What's the reason cap hits are the AAV instead of salary?

[895]

What was the rationale behind this?

If annual cap hits had just been the salary directly, wouldn't we have avoided so many problems?

No more buyout proof contracts due to signing bonuses. No more of the Hossa/Pronger situations with useless years tacked on at the end.

 

[Jumptheshark]

Go to cap friendly and see the hossa contract as an example

 

[895]

Go to cap friendly and see the hossa contract as an example

Not sure what you mean by this. I know what the contract looks like. That's why I made the thread.

 

[Kane One]

So that rich teams don’t front-load the contract.

 

[Flukeshot]

It was done to help prevent front and backloaded deals.

Let's use the Leafs as an example. Matthews and Marner could sign 8 yr deals but take $1m in the first year or two and make it all up on the back end.

Matthews is getting at least 10m x 8yrs

He could do 1-1-13x6 = 80m

Even if you kept the rule no year can be less than half the highest. He could take roughly 5.75 - 5.75 - 11.5×6

It would allow the Leafs to have a couple of years to go for a Cup and then by the time the duo start to make big money you have hopefully won and or the cap goes up to make it less a problem. Marleau would be gone too.

 

[895]

So that rich teams don’t front-load the contract.

Teams already do this. And this helps how?

 

[895]

It was done to help prevent front and backloaded deals.

Let's use the Leafs as an example. Matthews and Marner could sign 8 yr deals but take $1m in the first year or two and make it all up on the back end.

Matthews is getting at least 10m x 8yrs

He could do 1-1-13x6 = 80m

Even if you kept the rule no year can be less than half the highest. He could take roughly 5.75 - 5.75 - 11.5×6

It would allow the Leafs to have a couple of years to go for a Cup and then by the time the duo start to make big money you have hopefully won and or the cap goes up to make it less a problem. Marleau would be gone too.

Why would Matthews and Marner take less money in the first years though? Money now is worth more than money later.

It would be no different than them taking paycuts to keep the team together, which they could do now anyways.

 

[puckpilot]

Google says the following.

The basic cap hit of a contract for each year it is effective is the total money a player will earn in regular salary over the life of the contract divided by the number of years it is effective. This prevents a team from paying a player different amounts each year in order to load his cap hit in years in which the team has more cap room. Teams still use this practice, however, for other reasons.

So for example for the sake of simplicity, let's say Horvat's contract pays him $40 million over 8 years. That's a 5 million per season average. The Canucks have a ton of cap space right now. They aren't going to be challenging anytime soon, so to gain cap space when they are ready to compete, they front load the first three years of his contract and pay him 10 million per. It doesn't affect them because they have lots of space that they don't intend to use. So now they can pay him 2 million per for the next five thus gaining cap space for when they're ready to compete.

Now a team can do the opposite of that. For example remember Chicago had to trade players like Ladd and Byfuglien because they needed the cap space. Now since they're lean on cap space they could pay the two players league minimum and then pump up the last years of the contract, so they'll get the same amount of money over the life time of the contract. But this in effect is circumventing the cap. This would have allowed Chicago to keep the team together for a longer period before making moves.

It allows for the a team to shift when a player's cap hit will affect the team the most. You can front pay the cap hit or back pay it.

 

[Kane One]

Teams already do this. And this helps how?

Teams do it up to a certain limit. If there were no rules regarding front loading contracts, richer teams will be at an advantage where they could afford to give much more up front.

 

[nazim zmirli]

I realize most of these things turn out to be the same, but for Entry-Level guys with performance bonuses it can vary depending on what number you are looking at and what site you use as a reference. See for example Johnny Gaudreau - general fanager has his with a $925,000 cap hit (equal to his salary), but NHLnumbers.com has him with a cap hit of $1,850,000 (equal to his AAV, which includes performance bonuses). Plex Kodi Lucky Patcher

 

[Flukeshot]

Why would Matthews and Marner take less money in the first years though? Money now is worth more than money later.

It would be no different than them taking paycuts to keep the team together, which they could do now anyways.

It happens all the time in the NFL. And players could be compensated with more money in the back end to offset the interest lost by having less money upfront. It would happen in the NHL too.

There are pros and cons to each method. Ultimately the NHL chose average earnings over total contract life.

For what it is worth, the NHLPA's 50% of HRR is always calculated to actual dollar.

 

[Noldo]

It happens all the time in the NFL. And players could be compensated with more money in the back end to offset the interest lost by having less money upfront. It would happen in the NHL too.

There are pros and cons to each method. Ultimately the NHL chose average earnings over total contract life.

For what it is worth, the NHLPA's 50% of HRR is always calculated to actual dollar.

I wonder if the NHLPA could propose changing the cap hit to salary in order to resolve a part of the escrow issue? Although majority of the escrow is most likely due to teams spending to the cap, the salaries that exceed the cap hits do play a role.

No a likely proposition because such solution would not hurt the League a bit so I cannot see the NHLPA proposing such.

 

[Flukeshot]

I wonder if the NHLPA could propose changing the cap hit to salary in order to resolve a part of the escrow issue? Although majority of the escrow is most likely due to teams spending to the cap, the salaries that exceed the cap hits do play a role.

No a likely proposition because such solution would not hurt the League a bit so I cannot see the NHLPA proposing such.

Escrow is one of the PA's bigger frustrations at the moment. I am sure they'd be interested in anything that minimizes it. Would be interesting to see what the league total AAV vs Actual was for this past season. Capfriendly has already rolled over to next season, and the variances by team are all over the place with some having fewer dollars spent than cap hit, and some having much higher $ spent to cap hit.

But you're right that the bigger part is that more teams spend closer to the cap. If all teams spent to the cap escrow would be huge.

Additionally injured players get paid but don't count towards cap dollars spent. Their replacements start to eat into the total 50% and inflate what is lost to escrow.

If it were dollar per year instead of AAV, the IR relief would be complicated.

 

[Flukeshot]

What was the rationale behind this?

If annual cap hits had just been the salary directly, wouldn't we have avoided so many problems?

No more buyout proof contracts due to signing bonuses. No more of the Hossa/Pronger situations with useless years tacked on at the end.

Also forgot to mention the roll that buy outs play. If players signed long front loaded deals, than teams could buy out the remaining years (if the players' performance declined) with almost no penalty. You could see some shady business where teams and players agreed to buyouts so that they can go make more money elsewhere.

 

[mouser]

Also forgot to mention the roll that buy outs play. If players signed long front loaded deals, than teams could buy out the remaining years (if the players' performance declined) with almost no penalty. You could see some shady business where teams and players agreed to buyouts so that they can go make more money elsewhere.

You have it backwards. Teams would need to back-load a contract to buy it out with reduced penalties.