Why aren't signing bonuses counted towards contract rules? [mod: they are counted]

Discussion in 'Fugu's Business of Hockey Forum' started by TOML, Jul 4, 2011.

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  1. TOML

    TOML Registered User

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    Cap rules: The final two years of the contract can not be worth less than half of either of the first two years of the deal.

    But signing bonuses aren't counted.


    That means Ehrhoff and Richards can make a kajllion bajillion dollars in years one and two of their deals, but pennies in years 100 and 101 of their deals.

    The use of signing bonuses violates the principle behind the cap rule stated above.

    Am i missing the point of why that rule was even put into place if it is unenforcable?


    Meanwhile, Talbots contract is under review. The final two years of Talbot's deal are reportedly worth $1 million per year. This would violate cap rules as the final two years of the contract can not be worth less than half of either of the first two years of the deal. The first two years of Talbot's contract are worth $2.5 million and $2.25 million respectively.

    It's like the Flyers did that on purpose just to point out how pointless the rule is. lol @ Talbot's being 'the problem contract.'
     
  2. Dado

    Dado Guest

    I thought there was a provision that any bonuses "almost certainly" earned would count as salary for cap compliance math...?

    In which case, the signing bonus would/should count as "salary" when working out the cap-circumvention years...?
     
  3. Tawnos

    Tawnos A guy with a bass

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    The rule is that the drop in salary from one year to the next cannot be more than 50% of the salary of the first or second year of the deal, whichever is higher. In Richards case, the first year is $12m, which means a salary cannot drop by more than $6m. Year 7 is $7m and year 8 is $1m, therefore it's legal. You're misreading the rule.

    And bonuses do count. Technically, Richards is only making $2m in "salary" next year and $4m in "salary" the year after. (salary as in semi-monthly paychecks paid over the course of the season)
     
  4. kdb209

    kdb209 Registered User

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    As was stated, the "100 Percent Rule" takes into account salary and bonuses.

     

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