The Flames and the dreaded performance bonus overage

[sureLoss]

If you are not a CBA expert, you might not know there exists a performance bonus cushion in addition to the salary cap. This bonus cushion allows teams to exceed the salary cap by 7.5% in potential performance bonuses. The caveat to this bonus cushion is that by the end of the season you still need to be under the salary cap including all achieved performance bonuses or the excess amount will be charged against next year's salary cap as a bonus overage.

The most famous example of bonus overage:

The 2009-10 Chicago Blackhawks are the most famous example of a bonus overage. Bonuses earned by the likes of Patrick Kane and Jonathan Toews following their Stanley Cup win pushed the Blackhawks' final cap payroll $4,157,753 past the upper limit. As a result, the $4,157,753 overage reduced their 2010-11 upper limit from $59,400,000 to $55,242,247 million. That, in part, resulted in the trading of Kris Versteeg, Andrew Ladd, Dustin Byfuglien, Brian Campbell, and others.

For the Flames, these players could potentially earn up to the following performance bonuses for this season:

Monahan: $850,000
Bennett: $2,300,000
Gaudreau: $1,850,000
Granlund: $132,500
Total: $5,132,500

According to generalfanager.com, the Flames project to have $2,187,567 in cap space by the end of the season (and yes this number doesn't include performance bonuses).

This means if you assume the Flames make no cap moves from now until the end of the season and all the players above achieve full performance bonuses, the Flames will face a bonus overage $2,944,933 for the 2016/2017 season.

In other words, the Flames could effectively have a salary cap approximately $3 million less than the rest of the league.



Before Flames fans panic and bash each other's heads open to feast on the goo inside. Keep in mind the following:

1. The public doesn't generally know the conditions of performance bonuses on ELCs. The Flames will have a cystal clear knowledge of the performance bonuses and how much are actually achievable for the above players. For all we know, a large percentage of the above bonuses are already not achievable.
2. Flames are likely to move out a few contracts (namely Hudler and Jones) that should add some cap space to the Flames end of year number, assuming in those moves more salary goes out than comes back.



Depending on the size of the potential bonus overage, the Flames are less likely to retain salary to increase a player's trade value. If they can move a player out without retaining salary they need to do so.

Also could limit how much salary the Flames can take back before the trade deadline. i.e. relatively small cap hits or no cap hits can come back to the Flames in any deals to limit the bonus overage for next season.

One unique situation that could help out the Flames is Jared Cowen. As indicated by the following article, the Flames could trade for Jared Cowen and buy him out. Because of his contract structure and age, buying out Cowen this summer would gain a team $650k in cap space for next season, followed by a cap hit of $750k in 2017/18:
http://www.tsn.ca/mondaymustread-rar...value-1.428314

Still don't panic - lots of assumptions being made.

[sureLoss]

Since some will ask how performance bonuses break down in ELCs.

capgeek had a great breakdown of how performance bonuses work in ELCs.

http://web.archive.org/web/201410090...contracts-work

[calumniate]

Correct me if I'm wrong, and I probably am, but didn't the latest CBA add in some regulations regarding bonuses? Like some kind of 'hawk rule or something?

Edit - yeah, I guess your link above would adhere to the latest CBA, so there we have it.

[Macho0978]

I can't see Bennett or Granlund achieving all their bonuses. We also should gain cap space as we had 2.2 million at the start of the year but the year is over half over. I could see us being able to retain salary or taking a bad expiring contract back at deadline and not going over the cap

[Cali Panthers Fan]

Originally Posted by sureLoss

Before Flames fans panic and bash each other's heads open to feast on the goo inside.

Too late.

[Phanuthier]

I guess another obvious question is, how much cap savings (or was that already included?) do we get from players on IR?

Brodie - 9 games? (500k?)
Frolik - 12 games? (700k?)
Bouma - 34+ games? (~1M if he ends up out half the season?)
Smid - ??

[Imported_Aussie]

Originally Posted by Phanuthier

I guess another obvious question is, how much cap savings (or was that already included?) do we get from players on IR?

Brodie - 9 games? (500k?)
Frolik - 12 games? (700k?)
Bouma - 34+ games? (~1M if he ends up out half the season?)
Smid - ??

