Cameron88188 Posted January 25, 2016 Share Posted January 25, 2016 http://www.tsn.ca/mondaymustread-rare-contract-cap-credit-raises-cowen-s-value-1.428314 Need some help here. Read this article a few times and still do not understand how a NHL team can get a salary cap credit. From my understanding Cowen has 1 year left at 3.1 cap hit, 4.5 actual salary for 2016-2017. If any team buys him out it would be one third of his salary (ie;: 1.498) because he is under 26 years of age. I have thoughy that if you buy out a player, in this case the one third buy out of his cap (ie: 1.032 mil), this would count against the 2016-2017 cap. I have no clue how this team would get 650K salary cap credit for 2016-2017 then another salary 750K credit for 2017-2018. Apparently Buffalo got this deal when the cut CoHo too. Link to comment Share on other sites More sharing options...
Aladeen Posted January 25, 2016 Share Posted January 25, 2016 They don't get 750K credit in 2017-2018 they get a 750K penalty. The only credit is for '16-17 Link to comment Share on other sites More sharing options...
Cameron88188 Posted January 25, 2016 Author Share Posted January 25, 2016 27 minutes ago, Aladeen said: They don't get 750K credit in 2017-2018 they get a 750K penalty. The only credit is for '16-17 Thanks for the clarification. Still seems odd that a team can get a credit for one year, and the cap buyout penalty skips a year... Link to comment Share on other sites More sharing options...
Aladeen Posted January 25, 2016 Share Posted January 25, 2016 1 hour ago, Cameron88188 said: Thanks for the clarification. Still seems odd that a team can get a credit for one year, and the cap buyout penalty skips a year... I don't think it skips a year. I believe it has to do with his actual salary ($4.5 Million) vs. his cap hit.($3.1 Million) Since Cowen is under 26 (if bought out this June) the buyout would = 1/3 of his Salary remaining over 2 years. The Equation would look like this (Actual Salary) - (Cap Hit) - (Cap Hit Penalty) or Actual Salary = 4.5 Million Cap Hit = 3.1 Million Cap Hit Penalty = Actual Salary / 3 = 1.5 Million (divided over 2 years) = 750K So, 4.5Million - 3.1 Million - 750K = + 650K = 650K cap credit Since there is no salary or cap hit being bought out in 2017-18 the Cap hit penalty is the only thing that carries over to that season: - 750K = 750K cap penalty Link to comment Share on other sites More sharing options...
khay Posted January 25, 2016 Share Posted January 25, 2016 27 minutes ago, Aladeen said: I don't think it skips a year. I believe it has to do with his actual salary ($4.5 Million) vs. his cap hit.($3.1 Million) Since Cowen is under 26 (if bought out this June) the buyout would = 1/3 of his Salary remaining over 2 years. The Equation would look like this (Actual Salary) - (Cap Hit) - (Cap Hit Penalty) or Actual Salary = 4.5 Million Cap Hit = 3.1 Million Cap Hit Penalty = Actual Salary / 3 = 1.5 Million (divided over 2 years) = 750K So, 4.5Million - 3.1 Million - 750K = + 650K = 650K cap credit Since there is no salary or cap hit being bought out in 2017-18 the Cap hit penalty is the only thing that carries over to that season: - 750K = 750K cap penalty Thanks for the explanation. That was much better than the original article, the author of the article should have included the formulate used for calculating the cap hit/credit in the article. So, at the end of the day, the team that is going to trade for him is going to have to lose, 1) an asset (since Murray wants something back in return), 2) 750K for 2 years = 1.5 million dollars in real money, and 3) extra 750K cap hit for 2017-18 season, just so that the team trading for him can get 650K cap credit for 2016-17 season and hopefully to use him for the playoffs as a backup. The troubling thing here is the loss of asset and the penalty of 750K in 2017-18 season. Who knows if you will be even more cap strapped in 2017-18 season? What if the cap goes down in 2017-18? That 750K that you incur could hurt you even more than what 650K can buy you in 2016-17 season. It would be extremely short sighted and honestly, a retarded thing to do unless you are a team that thinks very highly of Cowen and that he can play for your team for the rest of this season and in the playoffs. I sincerely hope that the writer wrote the article because it was an interesting scenario and not because that he actually believes it to be a good reason to trade for Cowen. Link to comment Share on other sites More sharing options...
