Steve Simmons recently had an article on whether the Leafs should buy out Domi and his $1.25 million contract for next season and several other bloggers have also discussed the buyout issue. But there seems to be some confusion as to what the buyout procedure is and its implications on a teams salary cap. I believe some of the details that Simmons discussed in his article are incorrect. I have exchanged a few e-mails with Simmons on the issue but he sticks by his article even claiming his source on the matter is the vp of the league but I still think there is some confusion on Simmons part on which CBA rule applies in Domi’s situation should he be bought out. Here is what I believe to be the situation (but I will add that I am not a lawyer).
There are two sections in the CBA which I believe are causing the confusion. The first is about players over the age of 35 who sign multi-year contracts. A section on CBA page 190 states:
All Player Salary and Bonuses earned in a League Year by a Player who is in the second or later year of a multi-year SPC which was signed when the Player was age 35 or older, regardless of whether, or where, the Player is playing except to the extent the Player is playing under his SPC in the minor leagues, in which case onlt the Player Salary and Bonuses in excess of $100,000 shall count towards the calculation of the Actual Club Salary…
So, if Domi is on the second year of a multi-year contract his full contract value would count against the Leafs cap, even if he was released or demoted to the minors. In this case his $1,250,000 salary would count to the Leafs cap total.
But, if the Leafs buy out his contract he technically would never make it to the second year of his contract and thus in my opinion the above rule would not come into effect. So what matters is the rules for the buyout. The rules for how a buyout impacts the cap is on CBA page 206 and is followed by several examples and with more specifics on the buyout procedure on page 224. In none of the examples is the players full salary used, only the buyout amount. The buyout amount is 2/3 of the remaining value of the contract if the player is over age 26 and 1/3 otherwise with it to be paid over twice the number of remaining years of the players contract. In Domi’s case the Leafs would be buying out one year at $1,250,000. The cost of that buyout would be 2/3rds of 1.25 million or $833,333 which is to be paid over the next 2 seasons which would mean a $416,666 cap hit in both the 2006-07 and 2007-08 seasons.
The above is how I interpret the CBA. If anyone disputes the above then please make your case in the comments.