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I think we got off easy: How the new CBA actually affects the Flyers' current and traded long-term contracts

Eric Hartline-US PRESSWIRE

EDIT: Some new information, via CapGeek:

It appears the "cap advantage recapture" penalties will not apply to teams who traded long-term contracts prior to the new CBA.

So the parts about Richards and Carter may not even be right. Oh well the math's all there if you want to see it.

***

Over the course of the last two months of the lockout, we heard a number of different possible rules about long-term and/or back-diving contracts and how they'd be affected/paid for in this new CBA. Travis wrote a couple of pieces about how it would affect the Flyers here and here, and with the new CBA in place more details have come out about it that seem to have changed things a little bit. Some things have changed slightly from that second post from Travis, so here's what I can tell about the three long-term contracts that will potentially affect the Flyers. (Let me know if there's something wrong/something that you interpreted differently here, because there's a decent chance of that.)

First, some explanations. For a reminder of what it would've been before, Pierre LeBrun has a refresher:

In the original formula, if a player like Roberto Luongo was traded and retired before the end of his deal, the Canucks (the team who signed him to the contract) would assume his remaining $5.33-million cap early hit in retirement.

Woulda sucked, right? Fortunately, it appears that's not how it actually ended up. Reading on in LeBrun's article:

The new rule in this tentative agreement is different. Now, for any contract in excess of six years, both teams involved in a trade on a contract like Luongo’s would be penalized if he retired before the end of his deal.

To wit: let’s say the Canucks trade Luongo soon. Luongo has played two years of his 12-year contract, the Canucks paying him $16.716 million in salary but only absorbing a $5.33 million cap hit each year. That’s a cap savings of $6.056 million over two years so far for Vancouver. Under this new rule, should the Canucks trade him now and he retires with three years left on his contract, Vancouver would be charged that $6.056 million in cap savings over the final three years left on his deal from 2019 to 2022. However, let’s say for argument’s sake Luongo gets traded to Toronto, the Maple Leafs also would be subject to cap penalties if Luongo retires before the end of his deal.

To wit, part 2: If Luongo were to play the next seven years of his deal in Toronto before retiring, the Leafs would be paying him $43.666 million in salary but only counting $37.31 million against the cap over those seven years, a cap savings of $6.356 million. So if Luongo retires with three years left on his deal (because his salary falls to $1.618 million in the 10th year and then $1 million in the last two years of the deal), the Leafs would get charged that $6.356 million on their cap spread evenly over the remaining three years of his deal.

And obviously, if players under these back-diving deals are never traded, but retire before the end of their deals (Marian Hossa in Chicago), their current teams get charged the cap savings spread evenly over the remaining years of the deal.

That's a long explanation. (Elliotte Friedman has a basically identical one at that link.) So here's, from what I can gather, the TLDR version: if you trade a player with more than six years left on his contract after having gained a cap benefit based on his contract, and he retires, that cap benefit will be re-paid on the cap over the remaining years of that player's contract post-retirement. The same is also true if you receive a player with such a contract via trade and gain a cap benefit from his retirement.

There are three relevant Flyers contracts that I can think of here, and all three of them are different scenarios. I'll try to go through them now.

Ilya Bryzgalov:

Now, I have no idea if Bryz is going to retire before the end of his contract. And based on the new buyout possibilities, we don't even know if he'll be around for the length of it. But he's a good, easy example here, so let's just continue as if he's going to be on the team for a bit longer but not eight more years. He'll be 40 when his contract ends, so it's not ridiculous to suggest he'll retire before that happens. A full breakdown of Bryz's contract can be found here.

As you can see from there, the actual monetary value drops from $5.5 million to $2.25 million in the eighth year of the deal, so it's realistic to think that the eighth year (2018-19) was that year that was the wink-wink retirement year that Holmgren/Snider and Bryz and his agent agreed upon when they drew up the deal with the backdiving years. Let's assume that's actually the case.

Were Ilya Bryzgalov to retire before the 2018-19 season, the Flyers will have paid him $47.5 million. However, he will only have counted against the Flyers' cap for about $39.667 million. That's a difference of $7.833 million. That difference will be divided over the final two years of his signed contract, meaning that in 2018-19 and 2019-20, the Flyers will be on the hook for $3.917 million against the cap.

Similarly, if he retired the season before (leaving three years on his contract), the Flyers will have paid him $42 million while having him cost $34 million against the cap, meaning they'd be on the hook for $2.67 million against the cap through the 2017-18, 2018-19, and 2019-20 seasons.

