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NHL Flat Salary Cap Intensifies Luongo’s Cap Recapture Penalty

NHL flat salary cap of $81.5M for two seasons and $82.5M the season thereafter intensifies Luongo’s infamous cap recapture penalty impact on Vancouver. A team looking to sign numerous Unrestricted Free Agents (UFAs) and Restricted Free Agents (RFAs) this off-season.

Luongo’s Cap Recapture Penalty Impact on an NHL Flat Salary Cap

Introduction of the Cap Recapture Penalty

In 2009 Mike Gillis and Laurence Gilman found a loophole in the NHL’s Collective Bargaining Agreement (CBA). This was used to sign Roberto Luongo to a front-loaded 12-year deal worth $64 million overall. Allowing the goaltender’s cap hit to be roughly $5 million in Average Annual Value (AAV). The deal saw Luongo earn $10 million from 2010-11. But this would fade out to $1 million in the final two years of his contract. Luongo was quoted saying “my contract sucks” after not being moved at the trade deadline of April 2013.

Luongo’s was not the only deal like this helped the 2011 Canucks be as successful as they were. The NHL hated this bending of the rules. So the league introduced the cap recapture penalty clause into the CBA. This clause is fittingly nicknamed “The Luongo Rule”.

Luongo’s Trade and Retirement

Luongo was eventually traded back to the Florida Panthers a day before the NHL trade deadline of 2014. This trade included Luongo and Vancouver prospect Steven Anthony in return for Jacob Markstrom and Shawn Matthias. However the Canucks retained part of Luongo’s salary in order to offload the contract.

With eight years remaining on his contract. The veteran goaltender would play the remainder of his career at the franchise he debuted for in 2000. Having his jersey retired at BB&T Center.

Luongo retired in June of 2019 with three years remaining on his contract. This retirement was the news Canucks fans did not want to hear. The cap recapture penalty meant the league believed the Canucks profited approximately $9M whilst Luongo was in the team. Therefore the Canucks were hit with a $3.033 million cap recapture penalty over the next three years.

Effect on Vancouver’s Salary Cap

At the conclusion of this pandemic paused season. Year one of “The Luongo Rule” will have completed. However, as the pause impacted the NHL’s revenue this season. The salary cap remains flat at $81.5M for the remainder of the Luongo’s cap recapture penalty. Therefore, before even looking at the other bad contracts in Vancouver’s roster. The Canucks salary cap for the next 2 seasons would start at approximately $78.4M.

This is not a good sign when Vancouver is looking to lock in pending UFA’s such as Tyler Toffoli, Jacob Markstrom, and Chris Tanev. But these are not the only contracts ending this season. Jake Virtanen, Tyler Motte, Adam Gaudette, Zack MacEwen, Troy Stecher, Oscar Fantenberg, Louis Domingue, and Josh Leivo all become RFAs or UFAs after this season.

The Canucks need to be smart in their dealings this off-season. It has been a good start with the signing of Jack Rathbone to an entry-level contract (ELC) of $2.775M over three seasons. But Vancouver has a long way to go in straightening up the books whilst staying competitive. And this cap recapture penalty from a contract signed a decade ago does not help the situation.
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