Small question: negative cap hit on buyout

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

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  1. ocarina

    ocarina Registered 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. kdb209

    kdb209 Registered User

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

    The Buyout calculation pays back dollar-for-dollar any cap benefit (or penalty) accrued before the buyout due to frontloading (or backloading) over the remaining term of the original contract.

    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: C & P from a previous buyout thread.

    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 152011putting the total buyout cost at $62,666,667 spread over 28 yearsHis 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 buyoutA 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. AllByDesign

    AllByDesign Who'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. Fugu

    Fugu Guest


    Given their results so far, it seems it would be worth it. :laugh:
     
  5. AllByDesign

    AllByDesign Who'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! :laugh:
     
  6. Fourier

    Fourier Registered User

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    I picked Kovalchuk in my hockey pool. That pretty much sealed the deal as far as his fate this year is concerned. Out of ten players he is one of only 4 that did not have injury issues ;). So for all you Devil fans out there, don't worry, next year he will be back to normal.
     

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