1. Sports
Send to a Friend via Email

Your suggestion is on its way!

An email with a link to:

http://proicehockey.about.com/od/learnthegame/a/2013-Nhl-Salary-Cap-Trades-Contract-Buyouts-And-Escrow.htm

was emailed to:

Thanks for sharing About.com with others!

You can opt-out at any time. Please refer to our privacy policy for contact information.

The NHL Salary Cap: Trades, Contract Buyouts and Escrow

Further details on the NHL salary cap under the 2013 CBA.

By

Previous Page: Check Basics of the NHL Salary Cap as of 2013.

Player Trades:

  • When trading a player, a team has the option of retaining a portion of that player's contract, paying the salary and taking the salary cap hit for that portion. The remaining portion of the contract is charged to the player's new team.
  • The trading team can retain up to 50 percent of the departing player's salary and cap hit.
  • A team can carry no more than three "traded" contracts at one time.
  • The total paid to players who have been traded cannot exceed 15 percent of the team's salary cap.
  • A player can be traded with "retained salary" no more than twice over the life of a single contract.

2013-14 Compliance Buyouts:

  • To ease the transition to a lower salary cap in the early years of the CBA, teams can buy out up to two contracts without counting the cost of those buyouts against the salary cap. These "compliance" buyouts can be exercised in the summer of 2013 or the summer of 2014.
  • The cost of the buyouts will count against the players’ 50 percent share of HRR.
  • All contract buyouts beyond those two will be counted against the salary cap.

Contract Buyout Costs:

  • For players under the age of 26, a team can buy out the remaining value of the contract by paying the player one-third of the remaining contract value.
  • For players 26 or older, a contract buyout costs two-thirds of the remaining contract value.
  • Contract buyouts are charged against a team's salary cap as a percentage of the buyout value spread over twice the length of the remaining contract years.
  • A player bought out of his contract becomes an unrestricted free agent.

Player Escrow Payments:

  • Because the annual salary cap is based on an estimate of NHL revenue, a percentage of player salaries will be placed in an escrow account throughout the season.
  • When real NHL revenue is calculated at the end of the season, the escrow account is divided among players and owners to ensure that the players have received exactly 50 percent of the revenue total.
  • New for 2013: If the amount in the escrow account is insufficient to ensure a 50/50 revenue split, the difference will be made up from the players' 50 percent share for the following season.
  • New for 2013: The NHL Players' Association will have greater input in the setting of the escrow percentage every season.

Cheating on the Salary Cap:

  • "Hockey-related" revenue is defined in the CBA, and team revenue reports are audited.
  • A team hiding revenue is fined $1 million plus the amount misreported for the first offense, and $5 million plus double the amount misreported for further offenses.
  • Teams cannot circumvent the salary cap by paying players through other means - such as gifts, reimbursements on expenses, personal deals, money redirected through related corporate entities, separate contracts for marketing and promotion, etc.

No Renegotiations:

  • An NHL contract contract cannot be renegotiated at any point during the life of the contract.

©2014 About.com. All rights reserved.