Calculating CAP HIT if one team retains salary - impossible?

[KevinRedkey]

I KNOW IT'S LONG BUT IT'S EFFED UP

There are two ways of doing this:
1: Remaining Salary divided by years
example: Player is owed 15 million over 2 years. Cap hit of 7.5 million. They retain 2.5 million per year (5 total) and the CAP hit is now 5 million.

2: CAP HIT minus whatever the team retains = NEW CAP hit
example: 5 million CAP hit - 2 million retained = 3 million CAP HIT

Complications:

Alex on Anaheim:
5 Year Contract - 30 million dollars - CAP HIT of 6 million
Year 1: 5 million (completed)
Year 2: 5 million (completed)
Year 3: 6 million (completed)
Year 4: 7 million
Year 5: 7 million

In this example, Alex has just finished his 3rd year, and would be going in to his 4th. He's been paid 16 million of his 30 million, leaving 14 million to go. Lets say you want to make the CAP HIT 4 million for the team he is being trade to. This is the confusing part...

Example one:
4 million per year for 2 years = 8 million is salary
Total contract of 30 million - 8 million = 22 million
Anaheim has already paid him 16, so they pay another 6 (3 per year) to make it 22
CAP HIT is now 4 million for the other team

Example two:
Cap hit is 6, so Anaheim retains 2 per year (4 total) to make the CAP hit 4 million

Why both examples one makes no sense:
Corey plays for Carolina
10 years - 100 million dollars - CAP hit of 10million dollars
Year 1: 11 million (completed)
Year 2: 11 Million (completed)
Year 3, 4 ,5.. to 9: 11 million (completed)
Year 10: ONE million
Corey has completed 9 years and would be going in to his 10th. He's been paid 99 million of his 100 million, leaving only 1 million to go.
If he was traded normally, with no retention, his cap hit would be 10 million dollars (obviously).

Using example one (Remaining Salary divided by years):
1 year at 1 million - 0.500 (retention) = 0.500 CAP HIT
That makes no sense, right? So it must be example 2...

Using example 2 (CAP HIT minus whatever the team retains = NEW CAP hit):
10.0 CAP hit - 0.500 retention = 9.500 CAP Hit

So it must be example 2... but...

Alex on Aneheim:
6 million CAP hit and 7 million per year left in salary.
If they were to retain 6.5 million per year, that woul make his CAP hit NEGATIVE 0.500... that cant be right either.

How does one calculate this stuff?!! lol

Click to read more...

 

[me2]

You retain % not a fixed amount of salary. Max 50%.

Example 1
Just work on %. What % would it take to reduce the cap hit from $6m to $4m? You retain 1/3 of 6m cap hit (33.3%). You must then retain 33% of the remaining salary for the remainder of the contract.

year 4 $7m, retain 33.3% ie $2.33m cash retained
year 5 $7m, retain 33.3% ie $2.33m cash retained

If they want to retain $2m per year in real cash you would 2 years at 7m = 14 less 2y $2m retained= $4M. $4m is 28.7% retained. However this only works because the two years are $7m and $7m. If they were $6m and $8m (total $14m) you could still retain $4m but it would be 28.7% of $6m and 28.7% of $8m ie 1.72m & $2.28m.

You can't retain fixed amount of cash, just a %. If you wanted to retain $2m/y you would need to still use the %, this might mean some years you retain more than $2m and some you retain less with an average of $2m/y retained.

Corey has completed 9 years and would be going in to his 10th. He's been paid 99 million of his 100 million, leaving only 1 million to go.
If he was traded normally, with no retention, his cap hit would be 10 million dollars (obviously).

Using example 2 (CAP HIT minus whatever the team retains = NEW CAP hit):
10.0 CAP hit - 0.500 retention = 9.500 CAP Hit

Same % for both $ and cap hit. player has a $10m cap hit and a $1m salary. If 50% is retrained then the retaining team pays 50% of $1m (500K) and keeps 50% of of the cap hit ie $5m cap hit retained. If the retaining team kep 30% they would pay $300K and $3m cap hit.

 

[KevinRedkey]

Just work on %. What % would it take to reduce the cap hit from $6m to $4m? You retain 1/3 of 6m cap hit (33.3%). You must then retain 33% of the remaining salary for the remainder of the contract.

year 4 $7m, retain 33% ie $2.33m cash retained
year 5 $7m, retain 33% ie $2.33m cash retained

I thought of that too...

But with the 100 million dollar guy:

What % would it take to reduce the cap hit from $10m to $0.5m? You retain 19/20 of 10m cap hit (95%). You must then retain 95% of the remaining salary for the remainder of the contract.

year 10 $1m, retain 95% ie $0.950m cash retained
CAP hit is now 0.500? down from 10?

 

[KevinRedkey]

You retain % not a fixed amount of salary. Max 50%

I didnt see this, but it's the same thing..

Basically if you want the CAP hit to go down by X%, you retain X% of the remaining salary, is what you are saying.

So with the 100m guy in my example:
50% of 1m is 0.500 retained and CAP hit is now 5m

Is that right?

 

[mouser]

So with the 100m guy in my example:
50% of 1m is 0.500 retained and CAP hit is now 5m

Is that right?

In your example, yes.

Cap hit and salary do not change over the term of the contract. The player's total salary and yearly cap hit remain the same even if traded. The amount the trading team can retain is an identical fixed % of both that cannot exceed 50% nor change from year to year.

I think your initial question came about from thinking it's a fixed $ amount a team can retain. Becomes much more simple when recognizing it's a percentage.

 

[me2]

I didnt see this, but it's the same thing..

Basically if you want the CAP hit to go down by X%, you retain X% of the remaining salary, is what you are saying.

So with the 100m guy in my example:
50% of 1m is 0.500 retained and CAP hit is now 5m

Is that right?

yes

 

[KevinRedkey]

In your example, yes.

Cap hit and salary do not change over the term of the contract. The player's total salary and yearly cap hit remain the same even if traded. The amount the trading team can retain is an identical fixed % of both that cannot exceed 50% nor change from year to year.

I think your initial question came about from thinking it's a fixed $ amount a team can retain. Becomes much more simple when recognizing it's a percentage.

This seems like a way to get out of a bad contract though..

Like.. Shea Weber.. you could make his CAP hit 3.750 in his final 3 years by simply eating up 1.500 in salary over a three year span (0.500 per).

Luongo after his 39th Bday has 4 years left.
You could cut his CAP hit down to 2.666 and only pay out 3.750 in salary. A buyout would cost WAY more and carry a worse CAP hit
Year 1: 2.534
Year 2: 4.298
Year 3: 4.916
Year 4: 4.916
Years 5-5: 0.583

This basically makes any horribly long contract in to a non-buyout in the future.

 

[KevinRedkey]

yes

Thank You - I can now go to sleep haha