The Cap impacts and “recapture” risks of the Luongo rumor

Before I even begin to get into any financials, I’d like to first point out that I do not personally think there is any merit to rumors involving Roberto Luongo getting traded to the Flyers. I don’t think it makes much sense at all. If Bryzgalov is a long term risk, so is Luongo.

With that said, there were some rumblings in the Twitter world from some respected people.

 

On Monday, I discussed the new “cap recapture” rule with respect to Richards and Carter. I referenced Elliotte Friedman’s article on the topic, in which he used Roberto Luongo as his example in illustrating the ramifications of the rule.

As one of the prime “back-diving” contracts of the old CBA, it’s fair to wonder what risk the Flyers would be taking on if they decided to trade for Luongo. Let’s take a deeper dive into what Friedman has provided regarding Luongo and “cap-recapture”.

Click image to enlarge in new window

This chart shows the Contract Year, Salary, and Cap hit of Luongo. Additionally, it shows the Total Recapture Penalty which is a sum of the difference between Luongo’s salary and his cap hit (beginning in 2012-2013 when the Flyers would,hypothetically, acquire him). It, naturally, grows larger with each year in which his salary is greater than his cap hit. It shows the Recapture Penalty/Year which indicates the Total Recapture Penalty divided by the remaining number of years on the contract. Lastly, it shows Luongo’s age at the conclusion of that season.

The red numbers indicate seasons in which Luongo’s salary is greater than his cap hit. These are season in which the Flyers would be accruing a recapture penalty, as they are benefiting from cap “savings”.

Green numbers indicate the opposite, years in which Luongo’s salary is less than his cap hit.

As you can see, the largest the per-year penalty ever gets would be after the 2018-2019 season, in which the Flyers would take a $2.111 million penalty for the next three seasons.

As it turns out, the “cap-recapture” risk is far less than I would have anticipated. In fact, over the remaining 10 years of the contract, Luongo actually makes less in salary than in his accumulated cap hit. $46.827 million in salary as compared to $53.33 million in accrued cap hit. Vancouver has already taken the brunt of the “recapture” risk in Years 1 and 2, when the salary to cap hit difference was the greatest. So the risk would really come down to when he would choose to retire.

That said, I’m not holding my breath. I just thought I’d throw some math at the situation.