Long term injured reserve is a provision that allows a team to go over the cap by up to the cap hit of the player on injured reserve. Don't think that would apply here, as the flames have not gone to the cap ceiling this year

[Daradon]

I can't imagine that much will be earned in bonuses. Gaudreau is the only one I can see hitting anything substantial.

Bennett's must be so high for things like leading rookie scoring and/or rookie of the year. I don't think it's a worry with his slow start point wise.

[Poe969]

So trade for cowen then buy him out, that'll help a bit.

[sureLoss]

Originally Posted by Macho0978

We also should gain cap space as we had 2.2 million at the start of the year but the year is over half over.

Cap space doesn't prorate like this. Just because half the year is over doesn't mean a team with $2 million cap space in September has $4 million cap space in January. What it does mean is a player with a cap hit of $4 million in September has a cap hit of $2 million in January for the rest of the season.

Originally Posted by Phanuthier

I guess another obvious question is, how much cap savings (or was that already included?) do we get from players on IR?

Brodie - 9 games? (500k?)
Frolik - 12 games? (700k?)
Bouma - 34+ games? (~1M if he ends up out half the season?)
Smid - ??

Putting a player on LTIR does not provide "cap savings". It allows you to exceed the cap equivalent to that player's cap hit while that player is on LTIR (assuming you are already at the cap).

[lazypucker]

Performance bonuses for Flames players??

It's like paying bonuses for oil & gas executives.

What a joke...

[You Need a Thneed]

I can't see the amount of the bonuses being enough that this becomes an issue for the Flames. Perhaps a tiny amount, which doesn't really matter. Unless Bennet really heats up and wins the rookie of the year, or whatever it would take for him to get full bonuses.

[Azhouse]

So what I get out of this is that the Flames are close to being a cap team... yeesh do they have some work to do.

[JJ1532]

Out of interest, does anyone know what the performance bonus targets tend to be? Appearance numbers hit? Goals/points totals? Making the play off wins with said player on roster? Winning a round of the play offs?

[CorsiHockeyLeague]

Originally Posted by JJ1532

Out of interest, does anyone know what the performance bonus targets tend to be? Appearance numbers hit? Goals/points totals? Making the play off wins with said player on roster? Winning a round of the play offs?

All of these things. Also, winning a major NHL award is sometimes one.

The most famous one was the bonus Sergei Fedorov got when he was offer sheet'd by the Hurricanes... the 'Canes weren't any good, and the Wings were defending champs, and the bonus was triggered as an immediately payable lump sum if his team made the conference final. It was $12 million. The Wings made the conference final. Fedorov made $28 million in four months.

[getbak]

Originally Posted by JJ1532

Out of interest, does anyone know what the performance bonus targets tend to be? Appearance numbers hit? Goals/points totals? Making the play off wins with said player on roster? Winning a round of the play offs?

The CapGeek link sureLoss posted above shows every category that a player can receive bonuses for.

Keep in mind that only $850,000 can be paid for "A" level bonuses, and a player can only receive an "A" bonus in four different categories ($212,500 maximum for each category). Gaudreau last season would have qualified for more than 4, but he would have maxed out at 4.

The "A" bonuses are only for individual player performance. You can't get a bonus for just playing games and you can't get anything for the team's performance.



The "B" level bonuses are only for elite, league-wide performance. That is winning one of the major league awards (the Calder and Byng aren't considered major awards); or finishing top 10 league-wide in one of the major statistical categories for your position (forward or defence).

If Gaudreau finishes the season in the top 10 in goals, assists, points, or points-per-game there's a good chance he will earn at least part of his "B" bonuses. Right now, he is tied for 9th in points.

The "B" level maximum is $2 million dollars total, but a player can earn up to the full level for just achieving one goal on the list. When Toews won the Conn Smythe Trophy in the final year of his ELC, he earned a big "B" bonus, which was one of the problems that required the Hawks to sell off players like Ladd and Byfuglien.

