Cap Recapture

[ionthesparrow]

So, I keep hearing about “cap recapture” – which is a way to discourage teams from signing players to the sort of ridiculous, long-term, back-diving contracts that were starting to appear under the old CBA. Capgeek has a nice calculator for determining how much a player will cost your team if has one of these contracts and retires, but I found it a little opaque. So I crunched some numbers to get a better idea of how recapture actually works. (the details, by the way, can be found in section 50.5 of the new CBA).

Let’s take Mike Richards contract for an example. Not that I’m biased or anything.

In 2007, in the midst of a career best year, and already wearing the ‘A’, Richards signed a 12-year contract with the Philadelphia Flyers for an epic shit ton of money. The contract ran from the 08/09 season until the 19/20 season (at which point he would be 35) and paid him this much each year:

Not bad, eh? Number yanked from CapGeek, notice they go up in the middle of the contract, and down towards the end. I guess that means this contract is not technically “front-loaded” Sean McIndoe over at Grantland calls it “middle-loaded” but, whatever. It does dive a bit towards the end.

If you add all that salary up, you get $69,000,000 – which buys a lot of boats, lake houses, and beer. If you divide 69mill by 12 (the length of the contract in years) you get $5,750,000 – the AAV or cap hit. Which is still pretty steep, but not nearly as steep as if those last three years weren’t there.

Now, if you take the amount Richards was paid each year and subtract the cap hit, you get the cap benefit for the team, and since in the summer of 2011, Richards was traded to the LA Kings, that contract (and cap benefit) is now their problem:

You’ll notice in the first two years and the last four years of the contract, the cap hit actually exceeds the salary. It’s only in the middle 6 years of the contract that the team gets any benefit of the reduced cap hit (ONLY the middle six, JFC).

If Richards were to retire this summer, meaning the 2012-2013 season was the last he played, we would calculate the cap recapture by summing benefit his team received for each year he played for them:

Philadelphia Flyers Total Benefit = 650,000 + (-150,000) + (-350,000) = $150,000

LA Kings Total Benefit = 850,000 + 2,650,000 = $3,500,000

Now, technically, Philly traded Richards before the new CBA kicked in, so they’re off the hook:

Philadelphia Flyers Total Benefit = $150,000 + LOOPHOLE = $0

Nice. The Kings, on the other hand, have to count that benefit against their cap. The sum benefit (3.5mill) is divided by the number of years remaining on the contract (7):

$3,500,000 / 7 years = $500,000

Which means they have to count $500K off their cap from 2013-2014 until 2019-2020. If instead, Mike Richards retires in any of the other years remaining on his contract (without being traded (again)) you get a breakdown that looks like this:

In conclusion, please don’t retire* Mike Richards.

 

 

Did I mess up? Is my math off? Let me know!

 

 

* Or defect. Defecting counts too. (but not dying)