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The NHL Salary Cap Explained

Basics of the NHL Salary Cap as of the 2013 CBA.

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The NHL Salary Cap Explained
Kevork Djansezian/Stringer/Getty Images Sport/Getty Images

Check this article to learn how the salary cap operated between 2005 and 2012.

In plain language - as plain as possible - here's how the NHL salary cap works as of the collective agreement signed in 2013.

Also noted is any circumstance where the rules differ from the cap under the previous collective agreement (2005-2012).

Current NHL Salary Cap:

  • The NHL salary cap is set at $70.2 million for 2012-13,, pro-rated for a 48-game season. This is what the 2012-13 cap had been set at under the CBA, which expired in September. The minimum team payroll (aka the "floor") will be $44 million.
  • The 2013-14 salary cap is $64.3 million, while the floor remains at $44 million. This is identical to the salary cap in 2011-12.
  • For the remaining years of the CBA, the salary cap cannot fall below $64.3 million.
  • As of 2014-15, the salary cap will be set every year according to projected NHL revenues for the coming season, based on a 50/50 revenue split between players and teams.

The Salary Range:

  • As of 2014-15, the formula for calculating the cap and floor will be the same as in the previous collective agreement:
    - After estimating NHL revenue for the coming season, the league calculates the "midpoint" of the projected salary range.
    - The salary cap is set at 15 percent above the midpoint. The salary floor is 15 percent below the midpoint.
    - The range between salary cap and floor cannot fall below $16 million or rise above $28 million.

The Players' Share:

  • The salary cap is set by assigning a percentage of all "hockey-related" revenue (HRR) to player salaries. The definition of hockey-related revenue remains unchanged form the 2005-2012 collective agreement.
  • For the life of this CBA, the players will receive 50 percent of HRR.
  • During the 2005-2012 CBA, the players' share escalated from 54 percent to 57 percent of total revenues.

Defining a Player's "Cap Hit":

  • The "cap hit" is how much an individual player counts against his team's salary cap in one season.
  • On a multi-year deal, the cap hit is based on average annual value of the contract, not the actual salary paid each season.
  • For example, a player signs a three-year contract with the following annual salaries:
    - Year One: $3 million
    - Year Two: $3.6 million
    - Year Three: $3.3 million
    His salary cap hit is $3.3 million per year for three years ($9.9 million divided by three).
  • New for 2013: Salary in each year of a contract cannot vary by more than 35 percent from any other year. Also, salary in any year of the contract cannot be less than 50 per cent of the highest year.

Counting the Cap:

  • Team salary expenditures are calculated on a daily basis from the first day to the final day of the NHL regular season.
  • A team is in compliance if it has not already exceeded the cap for the season, and if it could carry its current roster without exceeding the cap at the end of the season.
  • Counted against the cap:
    - Players on the active roster or injured reserve.
    - Players who have left the team on a contract buyout, according to a formula that charges a percentage of the buyout against the cap.
    - New for 2013: Above a minimum threshold, salary paid to NHL players who have been assigned to play in another professional league (such as the American Hockey League or a league in Europe) will count against the cap.
  • Not counted against the cap:
    : - Junior-aged players who are returned to junior hockey after signing an NHL contract.
    - Players on the long-term injured list. (See "Long Term Injuries" below.)
Maximum Salaries:
  • A player's annual salary cannot exceed 20 percent of the salary cap, based on the cap as it stands in the year the contract is signed.
  • Terms and salaries remain in place for the life of the contract. The salary cannot decrease if the cap drops, nor can a contract trigger a salary increase if the cap goes up.

Entry-Level Salaries:

  • The limits on "entry-level" salaries remain unchanged from the previous collective agreement.
  • The the maximum entry-level salary remains at $925,000.
  • Signing bonuses are capped at 10 percent of the player's salary.

The "35-and-Older" Clause:

  • When a player aged 35 or older signs a multi-year contract, his average salary is counted against the team's salary cap during every year of the contract, even if the player retires before the contract is up.

Long-Term Injuries:

  • A player expected to miss at least 10 games and 24 days due to injury can be listed as a long-term injury (LTI).
  • An LTI can be covered by replacement players, as long as the replacement salaries do not exceed the salary of the injured player.
  • If the replacement salaries would push a team over the salary cap, the team is allowed cap relief, but only for the portion of the salary that exceeds the cap.
  • When the injured player returns, the team must immediately comply with the normal terms of the salary cap.

Next page: Trades, bonuses, and buyouts under the cap.

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