That one was simple. Let's move to the fun (and ultimately relieving) ones now.

Mike Richards:

This, at first glance, looked like the one that the Flyers were actually going to have to monitor despite having little control over it. But it turns out it may not make more than a negligible difference.

The Flyers traded Mike Richards on, as most of us probably remember, June 23, 2011. By that point, he had served three years of the 12-year deal the Flyers signed him to after his ELC ended. In those three years, he had made a total of $17.4 million while he had counted against the cap for $17.25 million for the Flyers. That difference? A mere $150,000. Yes, the way that contract was set up, Richie wasn't actually making more than his cap hit until the third year of it. So what this appears to mean is that $150,000 would be split over the final however many seasons would have been on Richards' contract if he retires.

In fact, it's actually the Kings who will take the majority of the hit if Richie retires before his contract ends (hardly a sure bet, by the way; he'll be 34 when its last year begins) but even they probably won't feel that much of a hit. The main cap-circumventing years are the next 4-5 seasons, before the contract dives under its cap value and dips to $3 million in its last two years. If Richards hypothetically retired before the 2018-19 season, with two years left on the deal (again, he'd be 33, so I'm not counting on it), the Kings would have paid him $45.6 million while having him count against the cap for $40.25 million. That's a difference of $5.35 million. Meaning that, in each of those two years, the Kings would have to pay $2.675 million against the cap. The Flyers? $75,000. Or, as Ed Snider calls it, a trip to the bathroom. And, in cap terms, that's about 14% of the current minimum salary for a player.

So that actually isn't too bad. Pretty much meaningless, actually.

Jeff Carter:

But this one. Oh, this one was going to be the worst. The Flyers were gonna get caught with cap charges for a guy who never even played a single game under the contract he signed. And with a contract that wasn't going to end until Carter was 37, this was one that actually had a decent chance of a retirement before it had ended.

Guess what? We might have dodged the bullet on this one entirely.

Based on the descriptions given by Lebrun and Friedman, it looks like cap penalties are only going to be enforced on teams who actually gained some sort of cap benefit from these contracts. Here's how that would look. (Some guesswork is involved in this next part.) Columbus had Carter on contract, according to Capgeek, for 140 out of the 185 days of last season. In that season, Carter was paid $6 million while counting against the cap for $5.272 million. That's a difference of $727,273 over the course of a season; for the timespan that he was in Columbus, that's a difference of $550,369, and for the 45 days he was in LA it's a difference of $176,904. So if he retires with, say, three years left on his deal (where his backdiving years come in), he'll have made $51 million on this contract compared to the $42.182 million he'll have counted for against the cap. That's a difference of $8.818 million. $550,369 of that will be paid for by the Blue Jackets over those three years, for an annual cap hit of $183,456, while the remaining $8.268 million will be paid for by the Kings, for an annual cap hit of $2.756 million.

The best part of that scenario, as well as any possible scenario involving Carter's retiring before his contract ends? It doesn't even mention the Flyers once.

Yes, if I'm understanding this correctly, the Flyers are pretty much off the hook for the Carter contract because they never actually reaped any of its cap-circumventing benefits.

***

Finally, if I'm to believe that "in excess of six years" means "of seven years or more", this means that they won't have to worry at all about the recent six-year extensions of Wayne Simmonds (who almost certainly won't retire before his extension ends, but what do I know?) or Scott Hartnell (who could feasibly retire before the end of his contract, since he'll be 36 when its final year begins) coming back to bite them should those guys retire before their contracts end. Similarly, James van Riemsdyk's recently-traded contract wouldn't matter since it was only six years, but even so, the Flyers won't have to worry about it since they traded him before he played a minute on that contract.

Now, I could be misinterpreting some or even all of what I've read, but if this is all correct as I think it is, it's a huge, huge break for the Flyers. As it appeared on the earlier iterations of potential CBAs, the Flyers were pretty much at the mercy of other teams on some of their long contracts, potentially facing the entire cap charges of those players if they retired on other teams. Now? It looks like the only one that may end up biting them a bit down the road is the Bryzgalov contract, which, at the very least, is one they have some control over.

In any event, here's to hopefully not having to worry about this crap again until some brave GM finds a new loophole in the new CBA and everyone exploits it.

This item was written by a member of this community and is not necessarily endorsed by <em>Broad Street Hockey</em>.

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