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Tuesday, April 20, 2010

Yashin buyout revisited

Soemone asked a question to Mr. Botta on why Yashin's buyout has such a big cap hit in 2010-11 (it's the highest of the eight year buyout period).  Here's why:

Yashin buyout math:

The effect on the cap in 2010-11 is highest this coming year, because Alexei's salary was actually lower in 10-11 than in the earlier years of his deal.  Since the cap hit is spread evenly across the years, the lower "actual" salary results in a higher buyout.

Specifically, he was going to make 4.864 million this year (the last of his deal) but the cap hit was going to be 7.415 million (spread equally over entire original contract).

He'll actually receive a payment of $2.204 million (1/8 of the buyout of $17.632 million)  The savings from the buyout is 4.864 - 2.204 or 2.660 million.  7.415 - 2.660 results in this year's cap hit of 4.755 million.

Note that for the final 4 years of the buyout (starting 2011-12), the cap hit is reduced to 2.204 million annually.

This "lesson" will be realized throughout the league with teams that signed long-term contracts in which the salary in the last couple of years are significantly lower than the remaining years. 

(As best I understand, this would not be an issue if the Isles were to ever buyout DiPietro's contract, which is $4.5 million annually.  The buyout is 2/3rd of the contact amount and there are 11 years remaining on that deal.  Thus, if it was to happen this summer, it would be a cap hit of 1.5 million for the next 22 seasons.  Can't see that happening!)

 Forever1940 is the nom de plume of Eric Hornick, statistician on Islander home telecasts since 1982. Visit my blog: forever1940.blogspot.com and follow me on Twitter @ehornick

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