Buying-Out a Contract with Cap Recapture Penalties

[Spurgeon]

Has there been any players that were signed to a contract that was subject to cap recapture penalties that has been subsequently bought out? The language in the CBA makes it difficult to interpret if any recapture penalty would be assessed to the original team that had signed the contract.

I think there’s a real possibility that Parise is bought out from his contract this off-season, but what implications does that have on his cap recapture penalty? Does it just vanish since he’ll still be receiving salary from the original contract and a penalty will already be imposed on the Wild in the form of the buyout cap hit?

My interpretation is that the buyout amount would hold and there wouldn’t be any further recapture penalties. However, what is the case if the Wild traded Parise to some team (Seattle) with the understanding that they’d buy out the contract. Is that a viable way for the Wild to get rid of Parise’s contract without any cap penalties?

 

[gstommylee]

Has there been any players that were signed to a contract that was subject to cap recapture penalties that has been subsequently bought out? The language in the CBA makes it difficult to interpret if any recapture penalty would be assessed to the original team that had signed the contract.

I think there’s a real possibility that Parise is bought out from his contract this off-season, but what implications does that have on his cap recapture penalty? Does it just vanish since he’ll still be receiving salary from the original contract and a penalty will already be imposed on the Wild in the form of the buyout cap hit?

My interpretation is that the buyout amount would hold and there wouldn’t be any further recapture penalties. However, what is the case if the Wild traded Parise to some team (Seattle) with the understanding that they’d buy out the contract. Is that a viable way for the Wild to get rid of Parise’s contract without any cap penalties?

Seattle isn't allowed to buy out contracts until the following season.

 

[StreetHawk]

Yes, but those were done during using compliance buyouts like for Lecavalier, Bryzgalov, Richards, and Ehrhoff.

Parise it would not help to buyout. Because there are 3 parts to a buyout.

1) remaining salary which is paid out at 2/3 over twice the remaining years on the contract
2) signing bonus are paid and cap hit at 100% in the year they apply
3) this one impacts Parise. All front loaded portions of the contract are allocated over the remainder of the contract. Example, Parise is a $7.5 mill cap hit. So say he has played 10 years of his contract this Minny has taken $75 mill in cap hit. But they may have paid him $90 mill over that time period. That $15 mill is also factored into the dead cap on a buyout. So if he had 4 years in his contract the wild would have to take a $3.75 mill dead cap per year over the final 4 years of his contract.

 

[mouser]

Has there been any players that were signed to a contract that was subject to cap recapture penalties that has been subsequently bought out? The language in the CBA makes it difficult to interpret if any recapture penalty would be assessed to the original team that had signed the contract.

I think there’s a real possibility that Parise is bought out from his contract this off-season, but what implications does that have on his cap recapture penalty? Does it just vanish since he’ll still be receiving salary from the original contract and a penalty will already be imposed on the Wild in the form of the buyout cap hit?

My interpretation is that the buyout amount would hold and there wouldn’t be any further recapture penalties. However, what is the case if the Wild traded Parise to some team (Seattle) with the understanding that they’d buy out the contract. Is that a viable way for the Wild to get rid of Parise’s contract without any cap penalties?

It has not happened. The CBA does not clarify which cap formula would take precedence, and to my knowledge the NHL has never publicly said how they believe precedence would work.

- When Cap Recapture and Compliance Buyout were intertwined, the Compliance Buyout rule of "no cap hit" took precedence.

- When Age 35+ rule (original version) and Ordinary Buyout were intertwined, the Age 35+ rule took precedence.

So even the empirical examples we have don't give us a completely confident opinion on how the NHL would interpret a contract hit by a combination of Cap Recapture and Ordinary Buyout.


I agree in theory if a player was never traded and only played for a single team, then the Ordinary Buyout cap formula would disgorge any cap space advantage gained over the lifetime of the contract--similar to the intent of the Cap Recapture rule. However this would not hold true if the player were traded.

 

[Hockeyholic]

Could the Wild theoretically pawn off Parise to the Red Wings. Have Detroit help pay off a portion of Parise's buyout. And in return, Minnesota gives Detroit a 1st?

Assuming Parise's recapture penalty wouldn't squarely be the Wings responsibility once said trade is made.

 

[StreetHawk]

Could the Wild theoretically pawn off Parise to the Red Wings. Have Detroit help pay off a portion of Parise's buyout. And in return, Minnesota gives Detroit a 1st?

Assuming Parise's recapture penalty wouldn't squarely be the Wings responsibility once said trade is made.

When the Avalanche acquired and bought out Brooks Orpik and when carolina acquired and bought out Marleau, there was not dead cap hit on either Washington or Toronto in those 2 instances.

Dead cap from a Parise buyout is not pretty. $2.4, $6.4, then 2 years at $7.4 then goes to $833K afterwards for 4 seasons.

Right now the issue is that Parise wants to keep playing, and honestly, Minnesota needs to keep him on the roster. There's really no way out for them aside from him ending his career on LTIR. Parise is in full control with a NMC.

Parise has been paid $88 mill of his $98 mill while the Wild have taken a $67.85 mill cap hit over the past 9 seasons. Parise would have $20 million in dead cap to allocate over the remaining 4 years of his contract, if they mutually opted to terminate the contract.