Critique my cap loop hole

[Dr Love]

Well if there are teams well below the cap, then Reddens cap hit is irrelevent.

No it isn't. That's been a basic tenet of my point, which you're clearly not getting.

 

[oil slick]

No it isn't. That's been a basic tenet of my point, which you're clearly not getting.

I'm clearly not... so explain it to me this year with repsect to Edmonton.

Say that Edmontons roster will be 33 million. Their cap figure is at 33 million also. They cannot pay more in salary - so any trades must now equal out in terms of salary.

Now say Edmonton was offered Redden for 500k in salary and a 5 million dollar cap hit.

This would mean their roster costs them 33.5 million - a stretch, but they could manage. Their cap is at 38 million. Why Edmonton would not think this is great.


I don't mean to be obtuse, but I'm willing to learn .

I also have enough degrees to know that it is possible to teach me.

 

[Dr Love]

Why Edmonton would not think this is great.

Because it would leave them with 1 million under the cap, and thus they'd have to move someone. So now they're going to have to move someone.

But that's with respect to Edmonton, who, as you say, are not a low payroll team. Now take a low payroll team, say, the Wild. Why would the Wild want to add Redden? He's not going to turn them into a bonafide playoff team, they have little reason to give up good assets for him.

 

[PecaFan]

Because it would leave them with 1 million under the cap, and thus they'd have to move someone. So now they're going to have to move someone.

That's his point. They don't have to move someone:

(1) They're under the cap. (2) Their actual salary output for the year is $33.5 million, within reach of their internal budget.

 

[me2]

I can't see why it wouldn't work provided it stayed within the rumoured rules (max $1.5m change per year). Something like

$6m
$4.5m
$3m
$1.5
$0.5
$0.5

$16m/6 years for an average of $2.66m cap hit per year. The NHL might frown on it though and not approve it if it thinks that teams are trying to be too smart by half.

The question, is it really worth it for the original team? They give up $5.5m for a better pick? Is it really going to be that much better a pick considering the player still has a big cap hit? $5.5m comes with a 6 year contract. Would you sign a 6 year contract in this new NHL with an average quality player ($2.66m player not a superstar).

The best (assuming revenue allows 8m max) 8 6.5 5 3.5 2 0.5 = 25.5m/6y for $4.25m/y cap hit. Total extra cost for 3 years of $6.75m, savings for new team after 3 years of the same.

That is the absolute biggest savings over 3 years. Marginal as to whether its worth the risk for better pick or prospect.

 

[Kestrel]

One thing to realize is that in the proposed scenario, New York isn't looking at taking a $25 million hit versus a $22.5 million hit over 5 years...

They're looking at taking a $23.4 million hit over 3 years as opposed to the $13.5 million hit they normally would have taken over those 3 years if they gave Redden the $4.5 million/year he's supposed to be worth.

Suddenly, it doesn't seem like such a good idea. I know New York has money - but are they really willing to pay out nearly $10 million in difference for a first rounder or two? If they keep Redden for the last 2 cheap years, it evens out - if they don't, they've paid out a huge fortune, and in my opinion, gotten comparatively little in return.

Edit: Sorry Me2 - I see you more or less already covered this idea

 

[shoothepuck]

I don't think it's a good loop-hole. It is very limited. You need 2 teams and a player willing to make a deal that takes place over a long period of time (3-5) years with the examples being used. Team management changes, revenue up or down, player's getting injured, other player's being available, ect., ect. Many variables can happen in that long a time frame, and the NHL has to approve it.

 

[oil slick]

I know New York has money - but are they really willing to pay out nearly $10 million in difference for a first rounder or two?

Fair enough... I guess I had extrapolated from their free spending ways before the cap... I would say plenty of their investments had far less return on investment thn this, but I suppose hingsight is 20/20.

 

[oil slick]

I don't think it's a good loop-hole. It is very limited. You need 2 teams and a player willing to make a deal that takes place over a long period of time (3-5) years with the examples being used. Team management changes, revenue up or down, player's getting injured, other player's being available, ect., ect. Many variables can happen in that long a time frame, and the NHL has to approve it.

ok... ok...

you guys are beating me into submission .

Back to the drawing board I guess.

 

[me2]

ok... ok...

you guys are beating me into submission .

Back to the drawing board I guess.

Don't worry, I'll bet some GM does try it at some stage. That'll make you feel better. 4 years, 3.5-2.0-.5-.05. Cap hit of $1.625m, but pretty cheap player in the last two years at just $500K real money.

I could almost see it working with cheaper players (around $1.5-2.5m/y average). Is it worth it for the mid level players (Sami Salo, Witt, Cooke, Amonte types)? Most GMs wouldn't bother.

For the star players I think its too much of a risk and the contract would be too long and the cap hits too big.

 

[Dr Love]

That's his point. They don't have to move someone:

(1) They're under the cap. (2) Their actual salary output for the year is $33.5 million, within reach of their internal budget.

Sure, they don't have have to if they don't want to add anyone else, then they can live at a 38 million cap figure. But now they've little room to be able to add anyone as the season progresses. It doesn't matter what their salary output is.... what matters is their cap hit.