Cameron88188 Posted January 25, 2016 Author Share Posted January 25, 2016 33 minutes ago, khay said: Thanks for the explanation. That was much better than the original article, the author of the article should have included the formulate used for calculating the cap hit/credit in the article. So, at the end of the day, the team that is going to trade for him is going to have to lose, 1) an asset (since Murray wants something back in return), 2) 750K for 2 years = 1.5 million dollars in real money, and 3) extra 750K cap hit for 2017-18 season, just so that the team trading for him can get 650K cap credit for 2016-17 season and hopefully to use him for the playoffs as a backup. The troubling thing here is the loss of asset and the penalty of 750K in 2017-18 season. Who knows if you will be even more cap strapped in 2017-18 season? What if the cap goes down in 2017-18? That 750K that you incur could hurt you even more than what 650K can buy you in 2016-17 season. It would be extremely short sighted and honestly, a retarded thing to do unless you are a team that thinks very highly of Cowen and that he can play for your team for the rest of this season and in the playoffs. I sincerely hope that the writer wrote the article because it was an interesting scenario and not because that he actually believes it to be a good reason to trade for Cowen. Thanks for the insight guys. It is starting to make a little bit more sense, and I get how the cap penalty is off $750K is for 2017 - 2018. The math makes more sense now that the cap hit is split over two seasons. Still stuck on how this "4.5Million - 3.1 Million - 750K = + 650K = 650K cap credi" is actually allowed. The other buyouts seem more straight forward. If you buy a player out you screwed up and a penalty is applied. I thought salary has nothing to do with cap hits or cap pims but I guess it does in this case based on his age. Link to comment Share on other sites More sharing options...
khay Posted January 25, 2016 Share Posted January 25, 2016 20 minutes ago, Cameron88188 said: Thanks for the insight guys. It is starting to make a little bit more sense, and I get how the cap penalty is off $750K is for 2017 - 2018. The math makes more sense now that the cap hit is split over two seasons. Still stuck on how this "4.5Million - 3.1 Million - 750K = + 650K = 650K cap credi" is actually allowed. The other buyouts seem more straight forward. If you buy a player out you screwed up and a penalty is applied. I thought salary has nothing to do with cap hits or cap pims but I guess it does in this case based on his age. The cap hits for Cowen are as follows: 2015-16: 3.1 million dollars 2016-17: If not bought out: 3.1 million dollars If bought out in June of 2016: 4.5 - 3.1 - 4.5*1/3*1/2 = 4.5 - 3.1 - 0.750 = +0.650 million dollars. 2017-18: If not bought out: 0 dollars (contract ends) If bought out in 2016 summer: 0 - 0 - 4.5*1/3*1/2 = -0.750. The first 0 comes from the fact that the real salary is 0 because the contract expired and the second 0 comes from the fact that there is no cap hit because the contract expired. 0.750 comes from the cap penalty for buying out the contract in June of 2016. If his cap hit were 4 million dollars instead of 3.5 million dollars say, then the cap hit is negative in both years: 2015-16: 3.1 million dollars 2016-17: If not bought out: 3.1 If bought out in June 2016: 4.5 - 4 - 0.750 = -0.250 million dollars. 2017-18: If not bought out: 0 If bought out in June 2016: 0 - 0 - 0.750 = -0.750 million dollars. It's confusing but once you apply the formula in Aladeen's post, it becomes clear. I hope this helps. Link to comment Share on other sites More sharing options...
khay Posted January 25, 2016 Share Posted January 25, 2016 33 minutes ago, Cameron88188 said: Thanks for the insight guys. It is starting to make a little bit more sense, and I get how the cap penalty is off $750K is for 2017 - 2018. The math makes more sense now that the cap hit is split over two seasons. Still stuck on how this "4.5Million - 3.1 Million - 750K = + 650K = 650K cap credi" is actually allowed. The other buyouts seem more straight forward. If you buy a player out you screwed up and a penalty is applied. I thought salary has nothing to do with cap hits or cap pims but I guess it does in this case based on his age. Yeah, I think that is the reason why the TSN writer brought this up. It's probably the first case where the discrepancy in the real salary and the cap hit brings this paradoxical event where you screwed up by signing a crappy contract but then somehow, due to the weird formula that they use, you get away with some cap credit. I would have thought that the formula should be something like: minimum of, 1. (real salary) - (cap hit) - (cap hit penalty for buying out the player) 2. 0. Link to comment Share on other sites More sharing options...
Cameron88188 Posted January 26, 2016 Author Share Posted January 26, 2016 Thanks KHAY. Very interesting, know I why they have capologists. I guess this is the opposite of the front loaded deals which we have all seen so accustom too (ie: Luongo & cap re-capture if he retirs) . I still think it is absurd that there is this kinda of loop hole in the CBA. Found coho, cap breakdown / buyout: http://www.diebytheblade.com/2015/6/29/8861965/sabres-waive-cody-hodgson-buy-out-his-contract Does that mean Buffalo gets a $458K cap credit in a couple years? Link to comment Share on other sites More sharing options...
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