Definition of Salary Cap Advantage Recapture

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What does the term "cap advantage recapture" mean in the NHL? What is meant by the "cap advantage recapture"?

The cap advantage recapture rule in the NHL can get a bit complicated, but we are going to break down the essence of the rule here.

The cap advantage recapture looks to prevent teams from abusing the salary cap system. The rule was brought in to deal with contracts like Roberto Luongo, where the Vancouver Canucks offered him a very long-term deal in order to create salary cap room.

Luongo's contract extended all the way until he was 43 years old, and it was clear that the Vancouver Canucks structured the deal to gain salary cap room.

Here is how the cap advantage recapture rule works.

Let's say that a player signs a seven-year deal and they are paid the following amounts per year:

Year 1 - $7,000,000
Year 2 - $7,000,000
Year 3 - $7,000,000
Year 4 - $5,000,000
Year 5 - $5,000,000
Year 6 - $2,000,000
Year 7 - $1,000,000

The cap hit is $4,857,142 per year (the total amount of the contract divided by 7 years).

The team will have $4,857,142 charged against their salary cap per year, regardless of how much they are paying the player in any particular year.

Now, what happens if the player retires after the fifth year of the deal?

The team has had only $24.28 million charged against their cap, though they paid the player out a total of $31 million.

You could see how teams could abuse this by signing players to massive front-end loaded deals, only to have the player retire in the back-half of the contract.

This is where the cap advantage recapture comes into play.

To calculate the cap advantage recapture, perform this calculation:

1. Total Paid Out To Player - Total Cap Charge = Total Cap Advantage

2. Total Cap Advantage / Years Left In Contract = Annual Cap Advantage Hit

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So, let's take the player described above.

Total Cap Advantage was $6.72 million.

Divide this by the two years left on the deal, and you have $3.36 million.

This $3.36 million must be charged against the team's salary cap for the remaining two years of the player's deal.

This is how the cap advantage recapture works.

There are complications to the rule, though this is the basic premise behind it.