The Cap Advantage Recapture Penalty: Real Life Examples

Yesterday I went over how the cap advantage recapture penalty (CARP) works. Today I will move away from the legalese of the CBA and focus on the CARP in action and potential.

To my knowledge, there are only two teams that currently have a CARP on their books. They are the New Jersey Devils and Los Angeles Kings. The Devils have had a $250,000 penalty since 2013-14 and will have it to the end of the 2024-25 season as a result of Ilya Kovalchuk’s “retirement.” The Kings are losing $1.32m in space starting this season and running through 2019-20 due to the early termination of Mike Richards’s contract. Many teams were able to rid themselves of potential CARP-inducing contracts through the use of compliance buyouts. Compliance buyouts were two penalty-free buyouts given to each team after the 2013 CBA was signed. A tracker of these buyouts can be found here.

Let’s look at the Kovalchuk contract in more detail. Below is a table summarizing the terms of his massive deal as well as the calculation of the cap advantage associated with his deal:

Season Salary Cap Hit Annual Cap Advantage Net Cap Advantage
 2010-11  $6.0m  $6.7m  -$0.7m  -$0.7m
 2011-12  $6.0m  $6.7m  -$0.7m  -$1.3m
 2012-13  $11.0m  $6.7m  $4.3m  $3.0m
 2013-14  $11.3m  $6.7m  $4.6m  $7.6m
 2014-15  $11.3m  $6.7m  $4.6m  $12.3m
 2015-16  $11.6m  $6.7m  $4.9m  $17.2m
 2016-17  $11.8m  $6.7m  $5.1m  $22.3m
 2017-18  $10.0m  $6.7m  $3.3m  $25.7m
 2018-19  $7.0m  $6.7m  $0.3m  $26.0m
 2019-20  $4.0m  $6.7m  -$2.7m  $23.3m
 2020-21  $1.0m  $6.7m  -$5.7m  $17.7m
 2021-22  $1.0m  $6.7m  -$5.7m  $12.0m
 2022-23  $1.0m  $6.7m -$5.7m  $6.3m
 2023-24  $3.0m  $6.7m -$3.7m  $2.7m
2024-25  $4.0m  $6.7m -$2.7m  $0.0m

Source: General Fanager

Kovalchuk retired just after the 2012-13 season, meaning that his contract had 12 years remaining and had accumulated $3.0m in cap advantage. As mentioned in the previous article, the CARP against his team is equal to the cap advantage spread out over the remainder of the contract. So here $3.0m / 12 years = $0.25m a year for 12 years.

This was actually a pretty good outcome for the Devils despite losing such a fantastic player. There would have been a lot of risk in keeping him on the team with that contract. Below is a table showing the potential CARPs in every year of the contract:

 Retire after Net Cap Advantage Contract Years Remaining Annual CARP
 2010-11  -$0.7m  14  $0.0m
 2011-12  -$1.3m  13  $0.0m
 2012-13  $3.0m  12  $0.3m
 2013-14  $7.6m  11  $0.7m
 2014-15  $12.3m  10  $1.2m
 2015-16  $17.2m  9  $1.9m
 2016-17  $22.3m  8  $2.8m
 2017-18  $25.7m  7  $3.7m
 2018-19  $26.0m  6  $4.3m
 2019-20  $23.3m  5  $4.7m
 2020-21  $17.7m  4  $4.4m
 2021-22  $12.0m  3  $4.0m
 2022-23  $6.3m  2 $3.2m
 2023-24  $2.7m  1 $2.7m
2024-25  $0.0m  0 n/a

Essentially, the point at which Kovalchuk left for the KHL was the last time that he could do so without putting a substantial strain on the Devils’s cap situation. Even delaying his departure a single year would have increased the CARP to just under $700,000 per year. It’s worth noting however that the Devils did still have two compliance buyouts at the time. They ultimately used them on Anton Volchenkov and Johan Hedburg shortly after Kovalchuk’s departure.

