced the penalty for Kovy...

 

[Adz]

They'd be on the hook for the recapture whether they traded him or whether they kept him so I imagine there is a contingency fund they're throwing a little into every year just in case.

Clarify something--Mr. Adz asked me this last night and I wasn't positive--If 2026 rolls around and he retires in January, do Preds pay the league $24m in money or do we start the next year with Cap Amount minus $24m?

 

[LCPreds]

I think this is just a potential cap hit. The reason is the money paid was front loaded. So it's a paper game on the back end not an actual payout to the league or anyone else.

 

[Viqsi]

They'd be on the hook for the recapture whether they traded him or whether they kept him so I imagine there is a contingency fund they're throwing a little into every year just in case.

Clarify something--Mr. Adz asked me this last night and I wasn't positive--If 2026 rolls around and he retires in January, do Preds pay the league $24m in money or do we start the next year with Cap Amount minus $24m?

The latter - it's a cap hit penalty, not a fine.

 

[mouser]

And they reduced the penalty for Kovy...

The league restored NJ's draft pick. They didn't change the recapture penalty for Kovy. Two separate things.

 

[triggrman]

The league restored NJ's draft pick. They didn't change the recapture penalty for Kovy. Two separate things.

Guess we'll see.

 

[Adz]

The latter - it's a cap hit penalty, not a fine.

Yikes. Well, cross that bridge if we get to it then.

 

[mouser]

Guess we'll see.

To add a little more clarity:

- NJ was penalized for signing Kovy to the 1st contract. After the NHL rejected it the PA took it to arbitration and lost. The league then punished NJ with a fine and draft pick loss for signing the illegal contract.

- Later NJ filed a second Kovy contract with the NHL. Also cap circumventing, but not as badly as the first contract. The NHL waited a week or so before approving the second contract. However as part of the approval process the NHL and PA agreed on new rules for the treatment of age 40+ contracts going forward--this rule was applied to Chara's new contract. Then when the new 2013 CBA was negotiated the recapture rule was instituted to retroactively apply to the cap circumventing contracts signed beforehand.

The two situations are connected in that they involved NJ and Kovy. But are independent in that the draft pick fine to NJ and the recapture penalty involved two different Kovy contracts.

 

[Roman Yoshi]

Callahan says the Weber recapture penalty will be split by both teams. Can't get twitter at work so I can't link, but it is there.

Wow

 

[NSH615]

Callahan says the Weber recapture penalty will be split by both teams. Can't get twitter at work so I can't link, but it is there.

Wow

Yes and no. Nashville is on the hook for $24M, Montreal gets the rest.

 

[mouser]

Yes and no. Nashville is on the hook for $24M, Montreal gets the rest.

FYI this chart is correct for Nashville, but very wrong for Montreal.

 

[Byrddog]

WEber took another kick in the Nads this morning. July 1 he gets his signing bonus. And thanks to the escalator 2.1 mil of that check today went to Escrow.

 

[NSH615]

FYI this chart is correct for Nashville, but very wrong for Montreal.

I got that from one of the SBNation sites. I think the site I found it on pulled it from somewhere else.

http://www.stanleycupofchowder.com/...Weber-Nashville-Predators--Flyers-Offer-Sheet

 

[mouser]

Not sure how they made that error on Montreal. Here are the correct figures: