Jump to content

Welcome to canucks.com Vancouver Canucks homepage

Photo
- - - - -

Negative buyout cap hit

Discussion

This topic has been archived. This means that you cannot reply to this topic.
10 replies to this topic

#1 dura_mater

dura_mater

    Canucks Rookie

  • Members
  • PipPipPipPipPipPipPipPip
  • 1,805 posts
  • Joined: 18-December 08

Posted 31 July 2012 - 08:28 AM

So I was exploring capgeek and stumbled upon something called a negative cap hit buyout. Below is a bit more information on how buyouts work but basically a negative cap hit buyout means a team can receive a credit to their cap in a given year; or in other words, they could have $2M, for example, added to their cap as opposed to subtracted from it by buying a player out of his contract.

How do buyouts work?

Teams are entitled to buy out player contracts for a portion of the remaining value of the contract — paid over a period of twice the remaining length of the contract. Following are the buyout amounts:
  • Younger than age 26 at the time of buyout, 1/3 the remaining value
  • Age 26 or older at the time of the buyout, 2/3 the remaining value
The remainder of this explanation assumes the player was not 35 or older when he signed his contract (in which case a buyout saves the team financially but does not reduce the player's cap hit).
When a player is bought out, the team still takes a cap hit for the player over a period of twice the remaining length of the contract. The amount of the cap hit (by year) is determined as follows:
  • Take the actual salary due for each remaining year
  • Take the Averaged Player Salary (cap hit) for the current contract
  • Calculate the buyout amount (as described above)
  • Spread the buy-out amount evenly over twice the remaining years of the contract
  • Take the number in No. 1 and subtract the number in No. 4. This is the "buyout savings."
  • Take the cap hit from No. 2 and subtract the buyout savings from No. 5.
This calculation is done for each year, meaning the buyout cap hit is not necessarily the same for all years. It can even be negative, meaning a team can receive a credit.

It's a bit complicated, so take Shea Weber as an example. His buyout works out to:

2012-13: -$3,523,810
  • 2013-14: -$3,523,810
  • 2014-15: -$3,523,810
  • 2015-16: -$3,523,810
  • 2016-17: -$1,523,810
  • 2017-18: -$1,523,810
  • 2018-19: $4,476,190
  • 2019-20: $4,476,190
  • 2020-21: $4,476,190
  • 2021-22: $4,476,190
  • 2022-23: $7,476,190
  • 2023-24: $9,476,190
  • 2024-25: $9,476,190
  • 2025-26: $9,476,190
  • 2026-27: $2,619,048
  • 2027-28: $2,619,048
  • 2028-29: $2,619,048
  • 2029-30: $2,619,048
  • 2030-31: $2,619,048
  • 2031-32: $2,619,048
  • 2032-33: $2,619,048
  • 2033-34: $2,619,048
  • 2034-35: $2,619,048
  • 2035-36: $2,619,048
  • 2036-37: $2,619,048
  • 2037-38: $2,619,048
  • 2038-39: $2,619,048
  • 2039-40: $2,619,048
So I was thinking, do you think it would be an ingenious move to sign 1 or 2 players to Weber type deals, buy them out, and then stack your team with the excess cap available? Or would a GM be run out of town for financially handcuffing his team in future years? First it would have to be a player you'd be willing to buyout and give up; so you wouldn't want to do it with a superstar. Second, you'd have to have an owner with very deep pockets.

Take the Shea Weber example from above. The first 4 years give you an additional $3.5M in cap and the 5th and 6th an additional $1.5M (double this if you were to do this with two players). Obviously, beyond this the team is handcuffed by the buyout, specifically and most severely, during years 12, 13, and 14 at a $9.5M cap hit for a player who has been bought out.

Now have a look at all the teams and their cap space available
http://capgeek.com/

There are 12 teams, currently, who could not afford the worst part ($9.5M) of the above buyout. While there are 4 teams who could handle two players bought out at the above scenario. Keep in mind how much easier it would be for a team in a rebuilding stage and again keep in mind that there's a reason some of these teams are so far below the cap ceiling (owners unable/unwilling to spend all that money).

Now take a team like Edmonton, where 3 of their top young players in Taylor Hall, Sam Gagne, and Jordan Eberle are all RFAs come 2013/14. Could a GM manoeuvre around the massive $9.5M deficit in cap by planning a rebuild and aligning his young new players entry level contracts (Entry Level Contract with bonuses - player can't be paid more than $3.775M) to coincide? It would take a tremendous amount of planning, some luck, and would be difficult, as you'd have to hope the draft year you plan it for is deep but technically is it a loophole that could work? Using the Edmonton example, if they're rebuilding, do they really need Shawn Horcoffs $5.5M? Ales Hemsky at $5M?

It would be pretty bold of a GM to buyout 2 players as per Webers contract and have an additional $7M for the following 4 years and $3M for the 4th and 5th years. The question is, is it possible to survive the 3 years at an $18M cap loss by planning to rebuild?

Apollo is not a real person but a post-bot built by the Aquilini's to create hype.


#2 SukhKular

SukhKular

    Canucks Rookie

  • Members
  • PipPipPipPipPipPipPipPip
  • 1,526 posts
  • Joined: 15-November 03

Posted 31 July 2012 - 08:33 AM

is it possible to survive the 3 years at an $18M cap loss by planning to rebuild?


