avsfolife said:
Please read my previous post.
Their is no way in h*** that the league would allow the cap hit of a contract to change just because a player is traded.
Critique my cap loop hole
- Thread starter oil slick
- Start date
- Status
Please read my previous post.
Their is no way in h*** that the league would allow the cap hit of a contract to change just because a player is traded.
kdb209
Registered User
- Jan 26, 2005
- 14,870
- 6
avsfolife said:
No. Resetting the cap hit when a player is traded doesn't make any sense. It would result in the cumulative cap hit for a player over the life of a contract to be not equal to the total salry paid. For front loaded contracts, the total cap hit will be less that dollars paid, for backloaded ones more than dollars paid.
It makes MUCH more sense that the cap hit is established when the player is signed, and those cap hits per year carry over no matter if the player is traded or not - as long as he is playing under the same contract.
When a team trades for a player, they know what his real salary and future cap hit are to be.
Any other approach is too much of a cap loophole.
I would be VERY surprised if cap dollars are recalculated after a trade.
Well, your understanding is entirely incorrect. And I am pretty sure that either you misunderstood what you read or you are otherwise mistaken.avsfolife said:
What you MIGHT have read is that, for players on existing contracts as of the signing of the CBA, their cap hit is averaged out for the remaining balance of their contract. That is pretty consistent with the 54% concept (the league not paying out more than 54% going forward), since any amount paid in the previous years under the existing contracts is now water under a different bridge.
How can you say with certainty that my understanding is wrong when the new CBA hasn't been publicly released yet?gscarpenter2002 said:
If you have access to it somehow, or can show me that that is definitely the case, then I will believe you ...
To me, it simply doesn't make sense that a GM be accountable for the portion of the contract that has already been paid out by another GM. If I'm to acquire a player, my cap hit should be the average $$$ over the term of his contract, since I obviously had no control over what happened 3 years ago and shouldn't have to base my decision on that ...
The escrow already ensures that only a certain % of revenue goes to players, so it shouldn't matter much to the league ...
avsfolife said:
You are speculating based on what you think is fair. The league has already established that the average of the contract will be the cap hit for that player. Why should it change just because a player is traded?
The scenario that you are proposing would make it alot easier to circumvent the cap. I am 99.9% sure that the league would not leave an obvious loop-hole like that when you consider how long it took them to write it.
To encourage player movement? Simplify trades?Spongebob said:
If what I said were to be true, I'm sure any loop-hole has been adressed in some other ways ...
But yeah, all we're doing is speculating ...
Here's something interesting I found:
http://proicehockey.about.com/od/thenewnhl/a/salary_cap_expl.htm
I'm confused now ...
avsfolife said:
This is in reference to what the team salary is for a given season. So if a player is called up 1/2 way through the season only half of his salary would count towards the cap.
It is not in reference to what a players contract average / cap hit would be. The reason the league instituted the "contract average = the annual cap hit" was to prevent teams from back loading contracts so they could fit more players under the cap.
In your scenario a team could write contracts where their players make league minimum this year and $6 million next year. Then they could sign all the players they wanted to because they would have plenty of cap room in the current season.
I find your 2 paragraphs to be contradicting ...Spongebob said:
If you think the league would allow the cap hit for a player being called 1/2 way through the season to be 1/2 of his contract amount over the season (instead of the average $$/entire contract life at the time of contract agreement), why wouldn't you think the league allow the cap hit to be recalculated for the new team at the time of a trade?
Actually, my scenario is that when a contract is signed or a player is acquired via a trade, the amount going towards the cap is the remaining $$ over the remaining term of the contract. Your scenario would not work under "my" system ...
Also, from what I can understand, a player's salary increase isn't allowed to be greater than 100% of his previous year's salary.
(eg. the max. amount a player could get in year 2 would be 3M, if he to get 1.5M in year 1)
avsfolife said:
Look at it this way. A player makes $450k/year. He only plays for 41 games. So the team would only have to pay him $225k for the NHL games he played. Therefore his cap hit is only $225k.
Like I stated before the "average salary in contract = annual cap hit" was made to prevent a team who might have a "win it now" attitude from back-loading their contracts so that they could load up on players to make a run at the cup this year. In doing so the official cap amount for that particular contract remains constant. It will not change for the life of the contract. No matter what team has that player.
It is kind of like a no trade clause. Lets say a player has a no trade clause in his contract. Then he approves a trade to another team. The no trade clause still exists in his contract even though his new team is not the ones who approved it.
A team that trades for a player who's "cap hit" is really $1 million more than his actual salary is aware of this before they make the trade. If it is not something they are willing to accept then they do not make the trade.
avsfolife said:
You are the one contradicting yourself. First you say that the cap hit is for the current amount of salary payed to a player. Then you say it is averaged, but only for the remaining years on a contract. You can't have it both ways. It either is for the actual money paid for the current season or the average of the entire contract.
