How the New CBA Affects the Islanders

Kevin Schultz

On January 12th, the NHL and NHLPA finally signed off on the Memorandum of Understanding, putting an end to the lockout. After that was done, they released a Summary of Terms of the new CBA. It’s not the new CBA with full detail but an abbreviated version that spells out the ideas they have agreed upon until there’s time to draw up a full-length CBA, with Ts crossed and Is dotted. There have been some changes since the last year-annihilating go-around and Puck Daddy has a good summary of them. We’ll leave the exercise of how this impacts the league as a whole to other outlets. Today, our task is to figure out how these changes will impact the Islanders specifically.

While nothing was ever officially said, we had a good idea last year that Nino Niederreiter’s contract was helping the Islanders to reach the salary cap floor in a unique way. For Niederreiter, his cap hit was $2.795M, most of which were performance bonuses ($1.925M), many of which he likely would not (and did not) reach, like the one that pays out extra for an All-Star Game selection. So what ended up happening is that the team wasn’t paying out actual dollars for what the cap hit was.

While a young player like Nino would count a couple million against the cap, as bonuses were included, the team wouldn’t actually be paying him that much since he only gets paid for the bonuses he achieves. Not anymore. That loophole — if you want to call it that since it was really more of a legal rule in the old CBA — is now closed. Enter another reason to keep Niederreiter in the AHL; it doesn’t impact the team’s cap situation as much as before. It’s not the reason to keep him in the AHL — he really does need to spend time there — but it’s a reason why he doesn’t have to be in the NHL.

This is a big one. Under the old CBA, the Islanders were ineligible for revenue sharing because of their proximity to New York City. In the new CBA, things won’t be perfect, but they’ll be better. The NHL has completely revamped the revenue sharing system. The top 10 revenue teams in the league will pay into a pool that goes towards assisting the bottom 20 teams, with the poorest teams receiving the most assistance. There is one catch; the Islanders can’t receive a full share. Teams with market DMAs* of greater than three million can only receive 50% of what they’re entitled to. That’s still better than the zero dollars the Islanders were getting under the old agreement that barred teams in large markets from getting any revenue sharing money. The CBA summary does not say if that money has to be spent directly on the team.

* – DMA means designated market area and is a television term that is a way of defining the size and scope of different television markets. The New York metro area has a DMA of 7.3 million according to Nielsen. Chicago and Los Angeles are the only other markets above 3 million.

Here’s another big one and this pertains to the whole league, not just the Islanders. It could also make the trade deadline a lot more interesting. These transactions are going to be similar to baseball in that teams can now pay portions of a player’s salary as part of trading them to another team. Teams can pay up to 50% of the average value of a contract over the life of the contract. Whatever percentage of the contract they choose to pay, they must pay that percentage over the remaining life of the contract. There is not an exception for teams to go over the cap with these transactions and teams can have a maximum of three retained salary players on their books at any one time.

Let’s do an example.

The Islanders want to trade Player A who is vastly overpaid and making $5M this year, $6M next year, and $7M in year three of his contract. The contract’s annual average value (AAV) is $6M, which is the cap hit. If the Islanders can find a trading partner, as part of the deal they can pay up to $3M per year of Player A’s contract to get him out of town. But they must pay the same amount every year and it cannot exceed 50% of the contract’s AAV.

This should end up being a great way for teams to get rid of bad contracts without having to buyout players or send them to the minors. Also works out for the players, who get their money and don’t have to toil in the minors.

There’s a provision in the old CBA that lets college players declare free agency four years after being drafted if they’re still unsigned by their pro team. It’s not true unadulterated free agency like you see in July, as these players can only sign two-year ELCs and there is a max on how much money they can earn, but they can still have their choice of team.

Notre Dame captain and Islanders draft pick Anders Lee (6th round, 2009) is one such player who could face this situation. Lee can become a free agent on June 1 if the Islanders can’t sign him. Like Justin Schultz last summer, Lee would get his choice of team and as much as a 10% signing bonus. Watching a promising young player walk away is tough, but you can see why I player might decide to choose their destination. There were no changes to this rule in the new CBA.

Cap Geek has a great article about how ELCs worked under the old CBA, and they didn’t change very much in the new one.

Last week the Rangers and Canadiens told Wade Redden and Scott Gomez both to stay home. The former All-Stars with huge contracts were going to be bought out this summer and to be on the safe side their teams told them to sit back and relax. Long story short that wasn’t in the best interest of the players, so the NHL and NHLPA amended things to allow one in-season buyout, but the cap hit would hold for this season.

One thing to keep in mind going forward is that is a player is hurt they cannot be bought out, so that’s why both teams decided to keep the players off the ice. Keep this in mind so you can impress your friends when discussing the possibility of buying out Rick DiPietro.

This is where we start to get really, really deep into things. If you remember last season, the Islanders used the emergency recall provision in the CBA to get around sending veteran players through waivers. If a team is under a certain number of healthy players they can call up players on an emergency basis without having to pass them through waivers. There is now a 30-day limit on this. If a player is up on an emergency recall, they have to pass waivers to stay more than 30 days. It’s lenient, but it’s something to note.

If you somehow made it to page 21 of the summary of terms without falling asleep (raises hand), then you might have noticed a section 1 of article 14, which mentioned a $73,5000 ‘full and final settlement’ for a Moulson grievance (as well as about a dozen other players). In all likelihood, Moulson was owed money for expenses from either the Islanders or Kings and that case was settled in this CBA. Exciting, right?