Post by Mike Colligan who can be found on twitter @MikeColligan and at his site ColliganHockey.com.
Question: How do retained salary trades work?
The 2013 CBA gave teams the flexibility to retain a percentage of salary and cap hits in trades. Calgary Flames President Brian Burke championed this idea for years at GM meetings before it was finally adopted.
There are a few key limitations:
- ‘Salary’ refers to remaining base player salary and bonuses, including signing bonuses.
- The percentage retained cannot be more than 50 percent of the salary and cap hit.
- The same percentage must be retained for both salary and cap hit. This cannot be altered from year to year.
- Teams limited to three retained salary contracts each season.
- Teams cannot retain an aggregate amount of more than 15 percent of the salary cap upper limit. In 2014-15 that number is $10.35 million.
- A player’s contract can only be traded twice in a retained salary transaction.
- There are a few specific scenarios highlighted by the CBA to keep in mind.
If a team trades away a player and retains salary in the transaction, that team cannot reacquire the player for one calendar year after the date of the transaction. One exception to this would be if the player’s contract expires or is otherwise terminated prior to the one calendar year date. In this case, the original team would be free to reacquire the player as the retained salary element no longer exists.
The CBA also prohibits a team from trading away a player and then reacquiring that player in a retained salary transaction within one year of the original trade.
If a contract involved in a retained salary transaction is bought out or terminated, all teams involved will be responsible for their respective percentage of obligations.
If a player acquired in a retained salary transaction is sent to the minors, the original team (the one that retained salary) must still include their portion of the contract on their salary cap for the remainder of the contract, regardless of whether the player is ever recalled or not. This prevents a team from cutting a player’s contract in half and then having the new team make the cap hit disappear by sending him to the minors.
Finally, a second retained salary transaction does not modify in any way the original terms and obligations of an initial retained salary transaction.
Real Example: Devan Dubnyk’s cross-continent travels in 2014 demonstrated a number of these provisions:
- Jan 15, 2014: Dubnyk was traded from Edmonton to Nashville.
- Edmonton retained 50% of his salary, or $1.75M of the $3.5M total.
- March 5, 2014: Dubnyk was traded from Nashville to Montreal.
- Nashville retained 25% of his salary (which applies to the original total). Therefore, the Predators retained $0.875M.
- March 5, 2014: Dubnyk was immediately demoted to Montreal’s AHL affiliate in Hamilton.
- After the demotion, he didn’t count against Montreal’s cap but he did still count against Edmonton’s ($1.75M) and Nashville’s ($0.875M).
CBA Reference: 50.5 (e-iii) Pages 271-274
Note: Explanation and legal interpretation of the above is solely the opinion of the author and may not reflect all scenarios or actual CBA interpretation by NHL/NHLPA representatives. If you have a suggestion for improving this interpretation, please reach out via our Contact page.