CGY Stone Contract

[Fourier]

Maybe I missed something and this has been discussed in detail on the BoH. If so mods please delete this thread. But as a topic for the BoH it seem to me that the Flames resigning Stone opens up a huge loophole going forward. Team A is in short term cap crunch so they buyout Player X with a large contract and then resign player X effectively delaying the cap hit.

Not every player would be happy with this but there are ways to make it palatable. Give Player X 40% of his previous salary for the same term that was left. That makes up for the delay in payments. It may even have an additional tax advantage for players in lower tax states.

To me my scenario sounds like clear circumvention. But where does the NHL draw the line? With no explicit rule in place the NHL has had difficulty answering such a question in the past.

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[cheswick]

1. Would only work on contracts in which players are getting paid above market value, otherwise another team would claim on waivers which are required prior to a buyout.

2. An agreement of resigning a contract after a buyout would be cap circumvention. Proving it is a different story. It appears in Calgary’s case Stone was only signed after some injury issues on the Flames so it doesn’t appear to be an agreement in advance.

 

[joestevens29]

1. Would only work on contracts in which players are getting paid above market value, otherwise another team would claim on waivers which are required prior to a buyout.

2. An agreement of resigning a contract after a buyout would be cap circumvention. Proving it is a different story. It appears in Calgary’s case Stone was only signed after some injury issues on the Flames so it doesn’t appear to be an agreement in advance.

I guess the wild card for me would be in the scenario where a guy has a NMC and doesn't go on waivers.

 

[tarheelhockey]

I guess the wild card for me would be in the scenario where a guy has a NMC and doesn't go on waivers.

Yeah, it seems like this is all fair game as long as the player clears waivers. I'd imagine the league would step in if someone tried to game it with the NMC.

 

[Fourier]

1. Would only work on contracts in which players are getting paid above market value, otherwise another team would claim on waivers which are required prior to a buyout.

2. An agreement of resigning a contract after a buyout would be cap circumvention. Proving it is a different story. It appears in Calgary’s case Stone was only signed after some injury issues on the Flames so it doesn’t appear to be an agreement in advance.

Players that are over market value are exactly the ones you would want to do this for. And that is precisely the thing that would keep them from being lost in waivers.

I think point 2) is what saves Calgary here. But the devil has always been in the details with these sorts of things. How do you prove collusion like this?

Lets say the Lucic/Neal trade had happened at the draft and the Oilers unexpectedly needed an extra $1.5M to sign a big fish on July 1. Had they waived Neal would anyone have picked him up? If they did then the Oilers might well have seen that as a win because it would have meant moving Lucic at the cost of $750K for four years. If he cleared and they bought him out but immediately resigned him for $2.35M for 4 years. They get their cap space an Neal gets $1.6M of extra money though spread out over a longer period of time. That has to be cap circumvention. But where do you draw the line.

 

[beakerboy]

Wasn't there something in the NBA a while back where a player promised the team that he'd resign with the team if they declined his option? The team did, the guy became a free agent and then signed with a different team?

Here it is. Carlos Boozer.
https://www.espn.com/nba/news/story?id=1848196

Agreement to resign with Cleveland for $41m over 6 if Cleveland declined their team option at $700k for one year. Instead signed with Utah for $68m over 6 years.

Not really salary cap circumvention in that case, but you would run a risk with a decent player that is overpaid if you did this. Buyout player with intent to resign him at less than 1/3 of his current salary (otherwise no cap / real money savings). Player says thanks, takes your money and signs somewhere else. You have zero recourse because anything that you'd complain about would prove salary cap circumvention.

 

[mouser]

Imo it all comes down to whether an agreement was in place prior to the buyout for the player to re-sign. Obviously this is difficult to prove, but both the Stone and Orpik situations don’t show any hints of this—both players went unsigned for significant periods of time with little interest.

If there was something that looked more suspicious I’m sure the nhl would delve into it.

 

[justafan22]

Imo it all comes down to whether an agreement was in place prior to the buyout for the player to re-sign. Obviously this is difficult to prove, but both the Stone and Orpik situations don’t show any hints of this—both players went unsigned for significant periods of time with little interest.

If there was something that looked more suspicious I’m sure the nhl would delve into it.

I.e. Marleau signing with the Leafs on July 1st.

 

[Ted Hoffman]

This "loophole" has always been present; it's just that no one has really taken advantage of it. And really, it's a loophole if somehow the team gets a cap benefit over what it actually pays the player that gets bought out.

In this instance? I'm fairly certain if you sum up the money paid to Stone to play under the current and prior contracts [including the buyout amount] and sum up the cap hits that Calgary will incur for those two contracts, the dollars will be the same. [I leave it to others to verify this.] The only thing is that Calgary will carry dead cap space on the buyout that it can't get rid of.