The “Luongo Rule” Explained

The “Luongo Rule” Explained

7:57 am

USATSI_8387789_154224518_lowresJames Mirtle of the Globe Mail reported back in early December that the NHL was going to target existing long-term contracts in the new CBA. They planned on punishing teams who had previously signed players to long-term back-diving contracts.

The NHL had proposed:

“We are proposing that all years of existing long-term contracts in excess of five (5) years be counted against a Club’s Cap regardless of whether or where a Player is playing. While such contracts (and Cap charges) can be traded during their terms, in the event a Player subsequently retires or ceases to play, the effective Cap charge would revert to the Club that originally entered into the contract.”

Fast-forward to today. With the new CBA awaiting ratification, the gist of what was earlier proposed, will be in the included. In what may now be known as the “Luongo Rule” (tagged by Pierre LeBrun on ESPN). Contracts that are longer than six years that are traded, could see both teams being penalized if the player retires before this contract expires.

To wit: let’s say the Canucks trade Luongo soon. Luongo has played two years of his 12-year contract, the Canucks paying him $16.716 million in salary but only absorbing a $5.33 million cap hit each year. That’s a cap savings of $6.056 million over two years so far for Vancouver. Under this new rule, should the Canucks trade him now and he retires with three years left on his contract, Vancouver would be charged that $6.056 million in cap savings over the final three years left on his deal from 2019 to 2022. However, let’s say for argument’s sake Luongo gets traded to Toronto, the Maple Leafs also would be subject to cap penalties if Luongo retires before the end of his deal.

To wit, part 2: If Luongo were to play the next seven years of his deal in Toronto before retiring, the Leafs would be paying him $43.666 million in salary but only counting $37.31 million against the cap over those seven years, a cap savings of $6.356 million. So if Luongo retires with three years left on his deal (because his salary falls to $1.618 million in the 10th year and then $1 million in the last two years of the deal), the Leafs would get charged that $6.356 million on their cap spread evenly over the remaining three years of his deal.

Elliotte Friedman of CBC also throws out some numbers pertaining to Luongo’s contract if he’s traded and retires early. Friedman brings up a couple interesting points: 1. this CBA could expire before Luongo (or some other long-term contracts) retire, therefore this ‘rule’ may not apply in the next CBA. 2. There is still LTIR option. Luongo or anyone else, could be forced to leave the game early, similar to Chris Pronger and Marc Savard. The team could then put the player on LTIR and the cap hit would not count against the cap.