Brace yourselves, Canucks fans: the club is facing a Roberto Luongo salary cap nightmare

[Bruce Boudreau]

In what might have been the twilight of his career, Roberto Luongo is playing great.

He’s giving the Florida Panthers security in their thinking about their goaltending situation, and probably nightmares for the Canucks’ longterm planning.

Just look at his record: he’s still putting up fantastic numbers:

Luongo, one of the NHL’s all-time greats, may once have lamented his contract, but there’s no doubt he’s now laughing all the way to the bank.

The Canucks, they’re not likely to be as enthusiastic as their former goalie is. And it’s not just about being jealous of all the year-round beach time at Lu’s disposal.

It’s all about the likelihood of Lu’s retirement.

Most goalies would be amazed to be still performing, let alone performing as well as Luongo is, at age 37.

The longer he keeps performing, the longer he’ll keep playing. The longer he keeps playing, the more trouble he’s going to cause the Canucks in their salary cap planning.

Yes, here’s a nearly three-year-old reminder of a contract, written to take advantage of the rules, being turned into the NHL’s most dangerous thing.

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Here are the cap penalties from Roberto Luongo's contract for the Canucks if he retires early. Could be really ugly

2:47 PM - 4 Mar 2014

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(Of course, if he were to play through to the end of the contract in 2022, there would be no penalty at all.)

The 12-year deal, which kicked in before the 2010-11 season, was structured in such a way that in real dollars he’d be paid plenty up front, when his performance was expected to be at its peak, with a very cheap tail, paying him a million dollars by the end. The overall picture made his cap hit  — $5.3 million per season, all the way through — highly advantageous to the Canucks. It was in line with a series of similar contracts signed under the pre-2013 Collective Bargaining Agreement between NHL owners and players.

Did Mike Gillis and his management team expect him to still be playing at age 42? Who knows. What was clear was they were willing to use the cap system in place — and available to every team in the NHL — to defer money until later in his life. For a team looking to add final pieces to a cup contender, it made sense. For Luongo, it meant a guaranteed salary for the rest of his career.

The three-year tail of the contract begins when Luongo will be 40, at the beginning of the 2019-20 season. It seems unlikely a team would really look to lock him in to a three-year, $3.6-milion contract at that age.

Take those three years and $3.6 million away, and Luongo’s seasonal cap hit jumps to $6.7 million. (If you keep the $64-million total figure, it’s $7.1 million per season.)

You can see the problem other teams had with it. But you could still argue that there was a chance Luongo would play for the full duration of the contract.

Back in 2012, when he was writing (and auditioning, though he didn’t know it at the time) for Leafs Nation, Cam Charron put together a fine chart. With Luongo to the Leafs rumours at their peak, Charron found Luongo’s performance showed he was consistently above the league average in save percentage. It seemed a safe bet he’d perform well into his mid-30s … but after that, the picture was less clear.

The problem, Charron noted in a later piece, was that the data on late-30s goalies is sparse. They just don’t come along very often. Projecting how he might perform as he approached 40 was like trying to predict a snowstorm in Vancouver.

From a playing perspective, the 2010 contract tracked very well with his league-leading performance at the time, and then through his inevitable decline phase. But again, it was that tail.

Even if the Canucks were taking some risk by committing to a goalie well past an age which had little history of performance, the problem was other teams hated the competitive advantage Gillis and other GMs, like Lou Lamoriello in New Jersey, had figured out. There were no rules preventing contracts like this. Some teams had figured out how to game the system and that pissed people off.

And so the cap recapture penalty was born.

ESPN’s Craig Custance spoke with one executive about the motivation behind adding such a punishing clause to the CBA. The new CBA included the new, fun, cap recapture penalty, which applied to about 20 contracts. In short, it takes the savings gained by stretching out the payments over the tail years of the contract and re-applies them to the cap, averaged out over how many years are left on the contract, if the player were to retire before the contract were over. If the player gets traded to another team, the new team shares somewhat in the pain, but not as much as the team which originally signed the contract.

“Teams that did those contracts essentially embarrassed Gary [Bettman]. We found a way to circumvent the CBA legally,” said one executive. “He was incensed, and said, ‘I’m going to get you back.’ Which he did.”

The Canucks had been asking a pretty steep price for Luongo before the 2012 lockout; adding in cap recapture looked to have turned Luongo into essentially an untradeable player. The Canucks were ready to move him in 2012, once it was clear Cory Schneider was ready to be the guy, with Eddie Lack set to ride shotgun. But with the team looking for young scoring forwards such as Nazem Kadri, Tyler Bozak or Jordan Eberle in return, they couldn’t find a dance partner.

It made Luongo’s situation a big, huge mess. If Luongo waited until the last year or two of his contract, when he’s in his early-40s, to retire, the per-year penalties were almost entirely against the Canucks and they would be massive. If he retired before 2020, his new team would have a penalty applied to their cap as well, but not as big as the one faced by the Canucks.

The Canucks kept trying, but the penalty was next-to-impossible to deal with.

As Jason Botchford reported at the 2013 deadline, when Gillis confirmed he’d been unable to move Luongo on to another team:

“My contract sucks,” Luongo said. “That’s what the problem is. Unfortunately, it’s a big factor in trading me. And it’s why I’m still here.

“I’d scrap it if I could right now.”