 

[mercury]

Wouldn't this team take a $5 million cap hit if they acquire Redden at $800K for the last two seasons? If the cap hit is the average of his deal over 5 years, and he got a 5-year, $25 million contract, the cap hit is $5 million per year, even if he is only actually paid $800K, right?

 

[oil slick]

Wouldn't this team take a $5 million cap hit if they acquire Redden at $800K for the last two seasons? If the cap hit is the average of his deal over 5 years, and he got a 5-year, $25 million contract, the cap hit is $5 million per year, even if he is only actually paid $800K, right?

Right... but the point was that a lot of teams don't care about the cap... they have their budgets, and the budgets are not close to 39 million, or even 34 million, so they don't care about a 5 million dollar cap hit... all they care about is the actual cost of a player.

The example I used was the Oilers, and I'll have to disagree with Dr. Love, even if signing a player like Redden brought them close to the cap, I think they would be all over something like this. They would have 25 players under contract, and have plenty of injury reserves, and the upside would be huge.

 

[Ishmael]

I thought about your idea, but from a different perspective - instead of trading the players, keep them but use the extra cap room in the later years to beef up. Basically:

1. Sign all of your core players to 3 year contracts. However, instead of making a 3yr/$9million contract worth $3mill/yr, make it worth $4mil/$4mil/$1mil.
2. Sign all your disposable players to 2-year deals.
3. In year 3, discard the disposables (hopefully for draft picks) and sign the best UFAs on the market to 1yr deals to put your team over the top.

This way, the team stays competitive for the first two years, and has a reasonable chance of winning (down slightly b/c players are taking up a disproportionate amount of cap space for the first 2 years).

Then, in year three, a couple of key free agents should be affordable in order to put the team over the top, and really have a strong shot at the Cup.

 

[turnbuckle*]

Good thinking on your part, but as stated, I don't believe you can have such a wide discrepancy in salary from year-to-year. I don't think it can be more than $1.5M.

If that's the case, the best contract they could offer a Redden would be 5 years at $24M.

A 5-year deal would have to look like this:

$7.8M
$6.3M
$4.8M
$3.3M
$1.8M

In that case their best bet would be to deal him in the fourth year if they're looking to deal with a cheapwad team - Redden for $1.8M in four years would be a bargain. I would also think you'd get plenty of interest at $3.3M and $1.8M in the final two years if they wanted to trade him; somehow I think the team that signed him would want to keep in. In fact, I'm pretty sure Ottawa wants to keep him first and foremost. Anyways, the cap hit per season would be $4.8M.

 

[Sixty Six]

Didn't Gonchar get $7m-$7m-$7m-$2m-$2m for his 5-year contract? Or am I just imagining things?

you're imagining things

 

[PeterSidorkiewicz]

Basically there is no way to critique this scenerio because NO ONE here has the CBA. You can critique it using only speculation on what you THINK the cap is. First off, no one has any idea whether the contract is spread out evenly over the years or it is in-fact on a year by year basis. I have actually heard conflicting reports on each, and no one here has a definite answer, as this question has been asked a billion times and no one can provide anything to backup their answer.

Also, most of the posts in this thread start with "I think you cant do this" and "I think you can't do that," but none of us knows unless we guess what the CBA really says, which is pointless. Once we know what the CBA really entails then we can actually look into different loopholes, if any.

 

[turnbuckle*]

Give me an example of a contract that has a $2M or more discrepancy from year-to-year. I also believe I read somewhere where there can't be more than a $1.5M difference, but I don't have a copy of the CBA in hand, sorry. Would you prefer I came out and said "This is the way it is?" I'm not 100 percent positive; neither are folks who are ignoring the question.

My hope was that someone would come along and clarify the matter, not just critique it.

 

[PeterSidorkiewicz]

Give me an example of a contract that has a $2M or more discrepancy from year-to-year. I also believe I read somewhere where there can't be more than a $1.5M difference, but I don't have a copy of the CBA in hand, sorry. Would you prefer I came out and said "This is the way it is?" I'm not 100 percent positive; neither are folks who are ignoring the question.

My hope was that someone would come along and clarify the matter, not just critique it.

Like I posted above, none of us know what the heck the CBA really entails, so its impossible to critique something when the official rules arent in front of you. It's all rumour and speculation and without knowing the rules, none of these points make any sense to me. This thread basically turned into wondering what the actual rules are because no one knows, instead of critiquing because it's impossible. Which is most of what these threads turn into, and with good reason.

 

[Captain Ron]

Like I posted above, none of us know what the heck the CBA really entails, so its impossible to critique something when the official rules arent in front of you. It's all rumour and speculation and without knowing the rules, none of these points make any sense to me. This thread basically turned into wondering what the actual rules are because no one knows, instead of critiquing because it's impossible. Which is most of what these threads turn into, and with good reason.

Not entirely true. Some parts of the CBA have filtered through to us via the media. Other pieces of information have come by posters who have actually asked people who have read the CBA (kdb209). So while I agree that some posters are making responses based on speculation. Other posters are basing their posts on information given to them by people who actually have access to the CBA. I am well aware that it is still second hand information but it is more than just rumor or speculation.