[getbak]

After reading the CBA a little further, an ELC player can receive a games-played bonus, but like their signing bonus, it is considered part of the player's base salary and is separate from the "A" & "B" bonuses. If any of the Flames ELC players have a games-played bonus on their contracts, they would have achieved them (they can be given for 5, 10, or more than 10 games played, and all the ELC players have played more than 10 games this season).


----------

Looking at the criteria and where the players sit right now...

GAUDREAU

• Achieved: 20 goals; NHL All-Star game
• Likely: 35 assists; 60 points; 0.73 P/G; +/- team Top 3 forward; Ice Time team Top 6 forward
• Possible: NHL All-Star game MVP
• Not Eligible: NHL All Rookie Team

Most likely to receive full $850,000 "A" bonus. If Top 10 League-wide in G,A,P, or P/G for forwards, possibly additional $1 million in "B" bonuses.



MONAHAN

• Achieved: None
• Likely: 20 goals; Ice Time team Top 6 forward
• Unlikely: 35 assists; 60 points; 0.73 P/G; +/- team Top 3 forward
• Not Eligible: NHL All-Star game; NHL All-Star game MVP; NHL All Rookie Team

Most likely to receive 2 "A" bonuses, for $425,000.



BENNETT

• Achieved: None
• Likely: 20 goals; Ice Time team Top 6 forward
• Possible: +/- team Top 3 forward; NHL All Rookie Team
• Unlikely: 35 assists; 60 points; 0.73 P/G
• Not Eligible: NHL All-Star game; NHL All-Star game MVP

Most likely to receive 2 "A" bonuses, for $425,000. Could receive up to the maximum $850,000 in "A" bonuses.



GRANLUND

• Achieved: None
• Possible: +/- team Top 3 forward
• Unlikely: 20 goals; 35 assists; 60 points; 0.73 P/G; Ice Time team Top 6 forward
• Not Eligible: NHL All-Star game; NHL All-Star game MVP; NHL All Rookie Team

Unlikely to receive any bonuses.




Although it's possible the Flames could end up paying out more than $5 million in ELC bonuses, the more likely number is around $1.7 million. The only thing that would push the Flames into overage trouble for next year is if Gaudreau finishes top-10 in league scoring (quite possible) and earns the full extra $1 million in "B" bonuses (we don't know what the criteria are for him to max out his "B" bonuses).

Also, if the Flames can move out some of the high-priced pending UFAs (Hudler, Jones, Hiller/Ramo, Russell) or any of the other big contracts, it would also create some cap space which would cover Johnny's likely "B" bonus.

[sureLoss]

^ Bennett could finish top 3 in Calder voting which could be another B Bonus

[getbak]

Originally Posted by sureLoss

^ Bennett could finish top 3 in Calder voting which could be another B Bonus

No, the Calder doesn't count as a major NHL award. He would receive the bonus that is paid by the League for Award finalists, but it isn't eligible for "B" bonuses paid by the team.

A Player and Club may also negotiate individual bonuses payable by the Club for the League-wide Awards/Trophy Bonuses and League Performance Bonuses set forth below, except where specifically stated otherwise, in amounts to be individually negotiated between a Club and a Player (the Club and Player could agree to pay more, or less, than the amounts payable by the League, set forth below). The maximum aggregate amount that a Club can pay a Player (in addition to any amounts paid by the League to such Player) on behalf of a Player's Individual "B" Bonuses is $2 million per season. There is no limit on the quantity (as opposed to the dollar amount) of League-wide Awards/Trophies and League Performance Bonuses a Player may receive from the Club.

(a) League-wide Awards/Trophies. The following are the only awards or trophies for which Clubs and Players may negotiate bonuses: the Hart Memorial Trophy ("Hart"), the "Rocket" Richard Trophy ("Richard"), the Vezina Trophy ("Vezina"), the William Jennings Trophy ("Jennings"), the Norris Trophy ("Norris"), the Conn Smythe ("Conn Smythe"), and the Frank J. Selke Trophy ("Selke"). In the event that the National Hockey League creates additional award(s) of like stature in the future, Clubs may award bonuses to Players in connection therewith.

[dying4acup]

If the Flames pay an overage penalty next season it will be negligible. At most 500k. A Raymond buy out would eleviate this. ��