It’s worth mentioning that the Kovalchuk contract that the league rejected was by far the most cap circumventing contract we have seen in the NHL. While it certainly was not the first, it took it to the extreme. The rejected deal was a 17-year, $102m contract. While the cap hit was $6.0m per year, the salary ranged from $11.5m down to $0.6m. In fact, the final five years of the deal were at $550k, which was league minimum at the time. While other contracts were paying $1m or even $550k in a few of the final seasons, none did so for more than 4 years. Furthermore, the contract would have lasted until Kovalchuk was 44, which was further out than any other long-term deal for other players in the league. Lastly, the maximum net cap advantage on the deal was $35.0m, which at the time was more than double the next largest and is even today still larger than any other deal. So while it’s true that the league was allowing other cap-circumventing contracts to be inked, they put their foot down on what was the most egregious one.

Now it’s time to start looking at the league with a wide angle lens. Below is a table showing a large number of contracts across the league that are subject to the CARP in the case of early retirement or termination of the contract:

Player Contract Length Age in Last Year Contract Value (mil $) AAV (mil $) Max. Salary (mil $) Max. Cap Advantage (mil $) Max Possible CARP (mil $) Max Possible CARP Period
Weber, Shea 14 40 110.0 7.9 14.0 32.9 6.9 3 yrs
Parise, Zach 13 40 98.0 7.5 12.0 20.2 6.5 2 yrs
Suter, Ryan 13 40 98.0 7.5 12.0 20.2 6.5 2 yrs
Crosby, Sidney 12 37 104.4 8.7 12.0 17.1 5.7 3 yrs
Zetterberg, Henrik 12 40 73.0 6.1 7.8 12.9 5.1 2 yrs
Pronger, Chris * 7 42 34.6 4.9 7.6 9.7 4.4 2 yrs
Hossa, Marian 12 42 63.3 5.3 7.9 18.4 4.3 4 yrs
Luongo, Roberto * 12 43 64.0 5.3 10.0 14.3 4.3 2 yrs
Keith, Duncan 13 39 72.0 5.5 8.0 14.0 4.0 1 yr
Savard, Marc * 7 39 28.2 4.0 7.0 9.4 3.4 2 yrs
Carter, Jeff * 11 37 58.0 5.3 7.0 9.1 3.3 2 yrs
Quick, Jonathon 10 37 58.0 5.8 7.0 8.4 3.3 1 yr
Franzen, Johan 11 40 43.5 4.0 5.5 8.3 3.0 2 yrs
Kronall, Niklas 7 38 33.3 4.8 6.0 4.3 3.0 1 yr
Myers, Tyler * 7 29 38.5 5.5 12.0 7.0 2.5 1 yr
Chara, Zdeno 7 40 45.5 6.5 8.5 4.0 2.5 1 yr
Wisniewski, James * 6 32 33.0 5.5 7.0 3.5 2.5 1 yr
Garrison, Jason * 6 33 27.6 4.6 6.5 3.2 2.1 1 yr

Contract Length – full length of the signed contract, in years

Age in Last Year – age of the player in his final year of his contract (+/- 1)

Contract Value – the total value of the contract, in mil $

AAV – the average annual value of the contract, in mil $

Max. Salary – the largest salary in the single year of a player’s contract, in mil $

Max. Cap Advantage– the largest net cap benefit in a player’s contract, in mil $

Max Possible CARP – the largest CARP possible if the player retires with the team he signed the contract with, in mil $

Max Possible CARP Period – the longest period of time over which the maximum CARP could be incurred for a player’s contract, in mil $

* traded

A number of contracts that would made this list were bought out back in 2013 using compliance buyouts such as Brad Richards, Ilya Bryzgalov, and Vincent Lecavalier. In addition, many of the above players were traded during the course of their contracts. Tomorrow I will go over the case of Roberto Luongo and how this trade has created a very messy situation for the Vancouver Canucks. I will then talk a bit about how the potential CARP implications will effect the ability of teams to move players on the above list in the years to come.

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