New York Islanders' general manager Mathieu Darche has plenty on his plate as he prepares for his first season with his new club. One of those decisions is the future of team captain Anders Lee, who is entering the final season of a seven-year deal worth $49 million.
Lee is entering his age-35 season, which means his next contract will have certain stipulations, per the NHL’s Collective Bargaining Agreement.
A contract is considered a 35-plus contract if a player is 35 or older as of June 30 when the contract takes effect, regardless of when it was signed. A 35-plus contract can include a signing bonus. It may also include performance bonuses if the deal is only for one season.
The performance bonuses are the significant part of this equation. Performance bonuses do not count toward a player’s cap hit in the season in which they are signed. For example, when the Islanders signed Matt Martin last season to his one-year, $775k contract, it included a $100k bonus if he played 10 or more games.
That bonus, once achieved, will either apply to the team in the given season or, if the bonuses take the team over the salary cap ceiling, carry over to the next season as a cap penalty. That Martin’s $100k bonus has been subtracted from the Islanders’ cap this season as a bonus overage charge.
A bonus overage charge occurs when a team cannot afford to take on a player’s performance bonus in the current season. Whatever the bonus amount is, Martin’s $100k, for example, gets charged to the Islanders’ cap this season.
Obviously, Martin’s $100k bonus is a smaller-scale example. In an exploding cap, the need to use overage charges will lessen as teams have more space each year. A more famous example of a team utilizing a 35-plus contract to limit an AAV in one year is the Boston Bruins.
Back in 2022-23, their cap was full, but they needed to sign Patrice Bergeron and David Krejci to one-year deals. So, Boston signed Bergeron to a one-year, $2.5 million contract and Krejci to a one-year, $1 million contract.
However, both contracts included heavy bonuses for playing 10 games. For Bergeron, it doubled his salary with a $2.5 million bonus, while Krejci received $1.5 million for 10 games, then another $500k thanks to Boston making the playoffs that year.
Those are the ways most one-year, 35-plus contracts are set up.
However, Lee, barring a surprising down year after a renaissance season, will likely want to sign a two-to-three-year deal. Under the rules for a 35-plus contract, performance bonuses are NOT eligible for 35-plus players who sign a multi-year deal.
According to the CBA, teams will receive unfavorable salary cap treatment for players on 35-plus contracts IF: The contract is for more than one year and contains signing bonuses beyond the first year, OR has the salary decrease year over year. All of these are ways to manipulate the AAV to be lower than it actually is.
However, the only way teams get punished for this is if the player retires before the contract ends, or if the team assigns the player to the minors, they will not receive cap relief.
As a result, the players simply will not retire then.
Brad Marchand just signed a six-year deal at the age of 37, on a contract that sees both a decreasing salary and signing bonuses past year one. Assuming Marchand does not play out his contract, he will simply be placed on Florida’s LTIR.
These are the most common ways a 35-plus contract is structured, and the basic rules.
For Lee, it seems unlikely either of these two common cap hacks, if you will, will come into play during this negotiation.