No. Especially for Nashville.

Edited by SukhKular, 31 July 2012 - 08:34 AM.

I'm saying Aladeen a lot because http://forum.canucks...dpost__10922428

I bet when Schneider turns 38, he will have broken all of Luongo's records.


Posted Image

General Manager of Buffalo Sabres; CDC Omega League; CM Connected; NHL 13; [[[[PS3]]]]

#3 goalie13

goalie13

    Osgoodian One

  • Members
  • PipPipPipPipPipPipPipPipPipPipPipPip
  • 6,263 posts
  • Joined: 30-April 07

Posted 31 July 2012 - 08:43 AM

So if I am reading this correctly, you would be gaining extra cap space for 5 years in exchange for losing cap space for 22 years?

I don't think it's worth the risk.
Posted Image

#4 Jai604

Jai604

    Canucks First-Line

  • Members
  • PipPipPipPipPipPipPipPipPipPipPipPip
  • 6,040 posts
  • Joined: 14-October 10

Posted 31 July 2012 - 09:20 AM

While the extra cap is nice, the cap penalty in the subsequent years is way too high for this to be viable. I'm pretty sure it was designed in such a way that no GM would realistically ever consider this a viable option.

RIP LB RR PD


#5 Snake Doctor

Snake Doctor

    Canucks Star

  • Members
  • PipPipPipPipPipPipPipPipPipPipPipPipPip
  • 8,431 posts
  • Joined: 30-September 08

Posted 31 July 2012 - 11:26 AM

So if I am reading this correctly, you would be gaining extra cap space for 5 years in exchange for losing cap space for 22 years?

I don't think it's worth the risk.


Posted Image


#6 Watermelons

Watermelons

    Canucks Rookie

  • Members
  • PipPipPipPipPipPipPipPip
  • 1,680 posts
  • Joined: 16-June 11

Posted 31 July 2012 - 01:17 PM

So this basically only works if you plan on competing for the Cup for 5 years and then taking the chance that players will take discounts to stay on your team because there isn't any cap to sign them for what they are worth?

tumblr_lv6jbk180f1r5jtugo1_250.gif  Kirby_eats_a_watermelon.gif 


#7 CanucksFanMike

CanucksFanMike

    Canucks Third-Line

  • Members
  • PipPipPipPipPipPipPipPipPipPip
  • 3,632 posts
  • Joined: 28-September 11

Posted 31 July 2012 - 04:35 PM

i wouldn't want to lose that much cap space for that many years
Posted Image
Credit to -Vintage Canuck-

#8 dura_mater

dura_mater

    Canucks Rookie

  • Members
  • PipPipPipPipPipPipPipPip
  • 1,805 posts
  • Joined: 18-December 08

Posted 31 July 2012 - 05:10 PM

So if I am reading this correctly, you would be gaining extra cap space for 5 years in exchange for losing cap space for 22 years?

I don't think it's worth the risk.


Is losing only $2.6M over the last 14 years of those 22 (some years of which are credit) really that big of a handicap though?

Apollo is not a real person but a post-bot built by the Aquilini's to create hype.


#9 Alex the Great

Alex the Great

    Canucks Regular

  • Members
  • PipPipPipPipPipPipPipPipPip
  • 2,863 posts
  • Joined: 17-April 12

Posted 01 August 2012 - 07:05 AM

So if I am reading this correctly, you would be gaining extra cap space for 5 years in exchange for losing cap space for 22 years?

I don't think it's worth the risk.


105uyog.jpg

 

Thanks to KhalifaWiz for the incredible sig!


#10 pianoman13

pianoman13

    Canucks Prospect

  • Members
  • PipPipPipPipPipPipPip
  • 1,032 posts
  • Joined: 09-December 06

Posted 01 August 2012 - 05:10 PM

This is interesting. It would not be worth it with Webers contract, but you could sign a contract that would give you maximum negative buyout cap hit. Do not know what that contract would be, and most likely not allowed after this CBA. No team would ever do that, but its interesting to know about it.

No videos in sig please. 


#11 87Crosby

87Crosby

    Canucks Prospect

  • Members
  • PipPipPipPipPipPipPip
  • 1,236 posts
  • Joined: 01-December 11

Posted 02 August 2012 - 07:45 AM

Is losing only $2.6M over the last 14 years of those 22 (some years of which are credit) really that big of a handicap though?

Is losing only $2.6M over the last 14 years of those 22 (some years of which are credit) really that big of a handicap though?

rather lose that than have raymond




Canucks.com is the official Web site of The Vancouver Canucks. The Vancouver Canucks and Canucks.com are trademarks of The Vancouver Canucks Limited Partnership.  NHL and the word mark and image of the Stanley Cup are registered trademarks and the NHL Shield and NHL Conference logos are trademarks of the National Hockey League. All NHL logos and marks and NHL team logos and marks as well as all other proprietary materials depicted herein are the property of the NHL and the respective NHL teams and may not be reproduced without the prior written consent of NHL Enterprises, L.P.  Copyright © 2009 The Vancouver Canucks Limited Partnership and the National Hockey League.  All Rights Reserved.