- Regarding buyouts in general ...... if a player is under 26, you have to pay him 1/3 of the remaining base salary on his contract spread out over twice the length of the remaining contract + you have to pay him 100% of signing bonuses remaining on his contract in the year they are due ..... if the player is 26 or older it is 2/3 the remaining base salary over twice the years left on the contract + 100% of signing bonuses when they are due ...... you basically save 1/3 or 2/3 of the players base salary over twice the number of years left on the contract depending on the players age.
- The buyout almost always reduces the total cap hit as well ...... it is a bit of a complicated calculation and the cap hit on a buyout is taken over twice the number of years left on the contract as well but the total cap hit that the team takes over the buyout time is almost always less then what they would take in the contract ..... the cap hit in a buyout is not calculated by adding up the cap hit left on the contract and taking the same amount over twice the number of years ..... it is calculated yearly and depends on multiple factors, so the cap hit is often different each year until the year after the contract would have been up if there was no buyout and in those years the cap hit usually equals the buyout cost.
- For example ..... someone asked about buying out Jarry ...... he is 28 y/o and has 4 years left on his contract ...... over those 4 years he is due $20,075,000 ($12,575,000 is in base salary and $7,500,000 is in signing bonuses) ...... therefore, as far as salary, the Pens would owe him 2/3 x 12,575,000 = 8,383,333 in equal amounts over 8 years + 7,500,000 in signing bonuses which are all due in the first 4 years for a total amount of money over 8 years of $15,883,333 instead of the $20,075,000 he is owed in his contract or a savings of $4,191,667.
- Jarry has a cap hit of $5,375,000/year x 4 years or $21,500,000 over 4 years ...... if you do the calculations to figure out his actual cap hit in a buyout each year for 8 years it is as follows .... Year 1 cap hit = $1,022,917 ... Year 2 = 1,997,917 .... Year 3 = 5,297,917 .... Year 4 = 4,797,917 .... Year 5 through 8 = 1,047,917/year x 4 years which = a total over 8 years of $17, 308,336 ...... so instead of a cap hit of 21,500,000 over 4 years, the Pens would have a cap hit of 17,308,336 over 8 years ...... of course, if you buyout a player, you are still paying him and taking a cap hit when the player isn't on your roster and you have to replace him with another player who takes up a salary and cap space ...... GM's in general don't like to buyout players.
- If anyone wants to verify what I said above, go to CapFriendly and they will explain buyouts and what salary the players are owed and what the cap hits would be (there is a buyout calculator and they have them calculated for every player already).
- Regarding 35+ contracts ...... not all 35+ contracts have zero affect on the cap hit in a buy out ...... true, if a 35+ contract is front loaded with salary or has a signing bonus after the 1st year, a buyout doesn't change the cap hit at all, but, if it is not front loaded and doesn't have a signing bonus in the 2nd or later years, the buyout works the same as an under 35 contract and there is some cap savings ...... Hextall structured all the Pens 35+ contracts so a buyout wouldn't change the cap hit ..... look at Varlamov's 35+ contract with the Islanders, the salary is the same each year and there are no signing bonuses so a buyout on him would save some cap space.