Sami, the Canucks and the Cap
With Sami Salo returning to practice with the Vancouver Canucks questions have already started to be raised about how the Canucks will manage the salary cap when he is ready to play. Unfortunately there is a great deal of misunderstanding of how the salary cap actually works. This article will try to explain the intricacies of the salary cap and how long term injured reserve plays a role in it.
In order to understand LTIR, it’s important to know how the salary cap is calculated. As everyone knows, the salary cap for the 2010-11 season is $59.4 million. The length of the regular season is 186 days. Therefore, each team has a daily cap limit of $319,355. Using an analogy to illustrate (courtesy of CapGeek.com), think of the salary cap as a bank account. At the start of each day, a team gets a deposit of $319,355 to spend on their active roster. Each player’s daily cap hit is their annual cap hit divided by the 186 days. The total of every player on the active roster must not exceed the balance in the account.
Take Ryan Kesler for example, his $5 million cap hit equates to a daily cap hit of $26,882. If a team spends less than $319,355 on a day, anything left over is saved and can be used later (i.e. trade deadline). It’s important to note you cannot ever have a negative value. In other words, you cannot spend more with the intention of later trading a player to save cap space and get back to above $0.
Sami Salo – Photo credit: http://Canucks.nhl.com
When long term injured reserve is used, using Sami Salo as an example, you are allowed to exceed the total daily cap hit by a maximum of his daily cap hit of $18,817 (Note: If the Canucks have any available cap space prior to placing Salo on LTIR then that cap space will be used and the remainder of Salo’s salary will become the cap relief. However, if you do exceed the total daily cap hit of $319,355 because of LTIR, you do NOT get savings. Your daily spending will always equal your daily limit, $319,355, so your balance remains at $0. Therefore, when Sami Salo comes off LTIR, the daily spending must once again be equal to, or less than, $319,355. There is not accumulated savings. Therefore, the team must clear approximately $3.5 million in terms of players total cap hit in order to get back below the cap.
Thank you very much for the info. Perfect timing!
Excellent article!
One minor correction – the extra cap room allowed by LTIR is not actually the player’s full cap hit, it’s the hit minus any cap space that’s available when the player is placed on the reserve. Hence all the juggling Gilman did between the Moose and the ‘Nucks at the beginning of the season to bring the team as close to the cap as possible.
Good point, forgot to mention that. Was trying to keep the article as easy to understand as possible. There’s also a difference between placing a player on LTIR before the season and during the season.
However; if Salo returns after the trade deadline I believe the cap hit does not apply and no trade would be required.
The salary cap counts until the end of the regular season.