Thursday, May 10, 2012

Will There Be A Compliance (or Amnesty) Buyout Clause In 2012 NHL CBA?

The current NHL Collective Bargaining Agreement is set to expire in September and as we approach a new free agency period in July, a number of teams would probably like to know if the next CBA will include a one time amnesty buyout that will not count against the salary cap in future seasons. In the last CBA there was a one week "compliance buyout" period prior to free agency, which saw Bobby Holik's deal wiped off the books (Bobby of course, still got paid). The question to be negotiated is how much of the money remaining on the contract will the team have to pay? That could be anywhere from 100% to 50% (paid out over the remaining term), and allows the player to become a free agent and sign a new contract while still being paid for the old one. There regular buyout clause that came into effect after the compliance period allows teams to buy out a contract for 2/3 the value remaining, but its value (divided by two) still counts against the team's salary cap limit (for 2 times as many years).

Because buyouts allow players to be paid twice, the NHLPA should want the buyouts, even encourage them (especially the higher the percentage). The argument against the compliance buyouts is that only the richest teams can afford them and it allows them to escape their mistakes without paying a cap penalty; providing a luxury that  lower revenue teams can't afford. The Penguins would surely love to wipe the Martin and Michalek contracts off the books, but would rather pay too much for mediocre production than pay them to play somewhere else. That's why in 2005, aside from Holik the compliance buyout was hardly used (plus they managed a 25% across the board reduction in salaries that they won't get in 2012).

There might be significantly more buyout candidates in 2012 than 2005. However the richest deals are still essentially "buyout proof". Is Tampa going to pay LeCavalier $40M - $60M to play for somebody else? Even if that money is spread out over the duration of the contract, it's a lot of money to spend for nothing but cap clemency. If there is another compliance buyout, rest assured that Scott Gomez and Wade Redden will be the first to go, while others like Mike Komisarek and Keith Ballard will be tempting targets for their cash rich teams.

Will there by a compliance clause in the new CBA? Some General Managers will fight for it, and the players would be smart to allow it (optimistically at 100% the value of the contracts), it just remains to be seen if a majority of NHL teams will support the rich team buyouts. Montreal certainly wants buyouts. Toronto too.

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