Flyers luck out with “cap-recapture” system, Richards and Carter deals won’t haunt Flyers

Yesterday I posed my top remaining questions about thew new CBA, and one of those questions was whether or not the “cap-recapture” system which was proposed at some point during negotiations, would ever come to fruition.

Dubbed the “screw you Paul Holmgren rule” by Travis Hughes of Broad Street Hockey, it was designed to penalize teams for signing players to “back-diving” contracts that serve to reduce a player’s cap hit.

As it turns out, that “cap-recapture” rule is officially a part of the CBA. While not all of the details are known, what is known is that it has the potential to haunt teams that signed players to these cap circumventing deals, even if those players were traded away. This is the case with Mike Richards, Jeff Carter, and possibly James Van Riemsdyk depending upon what the cut off is for the contract lengths.

Image courtesy of philly.com

Firstly, a thank you to Charlie O’Connor from The Hockey Guys for pointing this out to me after he, Tyler Altemose also from THG, and I were discussing the topic on Twitter.

Elliotte Freidman explained the intricacies of the rule. I strongly suggest you read his article in which he uses Roberto Luongo as an example.

If I’m understanding it correctly, the Flyers luck out.

Essentially, for heavily front-loaded contracts, if a team is paying a player a large salary, while their cap hit is much lower, they will be punished accordingly for that “cap savings” as compared to the real salary dollars.

It is also weighted based upon how many years they spent with the team.

So how does this specifically apply to the Flyers in the situations of Mike Richards and Jeff Carter, as they will almost surely be accountable with their 12 and 11 year deals respectively?

Jeff Carter signed an 11 year contract with the Flyers, however the first year of that contract was 2011-2012; a year he spent with the Columbus Blue Jackets and Los Angeles Kings. Carter was traded from the Flyers before his contract ever took effect.

As described in Elliotte’s article, the Flyers would not be responsible for any penalties should Carter ever retire prior to his contract ending.

The same can be said for JVR, who’s new contract kicks in this season; his first with Toronto. That is, if JVR’s contract will even be subjected to this rule.

Mike Richards, however, did play three season with the Flyers as part of his 12 year contract. In those three seasons he made $5.4, $5.6, and $6.4 million dollars for a total of $17.4 million.

Richards’ cap hit is $5.75 million. Over three seasons that comes to $17.25 million in cap hit “dollars”. Per Elliotte’s explanation, if we subtract the $17.25 million in cap hit, from the $17.4 million in salary, we get $150,000.

That $150,000 is the total “cap benefit” the Flyers received during Richards’ time with the team. If Richards were to ever retire early, the Flyers would be penalized that $150,000 amount over however many years of the contract Richards did not fulfill.

Obviously, even if the Flyers had to take the full penalty in a single season, $150,000 is pretty much negligible. If Richards retired with multiple years remaining on his contract, that amount would be divided up over the remaining unused contract years.

So what was a very legitimate fear for many Flyers’ fans–the idea of the Richards and Carter contracts coming back to haunt the Flyers’ cap–turns out to be a non-issue.

  • Matthew

    This is so crazy and cant be allowed to stand. Even the new rules they put in place after the Kovalchuk contract only applied to contracts signed after those new rules were put in place. This cant be accurate, its insane. The owners should not allow the CBA to be ratified unless this is taken out of the CBA.

    And I heard somewhere that it wasn’t going to be in the CBA, but then the San Jose Sharks owners pushed for it because they have no frontloaded contracts on their team but all their rivals do, like the Kings, Blackhawks, Red Wings, and Canucks, and I dont know but this is what I heard, apparently there is something shady going on with the NHL and the Sharks, where the Sharks get a lot of favoritism and like get to pick some aspects of their schedule, which is why the schedule going into this season gave the Sharks two less back to back games than any other team.

    No other teams were separated by two back to back games in their schedules, everyone else was tightly bunched together, but then there was the Sharks with 2 fewer than anyone else, giving them a big advantage.

    Ive heard more than a few whispers that there may be something going on between San Jose’s owners and the NHL, and something so insane like this rule that so clearly helps the Sharks but hurts so many other teams, how could one owner wanting this, San Jose’s owner, overrule all the owners voting against it? Unless there really is some extreme favoritism and cheating going on.

    • http://www.flyersfaithful.com/ Kevin Christmann

      It is more than likely going to stand, unless for some reason the CBA doesn’t get ratified as is.

      While I thought the idea of the rule was absurd when it was first proposed a few months back, I actually find that the way it is executed makes a lot of sense. I really don’t have any issue with it.

      It does suck for teams that may have acquired a heavily front-loaded contract without realizing this would occur though.

      You seem to have strong feelings towards some sort of Sharks conspiracy?

  • http://twitter.com/Brave_Fellow BCoch

    if the penalty is significant for some teams/players, then I do see a way around this. For example, if Richard’s penalty to the Flyers was 2 million dollars (for the sake of argument), then the Flyers could trade back for him in his “retirement” year.

    Then they claim he is putting off retirement but suffering from a groin injury or post concussion syndrome or some other BS excuse. Drop Richards onto LTIR and thus they pay him for the remaining years and $$$ on his contract BUT do not get penalized or even have his contract count against the cap.

    I’ll call this getting Rathje’d.

    • http://www.flyersfaithful.com/ Kevin Christmann

      Yea LTIR is the one saving grace. “Proving” that injury is easier said than done though. For one, the player has to cooperate. There’s always the risk that the NHL will be very strict in evaluating it.

    • http://www.facebook.com/iamhouli Sean Houlihan

      Wouldn’t Richards have to agree to the trade if his NTC still applies at that time? Basically it being up to him if he wants to screw the Flyers.

  • http://www.facebook.com/iamhouli Sean Houlihan

    Thanks for this! This is awesome and clears up part of our boards chat yesterday…good work from one Flyers fan to another.

    • http://www.flyersfaithful.com/ Kevin Christmann

      Glad you found it helpful!

  • John

    How does this work with Danny Briere? According to Capgeek through the 2013 season his “cap benefit” will have amounted to $8mm. If he retires after this year, or renegotiates his deal (slated to be paid $3mm next year, $2mm the year after) will that come back to bite the Flyers?

    • http://www.flyersfaithful.com/ Kevin Christmann

      Well you can’t renegotiate contracts in the NHL.

      I also think that rather than retire, Briere would prefer to accept the compliance buyout in the summer so he would receive some money, rather than just retiring; if it were to ever come to that.

  • Pingback: Same Shit Different Day - Page 51

  • Pingback: Flyers Faithful: The Cap impacts and "recapture" risks of the Luongo rumor