Individual Player Salary Cap Question

[RTWAP*]

There is an individual player salary cap that limits a player's salary to 20% of the team max, right?

How does that affect players sign for more than the current individual cap? For example, can you have signed a player to a 5 year $50M contract in August 2005?

The salary (and cap hit) would have been reduced to $7.8M the first year, but if the cap goes up to $45M next year then that player's salary and cap hit would rise to $9M.

Were there any players originally scheduled to make more than $7.8M in 2006-07 (after the 24% rollback)?

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[missK]

Jagr is still collecting his super inflated $11M/year contract even though the player cap is $6M something. My understanding is contracts negotiated prior to the lockout were grandfathered in after the new CBA but the team only takes a cap hit for the max number. I would think it would be the same if a contract is signed and then the cap goes down and thus that would change the player max too.

 

[Ted Hoffman]

Jagr is still collecting his super inflated $11M/year contract even though the player cap is $6M something. My understanding is contracts negotiated prior to the lockout were grandfathered in after the new CBA but the team only takes a cap hit for the max number. I would think it would be the same if a contract is signed and then the cap goes down and thus that would change the player max too.

Incorrect. Everyone was capped at $7.6M except for Jagr, who makes $8.34M because the Capitals were picking up part of the contract; the new CBA only charged the Rangers with the part they paid ($4.94M) and the Capitals didn't get charged for the part they paid. This clause applied to any other situation where one team was paying part of a contract for a player on another team when the CBA was ratified, but the whole "we'll pick up part of the salary" concept is banned going forward.

Back to the original question: I think it was answered in August after the CBA was ratified, so you might have to dig in the archives to see if the answer is there. I seem to recall the comment being made that the player's number wouldnot go up if the upper limit increased, but I can't confirm that at the moment.

 

[Fugu]

Back to the original question: I think it was answered in August after the CBA was ratified, so you might have to dig in the archives to see if the answer is there. I seem to recall the comment being made that the player's number wouldnot go up if the upper limit increased, but I can't confirm that at the moment.

I can't see how it could be negotiated in like this because of the (a) limit on the individual and (b) the averaging method used to allocate the hit to the cap each year. If you are at Year 1 for example, subsequent years cannot be greater than the max due to averaging as this would put the current amount over. Furthermore, you can't have a contract that decreases by more than 1/2 its value or increases in similar proportion over the life of the contract.

In the case of a contract extension which only applies in the final year of a contract, you can increase it but the current year gets factored into the averaging. So you still have to fit under the cap and, I presume, not exceed the individual limit for the current year.

I'm not 100% certain but I do believe that you cannot exceed the individual cap for any given year AND the averaging over the life of the contract should make it impossible to be at the max each year.

 

[missK]

Incorrect. Everyone was capped at $7.6M except for Jagr, who makes $8.34M because the Capitals were picking up part of the contract; the new CBA only charged the Rangers with the part they paid ($4.94M) and the Capitals didn't get charged for the part they paid. This clause applied to any other situation where one team was paying part of a contract for a player on another team when the CBA was ratified, but the whole "we'll pick up part of the salary" concept is banned going forward.

I was incorrect, sorry, I forget to minus the 24% rollback from the $11M but Jagr is still getting paid MORE than the player max this season. And if the cap figure does drop down at any point, other players could be making more than the player cap max also.

 

[boredmale]

I can't see how it could be negotiated in like this because of the (a) limit on the individual and (b) the averaging method used to allocate the hit to the cap each year.

If a player is worried that he won't get 20% of the cap, then maybe he should sign a bunch of 1 year deals.

Alot of players last year signed 3 year deals in fear that the cap would actually go down(Iginla, Lecavier, Thorton, etc) in which case if it did, they still would make the amount the deal said they should make(ie if Iginla signed a 3 year deal for 7 million a year, next year if 20% of the cap is 6.8 million, he still makes 7 million). Those players probably will regreat it now because they would have become free agents this summer and could have signed for more.

 

[missK]

Alot of players last year signed 3 year deals in fear that the cap would actually go down(Iginla, Lecavier, Thorton, etc) in which case if it did, they still would make the amount the deal said they should make(ie if Iginla signed a 3 year deal for 7 million a year, next year if 20% of the cap is 6.8 million, he still makes 7 million). Those players probably will regreat it now because they would have become free agents this summer and could have signed for more.

Like life for a player would really be so different if you made $8M a year vs $6M or $7M?

 

[RTWAP*]

If a player is worried that he won't get 20% of the cap, then maybe he should sign a bunch of 1 year deals.

Alot of players last year signed 3 year deals in fear that the cap would actually go down(Iginla, Lecavier, Thorton, etc) in which case if it did, they still would make the amount the deal said they should make(ie if Iginla signed a 3 year deal for 7 million a year, next year if 20% of the cap is 6.8 million, he still makes 7 million). Those players probably will regreat it now because they would have become free agents this summer and could have signed for more.

