How Did the Flyers Violate the CBA with Max Talbot’s Contract?

Gord Miller of TSN reported earlier today that he believes the Flyers may have violated the Collective Bargaining Agreement (CBA) with Max Talbot’s contract.

Due to the low cap hit ($1.8M AAV) and knowing that the Flyers have plenty of cap space, I knew immediately that the violation was of the 100 Percent Rule.

What is the 100 Percent Rule? In layman’s terms, it is designed to control the salary structure of a multi-year contract―determining how much a player can make from year to year and how much that number can fluctuate. The CBA reads:

50.7 “100 Percent Rule” for Multi-Year SPCs. The difference between the stated Player Salary and Bonuses in the first two League Years of an SPC cannot exceed the amount of the lower of the two League Years. Thereafter, in all subsequent League Years of the SPC, (i) any increase in Player Salary and Bonuses from one League Year to another may not exceed the amount of the lower of the first two League Years of the SPC (or, if such amounts are the same, that same amount); and (ii) any decrease in Player Salary and Bonuses from one League Year to another may not exceed 50 percent of the Player Salary and Bonuses of the lower of the first two League Years of the SPC (or, if such amounts are the same, 50 percent of that same amount.)

Basically, the 100 Percent Rule says three things. Remember, it all has to do with salary, not AAV/cap hit:

  • The difference between Year 1 and Year 2 can’t be more than Year 1 or Year 2, whichever is lower.
  • Starting with Year 3, any increase from one Year to another can’t exceed Year 1 or Year 2, whichever is lower.
  • Starting with Year 3, any decrease from one Year to another can’t exceed half of Year 1 or Year 2, whichever is lower.

Here’s Talbot’s contract per Gord Miller:

  • Year 1 = $2.50M
  • Year 2 = $2.25M
  • Year 3 = $2.25M
  • Year 4 = $1.00M
  • Year 5 = $1.00M

Where is the violation? I’ll show you.

The three years in question are Years 2, 3, and 4. All you need to know for Year 2 is that half of it is $1.125M. For Years 3 and 4, there is a decrease of $1.25M. Since the difference between Year 3 and Year 4 ($1.25M) is greater than half of Year 2 (which is the lower of Year 1 and Year 2) ($1.125M), Max Talbot’s contract effectively violates the 100 Percent Rule.

The solution is easy. Take $250K from Year 3 and throw it onto Year 4. It’ll restructure the contract and make it look like this:

  • Year 1 = $2.50M
  • Year 2 = $2.25M
  • Year 3 = $2.00M
  • Year 4 = $1.25M
  • Year 5 = $1.00M

Same term, same total amount, same cap hit, and without the hassle and embarrassment of a violation of the 100 Percent Rule. Wham, bam, thank you, ma’am.

10 Responses to How Did the Flyers Violate the CBA with Max Talbot’s Contract?

  1. Wow so Philly violates with that breakdown, yet the Rangers are ok with the deal they gave Brad Richards? His contract is 12, 12, 9, 8.5, 8.5, 7, 1, 1, 1. How is this not a violation from $7M to $1M? I am confused.

    By the way – new to your site and liking what I see!

  2. Tyler J. Altemose

    Bob,

    The answer is simple. The question in B. Richards’ contract is between Years 6 and 7. There is a $6M. Difference.

    The CBA dictates that, starting with Year 3, any decrease in salary from one year to another may not be more than half of Year 1 or Year 2, whichever of those is lower.

    Years 1 and 2 are both $12M. Half of that is $6M. The difference between Years 6 and 7 is $6M.

    Unfortunately, $6M does not exceed $6M.

    And that is how B. Richards’ contract is legal.

  3. Tyler J. Altemose

    Oh, and thanks for the kind words, Bob! Much appreciated!

  4. As am I, please explain

  5. Great article. This website is the tits!

  6. Tyler J. Altemose

    Thanks, Juliana! :)

    Marc, I hope my explanation above is sufficient. If you still have questions just let me know!

  7. arizonawingnut

    I must say that this is the most polite bunch of posts I’ve ever seen on this hockey forum. Especially considering the teams being mentioned, which ain’t exactly warm & fuzzy.

    BTW, the 100% rule is a bunch of crap. So what if they front load a players contract. Blow an ACL or get a major whack in the noggin and goodbye homie. Let ‘em play. Eventually that front loading will kill an entire front office, so the dust settles and they start over.

  8. Big deal, this is a non issue because all they have to do is shift a couple of bucks around. It’s not like the contract will be voided. :)

  9. I fully expect the NHL to impose a similar penalty on the Flyers organization that imposed on the Devils for the Kovalchuk deal. Remember they were fined for the first contract and the violation therein, not the final contract.

  10. Pingback: Solving the Cap Crisis – Detroit Sports Nation

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