NHL Collective Bargaining Agreement and Salary Cap HIt

The Collective Bargaining Agreement (CBA) is a ten-year agreement between the National Hockey League (NHL) and National Hockey League Players’ Association (NHLPA), and is active between September 16, 2012 and September 15, 2022. The document in it’s entirety can be seen here.

The Standard Player’s Contract (SPC) is the standard NHL player contract that acts as the only form of contract for player signings that comply with the agreement of the CBA.

The Salary Cap Hit is the total amount of salary cap room that is taken by a players contract. This number is calculated by the average dollar figure of the contract.

The Salary Cap Ceiling is the maximum amount of money that a team can spend on player salaries in accordance with the CBA. This number varies annually, and is commonly dependent upon the revenue accumulated by the NHL in previous seasons. No player may earn more than 20% of the salary cap. The ceiling for the 2015-16 season is $71,400,000. The minimum NHL player salary will rise to $575,000 by 2015-2016 from $550,000 in 2014-15.

The Salary Cap Floor is the minimum amount of money that a team must spend on player salaries in accordance with the CBA, the salary cap floor for the 2015-16 season is $52,800,000. This floor prevents teams from depleting or trading away the core of their rosters with the intent of sacrificing their position in the league standings for a higher ranked position in the entry draft. This also acts to ensure that all players are compensated fairly. The Salary Cap floor is commonly set around $16-18 million below the Salary Cap Ceiling.

A Performance Bonus can be given to a player in addition to their salary. Performance bonuses are only paid to the player if they meet the requirements as defined by the bonus. Performance bonuses count against the salary cap; however, a team can exceed the salary cap due to performance bonuses by the maximum performance bonus cushion amount of 7.5% of the upper limit. Not all players are eligible for Performance Bonuses, and to receive a bonus within their contract, a player must meet one of the following criteria:

1. The player is on an entry-level contract.
2. The player has signed a one-year contract and is over 35 years old.
3. The player has signed a one-year contract after returning from a long-term injury (has played 400 or more games, and spent 100 or more days on the Injured Reserve in the last year of their most recent contract).

Signing Bonuses are rewarded upon the signing of a player’s contract and are paid to the player regardless of buyouts, or performance.

Performance Bonuses are paid to a player if the requirements of the bonus are met, and are given over the course of the season as they are met.

When League Revenue is below $2.2 billion = 54%.
When League Revenue is between $2.2 billion and $2.4 billion = 55%
When League Revenue is between $2.4 billion and $2.7 billion = 56%
When League Revenue is exceeds $2.7 billion = 57%

If a player is considered to have a long-term injury (causing them to miss a minimum of 10 games and 24 days), they can be placed on the Long-Term Injury Reserve (LTIR), which can be used to receive cap relief.

While placing a player on the LTIR does not remove the player’s Salary Cap Hit from the overall team cap, it does provide the team relief if the team’s total average Salary Cap exceeds the upper Salary Cap Ceiling. More details are available at the LTIR FAQ.

Once an injured player returns to the team from the LTIR, the team must reduce its average salary cap to below the Salary Cap Ceiling before they may remove the player from the LTIR.

If a player is injured during training-camp, they can be placed on season-opening injured reserve, to possibly obtain cap relief:

Full Cap Hit

Players who are on a one-way contract, or players on a two-way contract who accrued 50 or more NHL games in the previous season count fully against the cap hit. Teams can opt to place these players on LTIR to obtain cap-relief (LTIR FAQ).

Discounted Cap Hit

Players on a two-way contract, who accured 1-49 NHL games in the previous season, count against the teams cap hit; however, the reduced cap hit is calculated as follows:
Multiply the players NHL cap hit by the total accrued NHL days in the previous season, and divide by the total number of days in the previous season (Ex: 186 for 2014-15)

When a player is reactivated to the active roster, their cap hit reverts back to the full rate

Full cap relief

Players who did not play any NHL games in the previous season can be placed on SOIR do not count against their teams cap hit.

A No-Movement Clause (NMC) prohibits a team from moving a player, or assigning a player to the minor division without their consent (by trade, loan or waivers). This ensures the players’ presence on the team, unless they consent to moving. However, an NMC does not prevent a team from buying out or terminating a players contract. An NMC follows a player even if they waive the clause and are traded, but it does not protect a player from being bought out.

A No-Trade Clause (NTC) is less restrictive, and only places restrictions on player movement as a result of trades. A player with an NTC cannot be traded to another team unless the player provides consent. However, player consent is not required for placement on waivers or assignment to minors. An NTC does not follow a player if they waive a full NTC, or are traded within the terms of a limited or modified NTC.

A Partial or Modified No-Trade Clause (PNTC) is less restrictive than a Full No-Trade Clause, dependent upon specific conditions outlined in the players’ contracts. PNTC often include conditions outlined by the player (that may include a list of teams to which the team may not trade the player). Players will often have NMCs tied to their contracts with Partial or Modified No-Trade Clauses. These prevent the team from moving the player via loan or waivers, but give the team some options for trading the player.

Players are not eligible for NMCs or NTCs in their contract until they are eligible for Group 3 Unrestricted Free Agency (7 accrued seasons or 27 years of age). Players may sign contracts with NMCs or NTCs that may become active partway through their contract, whereupon they become eligible for Group 3 Unrestricted Free Agency.

