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.