Understanding how a players cap hit is calculated if traded mid year

[WSA]

I've been trying to figure this out and maybe you guys can help.

If a player is traded to another team part way through the year, what is the player's cap hit for the new team? I know the team will only have to pay the actual salary for the portion of the year the player is on their team, but does this apply to the cap hit as well?

As an example:

If a player who signed to a two year contract with Team A at a cap hit of 4 million gets traded halfway through year one to Team B. Would Team B have to have 4 million in cap space available to take on the player? Or would they only need 2 million?

In other words is the players cap hit pro rated or is it the same no matter what? There seems to be some debate about this but I can't find a definitive answer including where this is outlined in the CBA.

It doesn't make sense to me why the cap hit would be pro-rated, but that seems to be what a lot of people say is true. I mean, what would stop teams from loading up on expensive players at the deadline only to be significantly over the salary cap in the summer?

I hope I am explaining what I am asking correctly here. Feel free to ask for more info if it isn't clear.

Click to read more...

 

[LadyStanley]

http://hfboards.com/showpost.php?p=20630345&postcount=7
http://hfboards.com/showpost.php?p=20630364&postcount=9


Read the stickied thread first.

 

[WSA]

I read that before I posted but did not see the answer. After you posted, I went and looked again but still don't see the answer. Can you give me an idea of how I am missing it????

 

[metric]

The best way I've seen it described is by CapGeek - http://capgeek.com/faq.php

To understand how each team's cap count is calculated, think of a bank account. For the 2009-10 season, teams got a "deposit" of about $294,300 each day which they can spend on player salaries [$56,800,000 salary cap upper limit / 193 days in the season]. The difference left over is "payroll room," or the amount that has been "banked" for the future, if needed. "Payroll room" can never fall below zero, meaning teams can't borrow from the future to pay for today.

So you can save up payroll room which is why you're allowed to acquire players that have a higher cap hit at the deadline. You use that saved payroll room to pay for the greater cap hit.

A player's daily cap hit is total cap hit divided by length of the regular season (in the FAQ example, 193 days)

 

[Fugu]

I've been trying to figure this out and maybe you guys can help.

If a player is traded to another team part way through the year, what is the player's cap hit for the new team? I know the team will only have to pay the actual salary for the portion of the year the player is on their team, but does this apply to the cap hit as well?

As an example:

If a player who signed to a two year contract with Team A at a cap hit of 4 million gets traded halfway through year one to Team B. Would Team B have to have 4 million in cap space available to take on the player? Or would they only need 2 million?

In other words is the players cap hit pro rated or is it the same no matter what? There seems to be some debate about this but I can't find a definitive answer including where this is outlined in the CBA.

It doesn't make sense to me why the cap hit would be pro-rated, but that seems to be what a lot of people say is true. I mean, what would stop teams from loading up on expensive players at the deadline only to be significantly over the salary cap in the summer?

I hope I am explaining what I am asking correctly here. Feel free to ask for more info if it isn't clear.

As checksix explains, you divide the players total annual cap hit by the number of days in the league year.

The player's cap hit remains unchanged if he's traded midyear, but the acquiring team only needs room for the remaining salary from that point forward. If his annual cap hit is $4m, and he's traded exactly at the midpoint, the new team only needs to have $2m in cap space. His daily cap hit however remains unchanged. When you add up his total cap hit for the year, it will be $4m, but spread out over the two teams.

 

[WSA]

As checksix explains, you divide the players total annual cap hit by the number of days in the league year.

The player's cap hit remains unchanged if he's traded midyear, but the acquiring team only needs room for the remaining salary from that point forward. If his annual cap hit is $4m, and he's traded exactly at the midpoint, the new team only needs to have $2m in cap space. His daily cap hit however remains unchanged. When you add up his total cap hit for the year, it will be $4m, but spread out over the two teams.

Thanks for the help with this stuff. Unfortunately i still don't fully understand.

If the daily payroll limit is calculated as the salary cap upper limit divided by the number of days in the season AND the players daily cap hit stays the same all year, then how is the team only responsible for half the cap hit? That to me sounds like they are only responsible for half the actual salary but the players cap hit stays the same.

I honestly don't know what I'm missing here.....

EDIT: so, a team could theoretically load up on more expensive players at the trade deadline and be over the cap come the offseason?

For example: a team has 4 million in available cap room and 3/4 of the way through the season they then go out and pick up 4 different players each with an annual cap hit of 4 million, only being responsible for 4 million total (16 million x 1/4 = 4 million cap hit). At the end of the year in the offseason, the players are then worth 16 million towards the cap again.

Do you see what I mean with this. It seems like an abuse of the upper limit the way I am looking at it.

It seems like the players cap hit is constantly going down while the daily limit is not.

 

[metric]

Thanks for the help with this stuff. Unfortunately i still don't fully understand.

If the daily payroll limit is calculated as the salary cap upper limit divided by the number of days in the season AND the players daily cap hit stays the same all year, then how is the team only responsible for half the cap hit? That to me sounds like they are only responsible for half the actual salary but the players cap hit stays the same.

I honestly don't know what I'm missing here.....