Just for fun lets assume your (avsfolife) scenario is correct and put it to the test. Lets say the Detroit Red Wings sign Pavel Datsyuk to this contract.
Year 1: 7.5 Million
Year 2: 6 Million
Year 3: 4.5 Million
Year 4: 3 Million
Year 5: 1.5 Million
Now for Detroit the cap hit for Datsyuk would be $4.5 million. But if they decided to trade Datsyuk in year 3 then the new team would only get a $3 million cap hit. So the new team is getting Datsyuk at a $1.5 million discount. So since Datsyuk is going to the new team for a discount it increases Datsyuk's value and Detroit wants more in return for the trade. So Detroit is actually getting more for Datsyuk then they would if he was at a $4.5 cap. This would create a situation where GM's would come up with strange contract structures just to be able to take advantage of other teams. The league would never allow for such a situation.
Year 1: 7.5 Million
Year 2: 6 Million
Year 3: 4.5 Million
Year 4: 3 Million
Year 5: 1.5 Million
Now for Detroit the cap hit for Datsyuk would be $4.5 million. But if they decided to trade Datsyuk in year 3 then the new team would only get a $3 million cap hit. So the new team is getting Datsyuk at a $1.5 million discount. So since Datsyuk is going to the new team for a discount it increases Datsyuk's value and Detroit wants more in return for the trade. So Detroit is actually getting more for Datsyuk then they would if he was at a $4.5 cap. This would create a situation where GM's would come up with strange contract structures just to be able to take advantage of other teams. The league would never allow for such a situation.
See, this is where you confuse me and contradict yourself ...Spongebob said:
If you believe the cap hit = average salary/entire contract, then it shouldn't matter whether the player has played 20 games or 82 or is in year 1 or 2 of his contract as his cap value will be the same. Unless we're talking about players signed with two-way contracts (not sure how that will work, actually).
I'm not sure how the no-trade clause will work, but if the player and team decide to waive it, then my guess is it's gone from the contract and the new team should/would not be subjected to that clause ...
I never said the cap hit was for the current amount paid to a player during that specific season. I posted that article, because I thought it contradicted the 'average rule' that I thought was being used ...
But, I think what they meant was that the actual salary paid during a certain is what will be used for calculating the league-wide payroll for that year ... I think ...
That's why it would make sense for a traded player to have his cap value recalculated at the time of the trade, because that number will yield a closer value to what is actually being paid to the player during that season, and would allow the team to spend accordingly ...
(eg. At end of year 3, Redden's cap value of 800k is closer to the 800k being paid than a cap value of 5M)
Yeah, but the problem, I think, is getting a player to sign for such a contract ...Spongebob said:
How many players would be willing to take a front-loaded contract and watch his value drop over the years?
me2
Go ahead foot
avsfolife said:
Yes you should. You know exactly what you are getting in terms of cap hit when you go to aquire that player. If you don't like what happened with the contract 3 years ago, don't aquire that player. Entirely your choice: accept the expired part or don't trade for the player. Simple.
If teams could do what you are suggesting they would just front load the contracts, use the length of the contract to bring the cap hit down, then trade player back and forth avoiding their cap duties because they don't have to account for the frontloaded part. It just wouldn't work under a capped system.
me2
Go ahead foot
avsfolife said:
The cap hit is most likely calculated on the following formula.
Players AVERAGE salary for year * % of time spent in NHL.
For example Player signs a 2 year 2-way deal for $1m and $2m. AVERAGE salary for the cap is $1.5m. The player spends time in the NHL (ignoring the injury rules his cap hit is)
0% in the NHL: cost $0 cap hit
25% in the NHL: $375K cap hit
50% in the NHL: $750K cap hit
100% in the NHL: $1.5m cap hit
It's their choice to waive or not if they have a no trade clause. Why would the players give up that right in the new CBA? I can't see why they would want to.
All reports have it as the average.
Except that would allow teams to violate the cap by stealth, as has been shown in the above examples.
But this is violating the cap because the $ are not being accounted for.
$7m $5.5m $4m $2.5m $1m = total salary paid $20m, cap hit $4m/y.
If that player is traded every year the cap hit is going to be
$4m, $3.25, $2.5m, 1.75, 1. Total cap hit of $12.5m.
So where did the extra $7.5m in real money go? If it is not accounted for then it cap evasion and should not be allowed.
me2
Go ahead foot
avsfolife said:
Just about all of them. Players love front loaded contracts. Getting the money in the hand now is better having to wait another 4 or 5 years. Stick it in a bank, or shares or buy another house. You could be killed or quit because illnessr or be sacked for reason: but hey you've got the clubs money already and they can't do jack about it.
The thing you seem to forget is that a GM's main role is to generate a profit for the owner. They've already forked out a lot of $$$ in prior years, why wouldn't they just keep the player for the remaining of his contract at a reasonable low price?me2 said:
Also, remember the league doesn't care about the 'cap value'. That's not the number it uses to calculate its league-wide payroll on a yearly basis ... So there isn't a single dollar paid in salaries that isn't/won't be accounted for ...