Despite all the millions he’s made, and will make, to hear him describe his 12-year, $64-million deal as an anchor provided a keyhole into his heart and soul. He wants to play, desperately so, and who among us who has ever played a sport at any level can’t relate with that?

A year later, they did find a suitor in Florida. Luongo is playing great. The more he plays great, the longer you assume he plays. The longer he plays, the bigger the cap recapture penalty will be on a yearly basis.

It could all end in a 2021-22 cap armageddon for the Canucks.

pjohnston@postmedia.com

twitter.com/risingaction

http://theprovince.com/sports/hockey/nhl/vancouver-canucks/brace-yourselves-canucks-fans-the-club-is-facing-a-robert-luongo-salary-cap-nightmare

[numb3r 16]

So if luongo retires in 2021 we will have an 8 mil cap penalty???

[pluralsight]

New Jersey got their first rounder back after the Kovalchuk debacle. If the Canucks don't get a pardon for this recapture penalty, then it confirms that the NHL is an old boys club. 

[Bruce Boudreau]

3 minutes ago, pluralsight said:

New Jersey got their first rounder back after the Kovalchuk debacle. If the Canucks don't get a pardon for this recapture penalty, then it confirms that the NHL is an old boys club. 

 

Bettman and his cronies basically threw a huge wrench in the Canucks 5 year rebuild plan and probably set them back the completion of the rebuild another 5 years to 2025 if Luongo retires early.

[EmilyM]

Ridiculous for the recapture penalty to retroactively apply to any contracts signed before the new rule was put in place.
Canucks should appeal it and WILL win it.

[ABNuck]

8 minutes ago, numb3r 16 said:

So if luongo retires in 2021 we will have an 8 mil cap penalty???

Yeah, great planning Bettman. So the Canucks have contracts on the book which cause them to be in excess of the cap due to the combination of those contracts + the re-capture penalty...what do they have to do to satisfy Buttman? Trade players? Send them down? You can't plan ahead of time (and handicap your own team) for the "possibility" that Lu retires. What a stupid solution to a problem that the ol' boy's club created themselves (by not addressing it in the CBA prior to those half dozen bad contracts)...a typical illogical knee-jerk reaction. I would hope that Aquaman challenges this in court if and when it occurs (basically changing the rules AFTER the fact). How would you like if some douche-bag suddenly decides that the tax rate charged by the government has been too low all these years, so they're changing the rules and back charging companies for the tax due for the past 5 years! Screw that...it's borderline illegal!

[combover]

Almost seems like the organization should fight that in court. A rule change after the contract was approved by none other than the guy setting the new rules. Doesn't make any sense. But that's bettman NHL for ya.

[cuporbust]

27 minutes ago, pluralsight said:

New Jersey got their first rounder back after the Kovalchuk debacle. If the Canucks don't get a pardon for this recapture penalty, then it confirms that the NHL is an old boys club. 

Theu already confirmed that when they retroactivly penalized us for a rule that didnt even exist when the contract was signed. Its a joke 

[King Heffy]

All this could have been avoided if our GM at the time hadn't been a complete moron.

 

A buyout should have been the ONLY option.  The fact that Gillis even considered not buying him out, let alone retaining salary and risking this debacle should have been cause for immediate termination.  Ownership intervention or not, no competent GM destroys the future of the franchise as badly as Gillis did.

[King Heffy]

11 minutes ago, combover said:

Almost seems like the organization should fight that in court. A rule change after the contract was approved by none other than the guy setting the new rules. Doesn't make any sense. But that's bettman NHL for ya.

I'm 100% down for this.  The NHL won't clean up their act until a judge tells them to do so.

[HowYaDrouin]

You think we got it bad ?

 

If Shea Weber retires 1 year early the Preds have a 24.5M recapture penalty added to there salary.

[on the cycle]

It's all BS whining from the NHL. 

The league approved the contract and then punished teams for being smart, creative, and being 100% legal.

 

How can you retroactively punish someone? It's like if you are driving 110kph in a 110 zone and now they want to fine you because they changed it to 100kph. Doesn't make any sense.

[Violator]

I think we should be fine but management should stop signing crap contracts or at least bury people in the minors or the bench instead of buyouts.

[Gaudette Celly]

Did you just "discover" this now?

[King Heffy]

Just now, Violator said:

I think we should be fine but management should stop signing crap contracts or at least bury people in the minors or the bench instead of buyouts.

 

This.  Wasting cap space for more than one year is moronic.  Look at Higgins.  Instead of just eating the caphit we had the space for, we're wasting space next year too.  Not sure how JB didn't learn from the tire-fire his brain-dead predecessor left him and realize how harmful these kind of moves are.  There's simply no excuse for this kind of short-shortsightedness.

[Cramarossa]

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[Stelar]

Wow, this news from 2014 is really interesting. Thanks.  I did not know this...... 

[Wilbur]

As long as the Canucks aren't contenders by 2021 it could make everyone happy.  The Canucks just spend the entire season over the cap and forfeit every game, meanwhile, win all the games they want to maintain the winning environment, then have the best odds at the #1 overall pick.  Screw the Leafs, that's the perfect tank season.  Am I right?

[Bruce Boudreau]

20 minutes ago, Hutton Wink said:

Did you just "discover" this now?

 

Yeah I did actually. You gotta problem with that?

[Wilbur]

Seriously though, is this chart even right?  I thought the penalty was the amount of cap being escaped spread over the remaining years.  So if he retires with 1 year left wouldn't it be 4.3 million?