Good point. So if the deal handles rising caps the way it handles falling ones, players probably just can't sign a deal that has a salary for any year that is above the current year's individual cap.

 

[Flukeshot]

Exactly, so a player really can make more than 20% of the cap if his contract was signed in a year when the cap is higher than the years that follow. If the cap is going to be say, $40mil next season, a UFA might sign a max salary of $8mil for like 5 years. And it is plausible that if the NHL began to fall financially and the cap went to say $35mil. $7mil should be the top but he'd still make 8.

 

[Ted Hoffman]

I was reading the CBA the other night, and I noticed that there was a clause that ....

Oh, that's right - the damn thing still hasn't been released.

 

[MountainHawk]

Why is there an assumption on this board that a contract between two private organizations has to be made public.

 

[No One]

Why is there an assumption on this board that a contract between two private organizations has to be made public.

Precedent, that's all.

The previous one was released.

As far as an agreement between two private entities being made public, you're right. They do not have to.

 

[Ted Hoffman]

Why is there an assumption on this board that a contract between two private organizations has to be made public.

If it wasn't going to be released, then I'd think the NHLPA would not put a message up stating that the new CBA will be posted as soon as it's released.

 

[MountainHawk]

Quite possible they decided not to release it, and forgot to take the message down.

 

[Captain Ron]

Quite possible they decided not to release it, and forgot to take the message down.

Yeah ....I am sure that is it. I am pretty sure it will be released eventually. The NHL has alwaysed released them to the public in the past.

 

[MountainHawk]

Yeah ....I am sure that is it. I am pretty sure it will be released eventually. The NHL has alwaysed released them to the public in the past.

If they release it, great. If they don't, that's fine too. I don't see why people get annoyed at them for 'not releasing it yet' when they are under 0 obligation to release it at all.

 

[Ted Hoffman]

Quite possible they decided not to release it, and forgot to take the message down.

I'd tend to dismiss that idea until I think of "we'll never accept a salary cap". Still, the framework was what was agreed to by both sides back in July, the fine print and legalese was to be hashed out by the lawyers on both sides and that supposedly could take several months. Plus, there were rumors that the new CBA wouldn't be released until Russia signed off on the IIHF transfer agreement (why that would matter, I sort of get but not completely).

 

[JETStender]

Here's a good example. I'm under a contrat that was agreed and ratified to in September 2005. I've been getting paid acording to it, but just signed it last week. We'd get a copy to sign but it would have some mistakes so we'd sent it back. Then everyone on the negoatioting commity has to sign it. For us its not bad because were all in the same location. Now when you have 9 or 10 different cities involved its gonna take time.

We will not see the CBA untill every player has a copy of it.

 

[sk84fun_dc]

Bill Daly was on XM204 recently (I think yesterday) and stated what many of us know, they are still finalizing the wording in some places, but the intent is clear to the parties involved. I think I heard him say it would be released once it is finalized. Anybody else hear the interview that can clarify/confirm?

 

[kdb209]

Well, here's what the draft CBA has to say about the 20% limit:

50.6 Maximum Player Salary and Bonuses; Fixed Dollar Amount of Player Salary.

(a) No SPC may provide for a total aggregate Player Salary and Bonuses that is in excess of twenty (20) percent of the Upper Limit for any League Year (the "Maximum Player Salary and Bonuses"). For a Player signing a multi-year SPC pursuant to which he receives the Maximum Player Salary and Bonuses in any League Year during the term of such SPC, the Maximum Player Salary and Bonuses for every League Year covered by the multi-year SPC shall be based upon the Upper Limit at the time the SPC was signed.

Illustration: Assume the Upper Limit is $40 million, and a Player signs a three-year SPC. The Player cannot receive more than $8 million in aggregate Player Salary and Bonuses (twenty (20) percent of the Upper Limit) in any year of that SPC, even if the Upper Limit in Year 2 or 3 actually exceeds $40 million, because any multi-year SPC providing the maximum allowable total aggregate Player Salary and Bonuses shall have the Upper Limit for the year in which the SPC is signed imputed across all years of the SPC.

(b) No SPC may provide for a Player Salary and Bonuses in any year that is not fixed (i.e., every SPC must state the amount of dollars of Player Salary and Bonuses to be paid in each League Year during the term of the SPC, and cannot state that it will be indexed as a percentage of the Upper Limit).

Illustration: Assume the Upper Limit is $40 million. A Player may sign an SPC for up to $8 million a year in aggregate Player Salary and Bonuses (twenty (20) percent of the Upper Limit), but his SPC must state the Player Salary and Bonuses to be provided as a dollar amount, not as "20 percent of the Upper Limit."

The 20% max of a multi year contract is based on the Upper Limit when the contract is signed. It is not affected if the cap goes up or down over the life of the contract. And the salary has to be a fixed number - it can't be indexed to the cap.