 

[avsfolife]

This is probably wrong or has been posted elsewhere... but anyways.

What is to stop the following scenario -

Say Redden becomes UFA and demands 4.5 million per year - so to sign a 5 year deal, he'll accept 22.5 million. Why doesn't Philly, NY, Toronto, Detroit or one of the other big market teams do the following.

Sign Redden to the following deal:

Year 1:7.8 million
Year 2:7.8 million
Year 3:7.8 million
Year 4:800k
Year 5:800k

So the cap hit each year will be 5 million if I understand correctly. NY holds on to Redden for 3 years. They don't care about salary - only about cap hit, so paying 7.8 million doesn't worry them too much since he only costs them 5 million in cap space, which is roughly what he's worth. Then at the end of three years they have this trading chip that is worth a lot.

At the end of three years, they trade Redden to some small market team that doesn't care about the cap... only about the actual cost of a player. For instance Edmonton could care less about whether Redden costs 5 million or 800k in cap space, but to get Redden for two years at 800k actual costs would be worth 1st rounders to them. Some real small market teams might even like the extra cap hit, since they can make the salary floor more easily.

NY wins because they get Redden for roughly the cap space, and get a fantastic bargaining chip for small market teams at the end of three years.

Redden wins because he gets 5 million a year instead of 4.5, and the salary is front loaded so he gets the money quicker.

The small market team wins since they add Redden for peanuts in actual costs.


Good idea? Huge flaw? Out to lunch?

There is a similar potential loophole for small market teams signing players to backloaded contracts and trading them to large market teams.

Supposing this was feasible under the new CBA, I don't see the point for any of those big market teams to structure Redden's contract this way ...

At the end of year 3, Redden may become extremely attractive, to both small and big market teams, because his cap hit would only be 800K, but, at the same time, it'll be hard for, say Rangers, to predict what they would get in return for him, because teams will also be aware that Redden will be asking for significantly more once his contract expires ... Small market teams will not sacrifice one of their key players for someone they think they will not be able to afford 2 years down the road ...

Also, why wouldn't the Rangers simply keep him at the end of year 3? They've already forked out the big $$$ for him in prior years, and assumed the 5M cap hit. Unless they needed to clear some cap room, keeping him would reflect well on their financial statements ....

Also, supposing it was feasible, I can't see Redden and his agent agree to such a contract ...
His value drops significantly at the end of year 3, and there is no guarantee he will be able to make anywhere near 5M the following year ... how will he justify such a big salary increase?

 

[Captain Ron]

At the end of year 3, Redden may become extremely attractive, to both small and big market teams, because his cap hit would only be 800K, but, at the same time, it'll be hard for, say Rangers, to predict what they would get in return for him, because teams will also be aware that Redden will be asking for significantly more once his contract expires ... Small market teams will not sacrifice one of their key players for someone they think they will not be able to afford 2 years down the road ...

Was this a mistake? Because his cap hit would not be $800k. It would be $5 million throughout the entire length of the contract.

 

[PeterSidorkiewicz]

Not entirely true. Some parts of the CBA have filtered through to us via the media. Other pieces of information have come by posters who have actually asked people who have read the CBA (kdb209). So while I agree that some posters are making responses based on speculation. Other posters are basing their posts on information given to them by people who actually have access to the CBA. I am well aware that it is still second hand information but it is more than just rumor or speculation.

I find it way too hard reading posts on here to actually seperate the confirmed truth from speculation. Like all of the questions I have wondered about the CBA, I have not found out one confirmed answer, such as does the cap use the contract for that year, or the average of the contract. I'm sure there are people who have read it and have good info like you have mentioned, but I guess I haven't looked hard enough to actually dig through everything and find it. That's why I cant wait for the CBA to be released so everything is out there, and everyone is posting by the same set of rules.

 

[Captain Ron]

I find it way too hard reading posts on here to actually seperate the confirmed truth from speculation. Like all of the questions I have wondered about the CBA, I have not found out one confirmed answer, such as does the cap use the contract for that year, or the average of the contract. I'm sure there are people who have read it and have good info like you have mentioned, but I guess I haven't looked hard enough to actually dig through everything and find it. That's why I cant wait for the CBA to be released so everything is out there, and everyone is posting by the same set of rules.

Here is a source for you. So you won't have to look it up.


http://www.washingtonpost.com/wp-dyn/content/article/2005/07/23/AR2005072300876.html

Next to the article is a box that says. "Here's The Deal"

If you go down to the seventh paragraph it says this....

Player contracts are counted against the cap using the average salary. For example, a three-year deal that pays $2 million in the first year, $3 million in the second and $4 million in the third counts $3 million against the cap each year.

Now I am going out on a limb and claiming this is indeed a part of the new CBA. Unless somebody else can prove otherwise.

 

[avsfolife]

Was this a mistake? Because his cap hit would not be $800k. It would be $5 million throughout the entire length of the contract.

No, it wasn't a mistake.
I've always understood (and pretty sure I read it somewhere) that for a traded player, what counts towards the cap is the remaining $$$ over the remaining term of the contract.
It would not make sense any other way ...