Roberto Luongo: Know the Risks

Roberto Luongo: Know the Risks

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This just in tonight from Pierre Lebrun of ESPN, describing the cap benefit recapture component of the new CBA on existing deals over 6 years.

To wit: let’s say the Canucks trade Luongo soon. Luongo has played two years of his 12-year contract, the Canucks paying him $16.716 million in salary but only absorbing a $5.33 million cap hit each year. That’s a cap savings of $6.056 million over two years so far for Vancouver. Under this new rule, should the Canucks trade him now and he retires with three years left on his contract, Vancouver would be charged that $6.056 million in cap savings over the final three years left on his deal from 2019 to 2022. However, let’s say for argument’s sake Luongo gets traded to Toronto, the Maple Leafs also would be subject to cap penalties if Luongo retires before the end of his deal.

To wit, part 2: If Luongo were to play the next seven years of his deal in Toronto before retiring, the Leafs would be paying him $43.666 million in salary but only counting $37.31 million against the cap over those seven years, a cap savings of $6.356 million. So if Luongo retires with three years left on his deal (because his salary falls to $1.618 million in the 10th year and then $1 million in the last two years of the deal), the Leafs would get charged that $6.356 million on their cap spread evenly over the remaining three years of his deal.

The Leafs would be on the hook for 6.356/3 or around 2.12 million per season on the cap for all remaining seasons of the contract if they were to acquire Luongo and he were to retire with three years left on his deal.

On the upside, if Burke were to acquire Luongo in a trade, the return value should reflect that the Leafs will likely be incurring this part of the penalty. I can’t see Luongo fetching significant value with these conditions in mind.

In other CBA news, Brian Burke’s wish for a rule allowing the retainment of salary in trades has been granted with a limit of up to 50% of the contract value of the traded player.

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