If there's one thing that's painfully obvious, its that very few people understand how the salary cap works. Posts on this site, articles from beat writers, even NHL general managers don't understand the CBA.
Here, I'm going to address the flavor of the quarter Flyers' CBA debacle. 2009 Q1's FotQ was not having enough cap space to call up a defenseman and being forced to use Amateur Tryouts. 2009 Q2's FotQ was the Chris Pronger debacle. 2009 Q3 brings us to JVR's contract.
This post is going to be updated a number of times. Upon updating, I'll edit the title. Right now, it says "Initial Post", with the first update it will read "Update 1". I think you can figure out how it will work from there....
I've spent some time the last couple days reading the CBA. You, too, can be driven to raging frustration and boredom by downloading the PDF. Just to add to the difficulties, the NHLPA has locked that document so that you can't copy and paste from it.
The reason for this post is that I am in the midst of a back and forth conversation with a person in the media who has great access and has promised to look into all of this for me. I'm not going to name that person, but I'll tell you that the person is working on getting all the information we lack and definitive answers to all these questions.
In association, I have been feeding the person with data and information. What follows is essentially the conversation we are having. We don't know the answers to these questions. I am posting up what we put together, and hoping that you guys will also be of assistance in figuring this all out by researching and analyzing with us.
II. Eligibility for Performance Bonuses
Only players over 35 years of age (Type A) and players on Entry-Level contracts (Type B) are eligible for performance bonuses in their contracts. Performance bonuses count against a salary cap for the team. One of the variables we have to determine is which salary cap they apply to.
III. Calculating Performance Bonuses
How the cap calculations of performance bonuses actually function is complicated.
Let's set our scene in October of 200x. At this time, NHL TEAM has a number of contracts for players which include performance bonuses for the upcoming season. The total potential value of those bonuses count against the team's salary cap right now.
However, in consideration of the fact that not every performance bonus will be met, the CBA includes a "Bonus Cushion". This cushion amount is 7.5% of the year's salary Upper Limit.
Why? Well, for instance, let's say that both Chris Pronger and Kimmo Timmonen have a bonus clause in their contract for winning the Norris Trophy. This obviously can't happen, yet the Flyers would have to drag both cap hits all season because the award isn't handed out until July. With the bonus cushion, you can offer bonuses that conflict and not be penalized under the salary cap for it. You can also award highly unlikely bonuses (leading the league in goals scored, playing 82 games, etc.) and not be forced to eat that cap space all season. Keep in mind, this is only to the extent of 7.5% of the current salary cap, so you can't go crazy with the bonuses.
So, back to our NHL TEAM. How much room do they have under the cap for performance bonuses?
(Salary Cap Upper Limit) - (Salary Against the Cap) + (Salary Cap Upper Limit x 7.5%) = Room for Performance Bonuses
As soon as a performance bonus becomes unattainable, it no longer counts against the team's cap. (For instance, a clause for playing 82 games is given to a player who has the flu and is scratched opening night. That bonus no longer counts against the team's cap. But a bonus for playing 50 games would be counted against the cap until the player missed his 33rd game of the season.)
C. End of Season
Okay, season over, awards show in Vegas over, now NHL TEAM has to pay out those performance bonuses. Makes perfect sense. Here's a check to our third line center for being better than +15 this year... here's a check to last year's 1st round draft pick for playing more than 40 games on the NHL roster...
What does this mean for the salary cap? Page 216 of the CBA, Section 50.5(h)(iii) reads:
At the conclusion of each League Year, the amount of Performance Bonuses actually earned... shall be determined and shall be charged against the Club's Upper Limit and Averaged Club Salary for such League Year.
So we go back and count all these bonuses achieved last season against last season's cap to make sure that, now that we know which bonuses were in fact achieved, our NHL TEAM didn't actually exceed last year's Upper Limit. Because we certainly can't be paying out salary to players and have it disappear into thin air; it has to count against a salary cap or else there's a wide open door for circumvention.
NHL TEAM never thought that much bonus money would have to be paid out and now that its retroactively applied to our salary cap, it turns out they were over the Upper Limit. Do they have to give the Stanley Cup back?
(continued from above section)
To the extent a Club's Averaged Club Salary exceeds its Upper Limit as a result of [bonuses] then the Club's Upper Limit for the Next League Year shall be reduced by an amount equal to such excess.
Looks like NHL TEAM needs to dump some salary this offseason.
The bonus cushion serves as both a protection from being screwed over by carrying unattained performance bonuses and a cap of 7.5% of the Upper Limit in order to keep this loophole under control.
IV. JVR's Contract
So, to the topic at hand: What is JVR's contract?
No one knows. His contract is for a cap hit of $875,000. He then has Type B Performance Bonuses which can equal as much as $800,000 more. But no one knows what those bonuses actually are. My person with access is working on identifying those bonuses.
JVR's likelihood of being a Flyer hinges on what those performance bonuses are.
If $750k are for winning the Conn Smythe, Rocket Richard, or Selke, then those unattainable bonuses can slide into the bonus cushion, won't be retroactively applied, and JVR's cap hit will be under $900k this season. Still expensive for a kid with no high level hockey experience, but at least somewhat possible to fit under the cap.
However, if JVR can attain all of his performance bonuses by playing 40 games and scoring ten goals, that $800k is going to be applied retroactively after the season. Which means the Flyers would have to choose between two terrible options to keep JVR on the team: either play the season with no reserves and no cap space or push money against next season's cap turning JVR in 2010 into a $2.4m cap hit (2009 PBs, 2010 Base Salary, 2010 PBs).
Sort of.... As I said, I'll update this post when I get information about JVR's contract. There is a mass impression, including by the person I've been talking to, that "But whatever they are, they really don't matter as performance bonuses do not count against the cap." The language I posted above seems to directly contradict this theory, but I certainly didn't read all 300+ pages of the CBA.
The idea here is to for this post to be a conversation to try to figure this all out together. I'll update the post as more information is gathered.
Update: Color me extremely disappointed. This is the bullshit that got published... I've emailed him and explained that I could do that in twelve seconds on capgeek.com. It apparently took him four days. He has had no comment on what JVRs bonus money is.