That's true, but explain to me, then, why the majority of contracts are structured such that payouts increase over the term of the contract?me2 said:
I don't think you understood what I meant in my post about no-trade clauses ...me2 said:
No, the league uses escrow to ensure the league-wide payroll for a particular year doesn't exceed a certain % of revenue.
So, as I've said in my other post, there won't be a single unaccounted dollar paid in salary.
Using 4M/year would actually cause players to receive less than what they would be entitled to at the end of certain year ...
[eg. 1M will go towards the total league payroll, but with a cap hit of 4M, team A isn't able to spend as much as it could on its other players.]
avsfolife said:
Because of the uncertainties that he described previously. A team doesn't like to pay a large amount of money up front and then watch that player have a career ending injury at the end of the first year.
If the contract is structured to where the player makes less money in the 1st year and then slowly increases then the team at least feels they did not spend too much. If he gets hurt at the end of the first season the team is not out a huge chunk of money. If he gets hurt in season 3 when he's making more money, well then you at least got a few years out of him.
See, that's another good reason why a team wouldn't just front load a contract for salary cap purposes ... which is what you and everyone else seem to be worried about.Spongebob said:
I believe he did too. My answer to that question would be the Jeremy Roenick example. He waived his no-trade clause to go to LA. But I believe the clause still exists in his contract. If it did not then LA could turn right back around and trade him to Buffalo. I am not 100% on this but I think he still has the right to veto a trade.avsfolife said:
I see where you are going with this. And to a certain degree you are correct. What you may not be comprehending is that the actual salary that the teams pay during the season will be used to determine the 54%. The average salary = cap rule only determines an individual teams cap.
So theorically some years the team would be able to go over the cap in actual salary and at other years they would lose some.For example......
Let's say that a team has a $36 million payroll and want to add one more player. Well the player they want is asking for $4 million dollars. That would not fit under the cap. But the team convices him to take this contract....
Year 1: $4 million
Year 2: $3 million
Year 3: $2 million
Now the cap hit for this contract would be $3 million dollars. But in actual salary the team has exceeded the cap by $1 million. But since the cap number and not the actual salary paid is what is important then the team is allowed to offer him this contract. But by doing so the team has robbed themselves of $1 million of cap space in year 3 of the contract. So technically it all evens itself out.
avsfolife said:
True but you have to remember this is NHL GM's we are talking about. As much as some think they are godlike I think most have average to below average intelligence and do not always think about consequences when making decisions. Especially if it were in some crazy attempt to circumvent the cap.
No, no, no ...Spongebob said:
I don't think you're getting me SB ...
I perfectly understand the difference between the number used for calculating a team cap and the number used to calculate the league-wide payroll ...
avsfolife said:
OK then what is it that you are trying to get at? You made this statement.
avsfolife said:
What I think you are trying to say is this....
Why should the team that traded for a player (Redden for example) lose $3 million worth of cap space when his actual salary is only $1 million? Correct.
Well the answer would be you are only paying $1 million for a $4 million player. Yes you lose the cap space but you are saving $3 million in actual money. Are you trying to say that a team like Washington wouldn't love that? They have plenty of cap room and they are able to add a high quality guy at only 1/4th of the price. Teams that are close to the cap would not like it because they couldn't fit him under.
But like I said it is a 2-way street. In year 5 of the contract a team is paying $1 million for a guy that takes up $4 million in cap space. Well in year 1 the team that wrote the contract was able to pay $7 million on a guy that only took up $4 million in cap space. Therefore that team could go over the cap by $3 million if they wanted to.
So by front loading a contract a large market team could actually give themselves more cap space but have to pay extra money to do it. Then when the contract gets into years 4 and 5 they can trade that same player to a team that might struggle to make the cap floor (ie.Washington). In the 1st year with the new team (Redden) would still have a cap hit of $4 million but would only cost $2.5 million. So if the team was struggling to make the cap floor they just saved themselves $1.5 million. In year 2 with his new team (Redden) would have saved his new team $3 million.
Teams will have to accept the cap value of a player before a trade. Whether his salary is lower than his cap number or higher.
me2
Go ahead foot
avsfolife said:
Because that is in the teams best interests not the players. Teams like to budget, its easier to budget into the future. Generally players contracts increase as players get better or more valuable (ie improving young players or players giving up UFA years). Teams rarely want to give up money in advance if they don't have. It has happened but usually only big efforts are to hurt other teams (Sakic offer sheet, Sergei Federov offersheet). Now and again a team might try and budget by paying some extra as a signing bonus, but it isn't that common. Under the cap averaging system teams are still free to pay more up front than at the back if they want to work their finances, the cap averaging, takes care of making it fair for the other teams in terms of talent distribution.
- Status