EDIT: so, a team could theoretically load up on more expensive players at the trade deadline and be over the cap come the offseason?

For example: a team has 4 million in available cap room and 3/4 of the way through the season they then go out and pick up 4 different players each with an annual cap hit of 4 million, only being responsible for 4 million total (16 million x 1/4 = 4 million cap hit). At the end of the year in the offseason, the players are then worth 16 million towards the cap again.

Do you see what I mean with this. It seems like an abuse of the upper limit the way I am looking at it.

It seems like the players cap hit is constantly going down while the daily limit is not.

That is correct, which is why rental players are on the last year of their contract. Teams can afford them for the rest of the season but not for the following season (at least not without shedding salary)

Players daily cap hit never changes. Put it this way, just say the cap next year is 60 million (nice even number). If a team has 58 million committed to their roster. Assume a 200 day season and no injuries, trades, call ups, etc. to keep things simple.

Day 1 of the season - Daily Payroll Available (Deposit): $300,000 - Total Player Cap Hit (Withdrawal): $290,000 - Payroll Room (Savings Account Balance): $10,000
Day 2 of the season - Daily Payroll Available (Deposit): $300,000 - Total Player Cap Hit (Withdrawal): $290,000 - Payroll Room (Savings Account Balance): $20,000

...

Flashforward to trade deadline, say day 150 (3/4 mark as in your example)

Day 150 of the season - Daily Payroll Available (Deposit): $300,000 - Total Player Cap Hit (Withdrawal): $290,000 - Payroll Room (Savings Account Balance): $1,500,000

Over the final 50 days of the season, you have an extra $1,500,000 to spend. That's equivalent to $30,000 per day. You also have that extra $10,000 per day that you weren't using before, that continues to accumulate. Basically that makes $40,000 per day available for the remainder of the season. Extrapolate that over the course of a season and you can afford a player who is signed to a contract with a 8 million cap hit even though you technically have "2 million".

I realize I may have just made things more confusing but I'm someone who learns best through examples, so therefore explain best through examples.

Things get considerably more confusing when you factor in injury call ups, LTIR (which doesn't change anything but simply provides cap relief while said player is on LTIR)

 

[kdb209]

EDIT: so, a team could theoretically load up on more expensive players at the trade deadline and be over the cap come the offseason?

For example: a team has 4 million in available cap room and 3/4 of the way through the season they then go out and pick up 4 different players each with an annual cap hit of 4 million, only being responsible for 4 million total (16 million x 1/4 = 4 million cap hit). At the end of the year in the offseason, the players are then worth 16 million towards the cap again.

Do you see what I mean with this. It seems like an abuse of the upper limit the way I am looking at it.

It seems like the players cap hit is constantly going down while the daily limit is not.

Basically correct.

A team with $1M in Payroll Room at the trading deadline (75% through the season) could acquire a $4M/yr cap hit player - whose remaining cap hit for the season will be $4M * 25% = $1M.

There are other limitations ("Tagging Rules") which prevent a team from exceeding the Upper Limit the next year.

If a team acquires a player with an expiring contract, that prorated contract just needs to fit in their available Payroll Room.

If a team acquires a player with a contract that extends into the next season, that prorated contract needs to fit into their available Payroll Room that year AND the full cap needs to fit into their available Payroll Room plus the value of any contracts which expire at the end of the season. Those expiring contracts are then Tagged - and their value cannot be used for another player transaction.

 

[PromisedLand]

bumping this thread

have a question about what if the player(s) sign X months after the season starts then how does the daily cap work?

Example: Nylander signs on Dec. 1st; his AAV is 6.9 on a 6 year deal.

How would this work?

 

[LadyStanley]

AAV $6.9m
Daily cap hit: $6.9m/185 days in season = $37,297.30/day

Regardless of when signed

 

[PromisedLand]

AAV $6.9m
Daily cap hit: $6.9m/185 days in season = $37,297.30/day

Regardless of when signed

Thanks for the post. I did the calculations to look at the accumulated cap hit on cap friendly

	Nylander Start of the Season		Nylander Dec. 1st
AAV	6,962,366		6,962,366
Total days to be played	186		126
per day	37,432		55,257
days played	75		15
Acc Cap Hit	2,807,406		828,853

[TBODY] [/TBODY]

Nylander's AAV is 6.9; if he had started playing start of the season his per day salary would be 37,432 and he would have played 75 days for accumulated cap hit of 2,807,406.

But because he is going to only play 126 days; his cap hit per day increases to 55,257 and his accumulated cap hit is 828,853 for 15 days of play (confirmed with cap friendly today).

Toronto Maple Leafs Daily Cap Tracker - CapFriendly - NHL Salary Caps

so basically, instead of having a daily cap hit of 37,432 (if he had signed at the start of the season); he now has a daily cap hit of 55,257 (about 17K more) daily.

so if you multiply his daily cap hit for this season of 55,257 x 186 days (full season) it comes to the annual cap hit of 10.27M which is what capfriendly has.

Does the accumulated cap hit matter for this season? or should one just disregard that on cap friendly?

because based on the accumulated cap hit it seems that the AAV for this season is about 55,257?