A player who’s contract is expiring and meets all of the following conditions shall become an unrestricted free agent (UFA):

1. The player is 25 years or older (as of June 30th of the calendar year the contract is expiring).
2. The player has completed 3 or more professional seasons – qualified by 11 or more professional games (for an 18/19 year old player), or 1 or more professional games (for a player aged 20 or older). This can include NHL, minor league, and European professional league seasons played while under an SPC.
3. The player has played less than 80 NHL games, or 28 NHL games of 30 minutes or greater for a goaltender.

Please see our Buyout FAQ

The maximum number of contracts per team permitted is as follows:

1. Total NHL Roster contracts per team = 23 (not including IR)
2. Total NHL contracts per team = 50 (including NHL, AHL & ECHL), players in junior leagues who have not played 10 NHL games do not count towards this limit.
3. Total NHL players belonging to a team = 90 (including roster, minor, prospects or drafted)

When a team trades a player, they have the option to retain a part of their salary (and cap hit). The team who retains the salary then pays the retained percentage of the salary, and also retains the percentage of the cap hit until the contract expires. The following requirements must be met to retain salary:

1. The percentage retained cannot exceed 50 percent of the player’s salary (including all bonuses) and Salary Cap Hit.
2. The same percentage must be retained for both the player’s salary and Salary Cap Hit, and cannot be modified.
3. All teams are limited to a maximum of 3 retained salary contracts per season.
4. Teams cannot retain an aggregate amount of more than 15 percent of the Salary Cap Upper Ceiling.
5. Players’ contracts are limited to 2 retained salary transactions per contract.

Once a retained salary transcation has occured, there are various limitations, such as:

• A team cannot reacquire a player whom they have retained salary from for a minimum of one year after the date of the transaction, or unless the player’s contract expires or is terminated prior to the one-year date.
• All teams involved in a retained salary transaction will have cap implications if the contract is bought out or terminated.
• Teams who retain salary on a players contract, will have the full value of the cap hit act against the teams salary cap total, regardless of whether the player is reassigned to the minors by their current team.

Teams do not receive full cap relief when a player on a one-way NHL contract is reassigned to the American Hockey League, or is loaned to a team in another professional league.

The players salary cap hit, minus the sum of the minimum NHL salary for the respective season and $375,000, still counts towards the team’s salary cap total.

The cap hit relief is therefore equal to the minimum salary of the respective season + $375,000:

• 2014-15: $550,000 + $375,000 = $925,000
• 2015-16: $575,000 + $375,000 = $950,000
• 2016-17: $575,000 + $375,000 = $950,000
• 2017-18: $650,000 + $375,000 = $1,025,000
• 2018-19: $650,000 + $375,000 = $1,025,000
• 2019-20: $700,000 + $375,000 = $1,075,000
• 2020-21: $700,000 + $375,000 = $1,075,000
• 2021-22: $750,000 + $375,000 = $1,125,000

Players younger than 25 years of age as of September 15 during the year of their first NHL contract must sign an entry-level contract which have set limitations – all entry-level contracts are two-way contracts and the maximum allowable salary for players drafted until 2022 is $925,000.

The length of the entry-level contract is also dependent on the player’s age:

• 18-21 years of age: 3 years
• 22-23 years of age: 2 years
• 24 years of age: 1 year

Entry-level contracts can still include signing and performance bonuses. Signing bonuses may not exceed 10 percent of the contract’s total compensation, and is paid to players annually. Performance bonuses for entry-level contracts, that are paid by the team and count against the salary cap cannot exceed a maximum of $2,850,000. Performance Bonuses are broken into 2 categories: Schedule A and Schedule B. Schedule A Bonuses may not exceed $212,500 per individual bonus, and $850,000 in total. There are two types of Schedule B Bonuses. League-wide award/trophy bonuses that are paid by the league and are not captured within the actual entry-level contract signed by the player, and player & club agreed upon bonuses, of which the maximum is $2million per season.

If a player who is signed to an entry-level contract and is 18 or 19 years of age (as of September 15 of the signing year), does not play in a minimum of 10 NHL games (including both regular season and playoffs; AHL games do not count), their contract is considered to ‘slide’, or extend, by one year. For example, if a player signed an ELC for three seasons from 2015-16 to 2017-2018, and their contract slides, their contract is now effective from 2016-17 to 2018-19.

Players who sign at 18 years old are eligible to have their contracted extended for 2 seasons. This extension does not apply if the player turns 20 between September 16 and December 31 in his signing year. Signing bonuses do not slide, and are paid to the player regardless of a slide, this causes the annual average of the players contract to change, and therefore the cap hit decreases for this player.

If a player signs a multi-year contract and is age 35 or older (as of June 30 prior to the year of the effective contract), the players individual cap hit counts against the teams cap hit regardless of whether, or where, the player is active. However, there is one circumstance in which there is a cap hit reduction, a team will receive a $100,000 relief off of the teams salary cap hit, if a player is playing in the minor leagues after the first year of their contract.

The 35+ rule was introduced in the 2005 CBA and was intended to prevent teams from burying veteran players in the AHL, or from front-loading contracts to draw players to signing with them. One result of the rule is that it has lead to teams signing short one or two year contracts with veteran players, to prevent the possibility of being stuck with the players full cap hit if they are injured or unable to produce.

On a related note, over the previous couple years there has been significant confusion as to whether a buyout does or does not receive a cap benefit for 35-plus contract. The most recent understanding is that bought out 35-plus contracts do not receive a cap hit benefit, as is explained by Michael Russo. More details on this are available at the Buyout FAQ

Restricted Free Agents who do not sign contracts by December 1 of a given year will be ineligible to play within the league for the remainder of that season.