Tuesday, April 17, 2007

Potential Cap Effects of Buying Out Joffrey Lupul

I want to preface this post by saying that I don't endorse buying Lupul's contract out, but if anyone is interested to see how that would play out, I think this is how it would go from consulting the CBA. I found what I think are three sections of significance, and have listed them at the end of this piece, with brief comments describing what is in each of the sections.

It was interesting to discover that, because of Lupul's age, a buyout of his contract would only require that Lupul be paid 1/3 of the amount he is owed. Any player under age 26 that sees their contract bought out only is due 1/3 of the contract, while those 26 and older are due 2/3 of the remainder of their contract.

Additionally, any buyout is spread out over double the number of years remaining on the contract. In the case of Lupul that means he would be owed 1/3 of the remainder of his contract, roughly 1.81 mil, or 453K for each of the next 4 seasons.

However the cap ramifications are not as simple. Since EDM has been charged ~800K more to their cap than they have actually spent EDM is entitled to receive this cap room back over what would have been the remaining 2 years left on the deal.

I worked thru the cap calculations as per the CBA, and here would be the cap hits, each year, as a result of a Lupul buy out:

2007/8: 230K
2008/9: -135K (the Oilers would actually receive a small cap credit in the 08/9 season)
2009/10: 453K (this number, for year's 3 and 4 of the buy out, is exactly equal to money spent on Lupul's buy out)
2010/11: 453K

To compare, here are the cash payments that a Lupul buyout would entail:

2007/8: 453K
2008/9: 453K
2009/10: 453K
2010/11: 453K

Sections of the CBA used to calculate a Lupul buy out:

Exhibit 1.13.(d).(i) - this exhibit is the Standard Player's Contract (known as SPC, throughout the CBA), that specific section mentions the 1/3, 2/3 rules.

Article 50.9.(1) - this section says that a player and team cannot come to any other buy out agreement, it must be as set out in the CBA. It also explains how the player would be paid his buy out money.

Article 50.5.(d).(iii) - explains, and gives examples, of how to calculate the buy out amounts and its cap effects.


Blogger godot10 said...

You don't have to buy Lupul out. He is still tradeable, it one doesn't ask for too much back.

4/17/2007 11:38 pm  
Blogger Lowetide said...

I suspect he'll ask for a trade, and Lowe will send him away on draft day. A good guess might be a team like Chicago.

4/18/2007 7:29 am  
Blogger speeds said...

Godot10: That would be my impression as well, I posted this in case anyone was interested in how the process worked, and also because I thought it interesting that EDM would only have to pay 1/3 of his remaining cocntract as a buy out because of Lupul's age.

4/18/2007 9:27 am  
Blogger Black Dog said...

That is interesting speeds, the 1/3 part I mean.

LT, I think you may be right. MacT has no use for Lupul and calling him a failure twice in his last presser would seem to me to shut the door on that relationship.

I mean, he was on Raffi too but he sure went out of his way to build up Torres in his comments - skills that 95% of NHLers would love to have, he said, iirc?

4/18/2007 9:56 am  
Blogger Earl Sleek said...

Not that I think you guys are wrong here, but is that a good move, call someone out publicly as a failure before trying to trade him, then building up another guy publicly before trying to re-sign him?

4/18/2007 6:26 pm  
Blogger Black Dog said...

Well, earl, you goddamned smartass with your irrefutable logic :)

Actually there have been a few instances where there has been a disconnect between what Lowe has said and what MacTavish has said.

In Torres' case MacT built him up but very much in a "this guy has all the potential in the world but has to realize it" so they may use those words in contract talks but with ~ 15 goals Raffi doesn't have the leverage he would have if he had scored twice that.

As for Lupul, well he was stating the obvious. Any return for Lupul in a trade would be pretty negligible but guys have bounced back from bad years before. I can think of Teemu Selanne as an example, no?

4/19/2007 6:46 am  

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