Thanks in advance for the help

 

[LeHab]

From cap friendly FAQ:

If a RFA signs after the season starts, how is their cap hit calculated?

When a restricted free agent signs a contract after the NHL season has already begun, their cap hit for the first year is greater than the contracts annual average, and similarly the cap hit of the remaining years is less than that of the annual average.

A notable aspect of the following calculation is that the sum of the cap hit values is greater than if the contract was signed before season start (and used the normal AAV calculation; monetary value of the contract divided by the total years)

The cap hit of the years after the first year of the contract is calculated first:
Cap hit after the first year = (First year salary * season days remaining / total season days + contract value remaining) / contract years

The first years cap hit is then calculated:
First years cap hit = cap hit after the first year * total season days / season days remaining

Example:
Hampus Lindholm of the Anaheim Ducks signed a $31,500,000 contract on Oct 27, 2016 in the 2016-17 season. There were 164 days remaining in the season on this date. The contract break down was as follows:
2016-17: $3,000,000
2017-18: $6,000,000
2018-19: $6,750,000
2019-20: $5,250,000
2020-21: $3,750,000
2021-22: $6,750,000
Total: $31,500,000
Annual Average: $5,250,000

The cap hit values are calculated as follows:
Cap hit (2017-18 to 2021-2022) = ($3,000,000 * 164 / 180 + $28,500,000) / 6 = $5,205,556
Cap hit (2016-17) = $5,205,556 * 180 / 164 = $5,713,415

The cap hit breakdown is therefore as follows:
2016-17: $5,713,415
2017-18: $5,205,556
2018-19: $5,205,556
2019-20: $5,205,556
2020-21: $5,205,556
2021-22: $5,205,556
Total: $31,741,294
Average: $5,290,216

 

[BoredBrandonPridham]

AAV $6.9m
Daily cap hit: $6.9m/185 days in season = $37,297.30/day

Regardless of when signed

This is more semantics, but doesn’t Nylanders contract have an “AAV” of $6.9m, however he has an in-year cap hit of around $10.2m. Or do they call $10.2m the “AAV” of the first year despite it not being an annual average of anything.

 

[PromisedLand]

This is more semantics, but doesn’t Nylanders contract have an “AAV” of $6.9m, however he has an in-year cap hit of around $10.2m. Or do they call $10.2m the “AAV” of the first year despite it not being an annual average of anything.

technically form the annualized POV the 10.2M for this year "mathematically" speaking makes sense. But like you said in the other thread - thanks again for correcting me - if we factor in the "accrual of the cap-space not used" - all this 10.2M cap hit BS goes out the door.

It's the stupid media fear mongering and not doing their due diligence before passing on the information to the general public. Sports Media when it comes to explaining the cap is STUPID!!!

 

[mouser]

bumping this thread

have a question about what if the player(s) sign X months after the season starts then how does the daily cap work?

Example: Nylander signs on Dec. 1st; his AAV is 6.9 on a 6 year deal.

How would this work?

When a player signs a multi-year contract after the season starts here's what they do:

A) Calculate exactly how much money the player actually makes from the contract then divide that amount by the # of years to find the AAV for years 2+. e.g. Nylander signed a face value $45m six year contract. However he's only going to be paid $41.77m since he misses out on 1/3rd of the year 1 salary. So $41.77m / 6 years = $6.96m AAV.

When a player is acquired or signs mid-season then the amount of cap space the team needs to fit the contract in is pro-rated. As this old thread you bumped discusses. For example, a team trading for a player with a $2m AAV contract exactly half way through the season only needs $1m in payroll room to fit the contract in. By the time the trade deadline approaches $1m in free payroll room is enough for a team to acquire a player with roughly a $4.5m AAV contract.

B) The NHL decided it would be a Bad Idea (tm) if teams deliberately delayed signing players after the regular season started for the purposes of lowering the year 1 cap space used. So when a player signs mid-season the year 1 AAV is inflated by an amount that exactly cancels out the late signing pro-ration formula. Meaning the amount of payroll room used up in year 1 is identical to the AAV for years 2+, regardless of whether the player signs a day late, a week late, or two months late.

Nylander signed with 126 days remaining of the 186 day regular season, meaning his year 1 AAV is set to 186/126 * $6.96m = $10.28m AAV. So Nylander's daily cap number for this season is $10.28m / 186 = $55.27k per day. Again, keep in mind he's only on an NHL roster for 126 days out of 186 this season.

 

[Jumptheshark]

Cap hits are based upon the hockey schedule and not per game.

So regardless of date of trade.. if it happens on the 20th day of the hockey season or 100th the math is the same.

That is why when teams are on their off break they often send waiver exempt players down to save some money.

People think cap hit is based upon games played and not physical days.

Capfriendy added the daily cap hit for this reason

 

[theguardianII]

Just because it might happen

Does the cap hit of a player traded AFTER the TDL count against the team's cap considering the rules state he is not allowed to play for the remainder of that season?

 

[mouser]

Just because it might happen

Does the cap hit of a player traded AFTER the TDL count against the team's cap considering the rules state he is not allowed to play for the remainder of that season?

The player is still being paid, so yes the cap hit still counts.