Signing Bonuses & The Salary Cap

[Sirius Vivace]

I've heard that signing bonuses are figured into the Salary Cap. For instance, if a player signs a 5 year $25 mil contract with a $5 mil signing bonus, the Cap hit should be $6 mil per year for 5 years.

But I'm not seeing that. For instance, look at Brassard's contract here:

http://www.spotrac.com/nhl/new-york-rangers/derick-brassard/
$5 mil cap hit over 5 years for his $25 mil contract. Yet, there is an $8 mil signing bonus that is apparently not calculated into the cap.

Check out Lundqvist here: http://www.spotrac.com/nhl/new-york-rangers/henrik-lundqvist/
$59.5 mil over 7 years. $8.5 mil Cap hit. Yet there is a $14 mil signing bonus that is apparently not figured into the cap.

What am I overlooking here? If it were that easy to overstep the cap, reported salaries would be small and everyone would get huge signing bonuses...but that is not the case.

Someone help me out on this please. I'm obviously missing something.

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[Hawkscap]

The signing bonus is included in the salary number.

 

[Finnish your Czech]

I've heard that signing bonuses are figured into the Salary Cap. For instance, if a player signs a 5 year $25 mil contract with a $5 mil signing bonus, the Cap hit should be $6 mil per year for 5 years.

But I'm not seeing that. For instance, look at Brassard's contract here:

http://www.spotrac.com/nhl/new-york-rangers/derick-brassard/
$5 mil cap hit over 5 years for his $25 mil contract. Yet, there is an $8 mil signing bonus that is apparently not calculated into the cap.

Check out Lundqvist here: http://www.spotrac.com/nhl/new-york-rangers/henrik-lundqvist/
$59.5 mil over 7 years. $8.5 mil Cap hit. Yet there is a $14 mil signing bonus that is apparently not figured into the cap.

What am I overlooking here? If it were that easy to overstep the cap, reported salaries would be small and everyone would get huge signing bonuses...but that is not the case.

Someone help me out on this please. I'm obviously missing something.

The website is not being clear. The signing bonus is included into the "base salary (cash)" number.

 

[Sirius Vivace]

Thanks! And I see that the signing bonuses can be paid up front in a lump sum...so that would be attractive to players (they can invest it, etc...)

 

[LadyStanley]

Thanks! And I see that the signing bonuses can be paid up front in a lump sum...so that would be attractive to players (they can invest it, etc...)

Especially for ELS deals, that signing bonus $$ (seems to be ~10%) is often used to pay for a new car (so they have something to drive to new NHL/AHL job).

 

[tsanuri]

Thanks! And I see that the signing bonuses can be paid up front in a lump sum...so that would be attractive to players (they can invest it, etc...)

In both cases you mentioned it's being paid out over the life of the contract. They are getting part of the bonus every year that would paid on July 1st.

 

[LadyStanley]

In both cases you mentioned it's being paid out over the life of the contract. They are getting part of the bonus every year that would paid on July 1st.

Signing bonuses are often paid lump sump, but for cap purposes are amortized over the life of the contract.

HOWEVER, bonuses can be negotiated to be paid in annual "7/1" (or any other date) periodic payments.

 

[kdb209]

Signing bonuses are often paid lump sump, but for cap purposes are amortized over the life of the contract.

HOWEVER, bonuses can be negotiated to be paid in annual "7/1" (or any other date) periodic payments.

Note however that that the actual amount of Signing Bonus paid in a year is limited by the 20% maximum salary limit - the total of salary and all bonuses paid in any year cannot exceed 20% of the Upper Limit in the year the SPC was signed.

 

[Sens of Anarchy]

Is the July 1st date for signing bonuses being due just a typical date ; or can signing bonuses be paid out on different dates depending on the contract?

 

[LadyStanley]

Negotiated. Just need to be specified in contract.

 

[LadyStanley]

For instance....

 

[mouser]

In both cases you mentioned it's being paid out over the life of the contract. They are getting part of the bonus every year that would paid on July 1st.

Not necessarily, again it depends on how the contract is structured. For example Brassard received no signing bonus in the first year of the contract, but then has signing bonuses in the other 4 years of the contract ranging from $1.5m to $2.5m.

 

[Do Make Say Think]

So we had a lockout over ridiculous back diving contracts and the League retroactively punished teams that signed players to them

The insane signing bonuses are more of a grey area, certainly less of a circumvention in absolute terms however is it reasonable to argue that these 15 million dollar signing bonuses go against the spirit of the cap since not a lot of teams can afford to play that game.

 

[tucker3434]

I’m sure it’ll be brought up at the next lockout as the owners will be paying those bonuses out without receiving any gate revenue. They always seem to need to be saved from themselves. But I’d be surprised if there was any penalty or cap implication, just a tweak to how much of a contract can be bonus.

 

[MNNumbers]

If they count against the cap, what's the difference?

 

[tony d]

I'm not sure I agree with them either. Thinking it might be an issue to be looked at during the next CBA as was previously mentioned.

 

[jkrdevil]

My guess the league will push for a clause in next cba that non-performance bonuses can be only a certain percentage of the overall salary.

 

[MNNumbers]

Again, in the other thread, it's explained that the bonus counts against the cap, but is so counted as of it were spread over the length entire length of the contract.

I fail to see an issue here. Please help me.

 

[AmericanDream]

i don't see it either....

 

[BigFatCat999]

$235,609,277


and this will go up. Is a quarter of a billion dollars of signing bonuses enough to speed up resolution of the next lockout?

I could see this reach half a billion next FA period.

 

[Tawnos]

So we had a lockout over ridiculous back diving contracts and the League retroactively punished teams that signed players to them

The insane signing bonuses are more of a grey area, certainly less of a circumvention in absolute terms however is it reasonable to argue that these 15 million dollar signing bonuses go against the spirit of the cap since not a lot of teams can afford to play that game.

I don’t see it.

However, I seem to remember that signing bonuses have an effect on escrow... negative on the players side. So the NHLPA might have a bigger issue with it than the league.

 

[BattleBorn]

Is that the signing bonuses for all the players in the league that were due today, or the cap hit for all the players signed today?

Because there was like $224MM in cap hit signed so far this UFA period, so it would be weird if those two numbers were that close.

 

[Nervousbreakdown]

This is my favourite reaction to the leafs signing Tavares yet.

 

[Do Make Say Think]

If they count against the cap, what's the difference?

Again, in the other thread, it's explained that the bonus counts against the cap, but is so counted as of it were spread over the length entire length of the contract.

I fail to see an issue here. Please help me

Not a lot of teams can afford to pay out 10s of million of dollars in one go.

Signing bonuses are essentially completely unregulated and it seems to be getting to the point where teams that can afford to pay someone 15 million dollars in one day may have an advantage that the league might find troublesome.

Very few teams can compete with that and the whole point of the cap is to level the playing field so is this an issue? I am not saying it is, I am wondering how people view this trend because it's increasing in intensity. This also means very rich teams get a big advantage as we get closer to the end of a CBA (since signing bonuses are paid even in a lockout I believe), is that something that could be a concern?

Just looking to discuss really.

 

[Do Make Say Think]

This is my favourite reaction to the leafs signing Tavares yet.

Obviously you fail to see that I am asking how other people feel about this. Go home kid, this is a serious talk for adults.