L K
Active member
lc9 said:
It's a way to recover the cap savings early in a deal that had no real intention of being played later.
If you sign a 8 year deal for 37 million dollars but frame the contract like this:
10 million, 10 million, 7 million 5 million 2 million, 1 million, 1 million, 1 million your cap hit is 4.625M
In year 1 you make 10 million vs. a 4.625M cap hit so there is a "cap savings" of 5.375 million. In year 2 you get the same, year three you save 2.375 million. Over the first three years you have "saved" almost 13 million in real dollars relative to cap hit. The average works out if the player plays the full 7 years but if a guy retires with 1-3 years left on a deal like this you didn't "pay the price" for averaging out the contract. So the league put the recapture penalty in place.
If you retire after 3 years on this deal. You would have saved 13 million in cap recapture money. That cap recapture money then gets averaged over the life of the deal. So if a player retires with 4 years left and a 13 million cap recapture penalty they would have a cap hit of 3.25M/year.
In the case of Luongo his net cap savings in Vancouver was 8.5M. If they held on to him for the entirely of his contract that number would keep coming down over time to a negligible amount. Because they traded him they never get the benefit of those declining years so they always benefited by the 8.5M. If Luongo retired with a year left on his deal, Vancouver has to eat that whole 8.5M. If he retired with 2 years left on his deal they would have a 4.25M hit each year.
