The dreaded Cap Recapture Penalty
Another provision put into place to protect players is the Cap Recapture Penalty. This rule states that teams cannot wipe a player’s contract off the books if he retires while his contract is still valid. In other words, if a player retires mid-contract, the team still has to carry that player’s cap hit for a specified period, that is, the remaining years of the player’s deal.
The amount of the Cap Recapture Penalty varies according to individual cases. A good example is Roberto Luongo’s premature retirement. PuckPedia has a wonderfully detailed explanation on the
matter here. In Luongo’s case, the Cap Recapture Penalty amounted to over $12 million due to the difference between the amount paid and the amount still owed.
The Vancouver Canucks and Florida Panthers shared the Cap Recapture Penalty for three seasons as Luongo retired with three years left on his contract. Both clubs split Luongo’s $5.33 million cap hit over three years, with the Panthers on the hook for more than $3 million per season.
So, let’s crunch some numbers for Landeskog. His total deal was set for eight years, $56 million with an AAV of $7 million per season. Landeskog is currently entering the fourth year of the deal. So, that means the Avs have paid out three years or $21 million. That would leave $35 million of which the Avalanche would be on the hook for.
Thus, the Avs would be stuck with $35 million of dead cap space for the next five seasons. That would mean roughly $7 million per season in dead cap space that can’t be used and can’t be moved to LTIR. While the Avs don’t have to pay Landeskog a dime, they have a ton of dead cap space that can’t be used for anything else.
In short, the Avs are better off paying Landeskog to spend time with his family and work out than deal with dead cap space. It’s a win-win for everyone.