How Cap Recapture could wreak havoc on PK Subban for Shea Weber deal

Salary cap recapture was implemented to deal with certain contracts being frontloaded, with the assumption that the player would retire with a few years left on the deal, with the player gaining more money than the AAV. Ilya Kovalchuk, Marc Savard, Chris Pronger, Marian Hossa, Henrik Zetterberg, Mike Richards, and Roberto Luongo are among the number of high profile players to have signed these now illegal deals.

Why would players sign these deals? Why would teams? Those extra years on the end that paid the player 1 million, for example, help artificially lower the AAV of contracts for teams, and for the player it allows them to get their money sooner. The NHL allowed these contracts to go on for a little while, but once teams really started to exploit this loophole, they cracked down. The Ilya Kovalchuk 17 year 102 million dollar contract was the straw that broke the NHL's back, and upon his early retirement, the New Jersey Devils were stuck with a $250k cap recapture charge.

How that figure was calculated was looking at the total amount of money Kovalchuk was paid during those first 3 years of the 15 year, $100 million contract, and then looking at how much it exceeded the Average Annual Value for those three years. With an AAV of $6.67 million, that equated to 20 million dollars over those three years in AAV, when he was paid $23 million. So to calculate the cap recapture penalty, the extra 3 million was then divided by the 12 years remaining on the contract, which comes out to $250k. The Devils are lucky that Kovalchuk retired as early as he did, as the cap charges could have come close to 5 million per year for five years after he retired.  If you want another explanation of how recapture works, check out this good article from JJ From Kansas from Winging It In Motown.

The Devils dodged a bullet when Kovalchuk retired early into his contract

Back to what this all means to Shea Weber and the Nashville Predators (and slightly to the Montreal Canadiens). When Paul Holmgren offer sheeted Weber to his historic 14 year $110 million deal, he frontloaded the contract as much as possible, hoping that it would dissuade the smaller market Predators from matching. This made it so the contract was structured even worse than the Kovalchuk contract that the NHL came down on, with Weber getting paid a total of 6 million for the last four years of his contract. The only year that the Predators could have been hit with a worse recapture scenario would have been if Weber was traded after the 2017-18 season, when his contract switches to 6 million dollars in real money a year.

In the first five years of his deal with Nashville, Weber was paid on average of $14 million, with a cap hit of $7,857,143 over that time. That has led to Weber being paid $24,571,428, giving the Predators a cap hit that is over 6 million less than what Weber was compensated, leading to a fairly bleak cap recapture scenario. Montreal could be impacted by these cap penalties as well, but as long as Weber plays until he is 34, they should avoid them, and they do not impact them as much as Nashville's, not even reaching $500k against the salary cap.

It is very unlikely that Weber would retire early. Even if he was injured, he would just be placed on LTIR so he would still gain the paycheck, and the Habs would be able to regain most of the cap hit. This is just the main scenario where the Predators could get burned in this mammoth Subban for Weber swap. And if Weber retires with one year left, $24.5 million in cap charges are a LOT. To put that number in context: Even with Subban's 9 million cap hit, the Predators entire defense signed for next year comes to a total of $21,862,500. An entire 6 man defense group of Subban, Josi, Ekholm, Ellis, Jackman, Bitetto signed for less than the maximum recapture penalty that the Predators could face. Now THAT would be interesting to see the Predators try and get out from under.