VANCOUVER — Officially, it’s called the “cap-recapture system,” but it has already been dubbed “The Luongo Rule.”
It’s one of the new wrinkles of the collective bargaining agreement hammered out between the NHL and its players and serves to punish not only teams that have signed players to lengthy back-diving or front-loaded deals, but also those teams who acquire a player with such a contract via trade.
And it doesn’t figure to make it any easier for the Canucks to deal goalie Roberto Luongo, who has 10 years remaining on the 12-year contract he signed with Vancouver.
Here’s how it works and keep in mind the salary cap penalties take effect only if a player retires before the end of his contract.
Let’s assume — because nearly everyone is — that Luongo gets traded before this season starts to the Toronto Maple Leafs. The Canucks would be responsible for the cap benefit they enjoyed during the first two years of Luongo’s deal.
Luongo’s salary cap hit for the entire term of his contract is $5.33 million, but the Canucks paid him $10 million in 2010-11 and $6.716 million in 2011-12 for a total of $16,716,000. Luongo’s salary cap hit for those two years was just $10.66 million. So the Canucks’ cap benefit is the difference, or $6,049,334.
Now let’s say Luongo plays seven years in Toronto and then retires, foregoing the final three years of his deal when he was scheduled to earn a total of $3.618 million or annual salaries of $1.618 million, $1 million and $1 million.
Once Luongo takes his early retirement — and he’d be 40 years old after completing the ninth year of his deal — the Canucks must pay the piper. That $6,049,334 cap benefit they enjoyed in the first two years of his deal is now divided by the number of years Luongo had left on his deal before retiring. So in this example you’d divide $6,049,334 by three and come up with $2,016,444. That’s the salary cap hit the Canucks would be forced to take for each of the 2019-20, 2020-21 and 2021-22 seasons.
Now general manager Mike Gillis and assistant GM and resident capologist Laurence Gilman figure to be long gone by then and that cap hit will be someone else’s problem. But a bigger concern the Canucks must have about this new rule is the fact the Maple Leafs also get hit, which could complicate any deal.
Under the previously outlined scenario, the Maple Leafs would pay Luongo a total salary of $43,666,000 for his seven years of service. But their cap hit for those seven years would only be $37,333,331. The Leafs’ cap benefit when Luongo retires in 2019 would be $6,332,669. They’d divide that by three and would face a cap hit of $2,110,890 in the 2019-20, 2020-21 and 2021-22 seasons.
The cap-recapture system, which applies to contracts of six years or longer, is not the only new wrinkle that could have an impact on a potential Luongo trade.
The NHL is about to begin allowing teams to retain salary in trades, something Toronto general manager Brian Burke has been lobbying hard for in recent years.
Teams will be able to absorb up to 50 per cent of the salary or cap hit of a player they trade away, but can have only a maximum of three such contracts on their books for no more than 15 per cent of the upper salary camp limit.
What it means is that teams interested in Luongo could ask the Canucks to retain part of his salary.
It seems almost a certainty that Burke will do just that once teams can begin talking trades after the CBA is ratified later this week.
bziemer@vancouversun.com
