Friday, May 16, 2008


Performance Bonuses

A few days ago, In Lou We Trust reader Don had a question for me:
with regard to the cap, for players who are 35 or older, if/when those players have a base salary with incentives such as i believe that shanahan had with the rangers, if the base salary were, say 2.5M and had another 2.5 in incentives, how much counts against the cap when the contract is signed?...and if the incentives were met in their entirely would the cap hit go up?...and in which year,the season just played or the following season?...and if were in the year that was just played, what would happen if the incentives brought the team over the cap?...i know it is a tricky issue, so much so that lou, who was responsible for its acceptance and implementation forgot about the 35 year old an up multi-year"wherever and whether he plays" situation
Well, according to NHLSCAP's salary cap FAQ, the short answer is that performance bonuses do count against the salary cap. However, they only count for one season and while the contract bargaining agreement allows for up to a 7.5% increase in the cap for bonuses, that amount is reduced from the cap for that team in the next season. So any bonuses for Brendan Shanahan counts and his $2.5 million cap hit according to NHLSCAP reflects that. I do not know what his bonuses are, so I don't know how much of an extra hit will that cost the Rangers - assuming they did go over with the bonuses to any players.

To be honest, I don't think Lou has forgotten about this clause. Should Lou go after a free agent like Mats Sundin - someone who would be a #1 center on the team, who is over 35, and is a viable target for the Devils - you can be sure this would into play when it comes to making him an offer. Don't scoff at me. He may be getting up there, but he still was a point per game player (78 in 74) and led a bad Toronto team in scoring by quite a bit (22 points more than Nik Antropov). With 32 goals and 46 assists, Sundin's still got "it." His salary for Toronto last season was $5.5 million. The Devils could get him for a similar price; but with performance bonuses, he could be had for a lower base salary. If he hits his bonuses, he's clearly benefiting the team. If not, the Devils save a little money. It's a good tactic, from a management standpoint, and you can expect Lou to utilize it should he make an offer to Sundin or someone like Sundin.

Thank for your questions, Don! And for everyone else, if you e-mail me a question, I may just answer it here.

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john, thank you very much for taking the time to answer my question, i appreceate it very much!
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