The point of the cap is to provide cost certainty for ownership. So that there is some certainty to how much an organization will have to pay yearly in order to ice a competitive team. This obviously is attractive to smaller market teams, and makes it possible to ice teams in non-standard markets to try and grow the game. The ability to buy out a contract in cash and eliminate it from the cap provides a vector for cash transactions and to give teams in bigger markets a way to gain a much larger competitive advantage just for having more money. We would essentially see more, and much bigger cash transactions happening.
It would allow massive cap circumvention by offloading most of a player's contract into later years when they are not intending to play.
For example, let's take Leafs signing Marleau and cap circumvention. Rather than sign him at $6.25m/yr for 3 years, Leafs can sign him for $3.125m/yr for 6 years and buy him out after year 2 with no penalty. Essentially a same value contract for 1/2 the cap hit.
When it comes to cash transactions, let's say Ottawa wants to offload Phaneuf in the last 3yrs of his contract. They trade Phaneuf to Leafs with a 1st rounder, and Leafs buy him out at no cap penalty. Leafs just bought Ottawa's pick for cash.
For flexing financial muscle, Arizona can only compete on signing UFAs when those UFAs are getting max term. If they want to sign a UFA for 5 years, then Leafs can sign them for 7 at the same AAV, knowing they can just buy out the last 2 years if necessary. Using cash to gain a substantial advantage against smaller market teams for contract negotiations.
I understand what you're saying, but you make it sound like the cap as structured is preventing cap circumvention. That's not true. The Leafs (and other teams) are actively circumventing the cap with players like Lupul, Horton (who they took on to get rid of Clarkson) and Robidas buried on injured reserve.
The 50/50 deal and the escrow payments already ensure cost certainty. Allowing the Leafs to buy out Lupul's deal with no cap penalty allows Lupul to try and resume his career and the Leafs have more money to spend on other players (which they're doing anyway). It doesn't have any impact on the 50/50 split, except to raise the amount the players are getting (which the owners claw back through the escrow). If the Leafs were able to buy out Lupul with no cap penalty, they money remains in the system and at the end of the year if it turns out the players' percentage exceeded 50%, it would be clawed back from all the players through the escrow.
And your Phaneuf scenario is happening to some degree, although not as dramatically as a first rounder. There have been examples of teams taking on cap ballast salary in exchange for a draft pick.
And I believe the most recent CBA prevents teams from front-loading contracts to spread out the cap hit. I'm not familiar with the percentages, but the annual value of the deal has to remain within a certain percentage over the lifetime of the contract.
I really don't see any downside to making the change.
The 50/50 split is guaranteed through escrow.
Players get the money they are owed.
Teams can rid themselves of players and contracts they don't want.
Players like Lupul can try and revive their career elsewhere.