Question: I’ve heard that contracts for players age 35 and over are handled differently. What does this mean?
If a player signs a multi-year contract at the age of 35 (calculated as of June 30 prior to the year the contract takes effect, not as of the signing date), all salary and bonuses continue to count against the team salary cap, regardless of where and whether or not that player is playing.
The only exception to this rule is if a player is playing in the minor leagues after the first year of his contract. In this case, the team receives $100,000 relief off the cap hit. All other salary and bonuses still count.
*Update July 2015: There has been significant confusion and debate over the impact of buyouts of 35+ players. Michael Russo confirmed with NHL Deputy Commissioner Bill Daly that buyouts are not an exception to the above rule. If a player’s contract is bought out, all salary and bonuses would continue to count against the team salary cap. We are now adopting this interpretation until further evidence indicates otherwise.
The 35+ rule prevents teams from manipulating extra cap space by signing veteran players to front-loaded, multi-year contracts, for example. If this rule were not in effect, a player might receive an annual salary that’s greater than his cap hit to the team in early years of the contract and then retire before salary drops below the cap hit in later years.
Real Example: The Philadelphia Flyers signed Chris Pronger to a seven-year contract extension on July 7, 2009. The annual salary breakdown is as follows:
|Year 1||Year 2||Year 3||Year 4||Year 5||Year 6||Year 7||AAV|
At first glance, the front-loaded nature of this deal meant Pronger could get a significant majority of his money in the early years of the contract while the Flyers carried a smaller cap hit on their books. Pronger could then retire in Year 6 at age 40 and both sides would walk away happy.
This was not the case though. Pronger was 34 at the time (birthday October 10) of signing and the extension didn’t take effect until the 2010-11 season. According to this rule, Pronger would be 35 on June 30, 2010 and therefore his full cap hit would still apply even in retirement.
It seems as if the Flyers may have misinterpreted this rule. Depending on your perspective, the Flyers were fortunate/unfortunate that Pronger suffered serious concussion and eye injuries in 2011 and will never play again.
Instead of retiring and forfeiting the salary he’s owed under the remainder of the contract (and more importantly, leaving the Flyers with a permanent cap hit on their books), Pronger will be on Injured Reserve for the rest of his career. Philadelphia can utilize the long-term injury relief exception (LTIR) on Pronger and therefore receive relief from all or most of his salary.
Pronger took a position with the Department of Player Safety in 2014, meaning he is now receiving a paycheck from the Flyers and the NHL.[Update June 27, 2015: Pronger was traded to the Arizona Coyotes. The Coyotes will not be operating at the salary cap ceiling for the foreseeable future, but they are instead utilizing Pronger’s $4.9 cap hit to reach the salary cap floor. This is ideal for Arizona as Pronger only receives an actual salary of $575k for each of the final two years of his contract.]
CBA Reference: 50.5 (d-i-B-5) Pages 263-264
Note: Explanation and legal interpretation of the above is solely the opinion of the author and may not reflect all scenarios or actual CBA interpretation by NHL/NHLPA representatives. If you have a suggestion for improving this interpretation, please reach out via our Contact page.