This article is specific to the 2005-2012 NHL seasons. Check this article for an update on how the cap works as of 2013.
- When a team trades for a player, it assumes all salary and salary cap obligations. The player's old team cannot "pick up" a portion of the contract as part of the deal.
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 the 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.
- For players under the age of 26, a buyout costs the team one-third of remaining contract value.
- For players 26 or older, a buyout costs two-thirds of remaining contract value.
- On a buyout, the team takes a cap hit for a percentage of the buyout value (according to a very complex formula) spread over twice the length of the remaining contract years.
- Performance bonuses can be earned by the following players only:
- players on entry-level contracts.
- veteran players (400 or more games) signing one-year contracts after returning from long-term injuries (100 or more days on injured reserve in their recent year).
- players who sign a one-year contract after the age of 35.
- A team can exceed the cap by 7.5% to pay bonuses, but its salary cap for the following season will be reduced by the excessive amount.
- A contract cannot be renegotiated at any point during the life of the contract.
- To ensure the correct revenue split, a percentage of player salaries could be placed in escrow. When total NHL revenues are determined at the end of the season, the escrow account is divided among players and owners to ensure that the target has been met.