The Chicago Blackhawks are going to have some salary cap issues. Tell me if you’ve heard that one before. It’s led to the usual questions about where the team goes to find money to spend. Marian Hossa and his $5.275 million cap hit are usually one of the targets when it comes to creating more space.
However, that’s probably not happening. As you might already know, Hossa’s contract has a salary cap recapture penalty attached to it. The league created these penalties as part of the 2013 CBA to punish teams that it believed circumvented salary cap rules with lengthy deals that deflated annual average values. Hossa’s 12-year, $63 million deal, which concludes with a salary of $1 million in the final four years, will incur those penalties if he retires.
And based on the numbers, it becomes clear why Hossa retiring is unlikely to be a solution. Essentially, as long as Hossa plays at the level of a player worth $1 million through the life of his contract, he’ll be worth keeping around. That’s because the cap recapture penalties on his contract are pretty substantial.
Cap recapture penalties are based on the differential between the amount of money paid and the accrued salary cap hits prior to a player’s retirement. If Hossa retires following the 2015-16 season, he’ll have earned $55.3 million with an accumulated cap hit of $36.925 million during his contract with Chicago. That difference, which comes to $18.375 million, would be distributed over the next five years — the remaining term of his contract — onto the Hawks’ books. So if Hossa retired after this season, the Hawks would have an annual cap hit of $3.675 million on their books through the 2020-21 season.
That savings becomes even smaller if he retires at any point following the 2016-17 season:
Most likely, Hossa won’t retire following this season. He’s still clearly capable of playing at an NHL level and gets to compete regularly for Stanley Cups. So it’s probably fair to assume that he’ll at least play through 2016-17 and any cap recapture penalty against the Blackhawks would be $4.275 million annually.
And while that would indeed save the team $1 million in cap space, the Hawks would still need to go out and spend money on someone else to take his roster spot. So if Hossa plays at least through next season, the real question, at least from the team’s perspective, will be whether he’s better than a player who gets paid $1 million. Because if Hossa retires and the team spends more than $1 million to replace him, then the overall hit to the team’s salary cap books will be larger than if Hossa had simply stuck around.
That pretty much means Hossa will be allowed to play in Chicago until he doesn’t want to anymore. Based on his current performance, he’s still a very solid player even at age 37. And given the way the money stacks up for the Hawks, the team probably won’t put much pressure on him to retire at any point given the minimal savings. If he can still produce, even if it meant a drop to the third line at some point before he’s 42 years old, it would still likely make more sense than having him retire to pay someone else and take on an even larger commitment.
Of course, there’s also one wild card to the situation, and that’s the long-term injured reserve. We’ve seen teams place players who are effectively retired for all intents and purposes onto LTIR in order to receive the cap benefits. A player who’s on LTIR is technically active, so he still receives his salary from the team, but his cap hit is removed from the books. That’s the ideal scenario for the Blackhawks. The problem is that the NHL likely would have an issue with this given that it pushed for the salary cap recapture penalties in the first place. To see Chicago try to circumvent punishments that were handed out for previously circumventing other rules would probably lead to some sort of response from the league.
And because of the way the cap recapture rules are designed, trading Hossa won’t solve the problem. If the Hawks trade Hossa and he retires after playing for another team, Chicago will still receive the cap recapture penalties regardless. Maybe you could trade Hossa somewhere that he’d be happy and a low-budget team would be thrilled to have a large cap hit on a guy making just $1 million, but there’s still the risk that he retires at some point and the penalty goes into effect.
So unless the LTIR option somehow opens up, Hossa is probably going to be a Blackhawk for the next several years. The salary cap savings simply won’t be there if he retires given the recapture penalties relative to his current cap hit. Unless Hossa’s game takes a serious dive, which has not happened yet in his late 30s, it’s better for Chicago if he stays active and keeps contributing. Let’s just hope he ages like Jagr.