# Small question: negative cap hit on buyout

Discussion in 'Fugu's Business of Hockey Forum' started by ocarina, Dec 27, 2010.

1. ### ocarinaRegistered User

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I was fooling around on capgeek's buyout calculator, and I noticed that if Kovalchuk was theoretically bought out after this season, he would have a six year stretch where the cap hit is negative.

My question is, would that negative cap hit give New Jersey extra cap room by the amount of the (negative) cap hit? Or would the cap hit just be treated as nil, and effectively be zero?

I think I saw a similar situation occur when Patrick Eaves was bought out a few years back.

2. ### kdb209Registered User

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A Buyout can give a player a real negative cap hit - ie give his team extra cap room.

It a contract is sufficiently backloaded it is possible for the Buyout cap hit calculation to become negative - effectively a cap credit. There is an example of such a case in the CBA.

edit 2: Just for Yuks - here is the Capgeek Buyout Calculator for Kovy:

PHP:
``` Ilya Kovalchuk is 28 years old on the buyout date of June 15, 2011, putting the total buyout cost at \$62,666,667 spread over 28 years. His contract was originally valued at \$100,000,000 with an annual cap hit of \$6,666,667 beginning in 2010 and ending in 2025. The following is a season-by-season breakdown of the buyout. A negative buyout cap hit number indicates a credit. Season      Actual Salary      Cap Hit      Buyout      Savings      Buyout Cap Hit 2011-2012    \$6,000,000    \$6,666,667    \$2,238,095    \$3,761,905    \$2,904,762 2012-2013    \$11,000,000    \$6,666,667    \$2,238,095    \$8,761,905    \$-2,095,238 2013-2014    \$11,300,000    \$6,666,667    \$2,238,095    \$9,061,905    \$-2,395,238 2014-2015    \$11,300,000    \$6,666,667    \$2,238,095    \$9,061,905    \$-2,395,238 2015-2016    \$11,600,000    \$6,666,667    \$2,238,095    \$9,361,905    \$-2,695,238 2016-2017    \$11,800,000    \$6,666,667    \$2,238,095    \$9,561,905    \$-2,895,238 2017-2018    \$10,000,000    \$6,666,667    \$2,238,095    \$7,761,905    \$-1,095,238 2018-2019    \$7,000,000    \$6,666,667    \$2,238,095    \$4,761,905    \$1,904,762 2019-2020    \$4,000,000    \$6,666,667    \$2,238,095    \$1,761,905    \$4,904,762 2020-2021    \$1,000,000    \$6,666,667    \$2,238,095    \$-1,238,095    \$7,904,762 2021-2022    \$1,000,000    \$6,666,667    \$2,238,095    \$-1,238,095    \$7,904,762 2022-2023    \$1,000,000    \$6,666,667    \$2,238,095    \$-1,238,095    \$7,904,762 2023-2024    \$3,000,000    \$6,666,667    \$2,238,095    \$761,905    \$5,904,762 2024-2025    \$4,000,000    \$6,666,667    \$2,238,095    \$1,761,905    \$4,904,762 2025-2026    \$0    \$0    \$2,238,095    \$-2,238,095    \$2,238,095 2026-2027    \$0    \$0    \$2,238,095    \$-2,238,095    \$2,238,095 2027-2028    \$0    \$0    \$2,238,095    \$-2,238,095    \$2,238,095 2028-2029    \$0    \$0    \$2,238,095    \$-2,238,095    \$2,238,095 2029-2030    \$0    \$0    \$2,238,095    \$-2,238,095    \$2,238,095 2030-2031    \$0    \$0    \$2,238,095    \$-2,238,095    \$2,238,095 2031-2032    \$0    \$0    \$2,238,095    \$-2,238,095    \$2,238,095 2032-2033    \$0    \$0    \$2,238,095    \$-2,238,095    \$2,238,095 2033-2034    \$0    \$0    \$2,238,095    \$-2,238,095    \$2,238,095 2034-2035    \$0    \$0    \$2,238,095    \$-2,238,095    \$2,238,095 2035-2036    \$0    \$0    \$2,238,095    \$-2,238,095    \$2,238,095 2036-2037    \$0    \$0    \$2,238,095    \$-2,238,095    \$2,238,095 2037-2038    \$0    \$0    \$2,238,095    \$-2,238,095    \$2,238,095 2038-2039    \$0    \$0    \$2,238,095    \$-2,238,095    \$2,238,095 TEXT CAP HIT BREAKDOWN (for copying and pasting) ILYA KOVALCHUK BUYOUT FROM CAPGEEK.COM 2011-2012: \$2,904,762 2012-2013: \$-2,095,238 2013-2014: \$-2,395,238 2014-2015: \$-2,395,238 2015-2016: \$-2,695,238 2016-2017: \$-2,895,238 2017-2018: \$-1,095,238 2018-2019: \$1,904,762 2019-2020: \$4,904,762 2020-2021: \$7,904,762 2021-2022: \$7,904,762 2022-2023: \$7,904,762 2023-2024: \$5,904,762 2024-2025: \$4,904,762 2025-2026: \$2,238,095 2026-2027: \$2,238,095 2027-2028: \$2,238,095 2028-2029: \$2,238,095 2029-2030: \$2,238,095 2030-2031: \$2,238,095 2031-2032: \$2,238,095 2032-2033: \$2,238,095 2033-2034: \$2,238,095 2034-2035: \$2,238,095 2035-2036: \$2,238,095 2036-2037: \$2,238,095 2037-2038: \$2,238,095 2038-2039: \$2,238,095 ```
Lou - you evil genius.

For only \$63M and cap hell for the rest of your childrens' lives, you can buy a few years of an extra \$2M in cap room.

Circumvention, Circumvention

Last edited: Dec 28, 2010
3. ### AllByDesignWho's this ABD guy??

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But KDB, you are forgetting that by the 2037 season the cap will be nearly a Billion dollars, so the cap hit would be workable.

4. ### FuguGuest

Given their results so far, it seems it would be worth it.

5. ### AllByDesignWho's this ABD guy??

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So true. Let's give Kovalchuk some credit. He picked a fight with Phaneuf, so that can only tell us one thing. He is making every effort to help his team by trying to get on the LTIR. Adda boy Ilya!

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