Rules Question

[Paul S.]

The rule clearly states that the 10% penalty is on the entire original remaining amount,  NOT on the discounted cap hits.  The buyout would be $4.5m unless the rule is re-written.

Contract Buyout
Money owed to a player released under contract may be financed through a contract buyout.  This can be done by adding up the total remaining contract amount, multiplying it by 1.1 rounded up to the nearest $500k.  This amount may be divided up any way you choose as long as the number of years is not more than what it was before AND that no salary owed in any year is more than an amount in a prior year.  I will use some current examples to highlight the effects of the buyout and its 10% tax.

Jones, Andruw, Released Under Contract ($5m in 2009, $3m from 2010 to 2014)
Jones' salary hit doesn't fall under the 90/60/30 cap hit rules because these liabilities were inherited. The lump sum as of 2009 is $20m.  Applying the buyout tax of 10% ($2m), and the cap hit can be consolidated into $22m for 2009.

Riske, David, Released Under Contract, $2.5m in 2010, $4m in 2009
The Brew Crew is $5.5m under the cap, but without Riske in the situation, they are $8m under the cap.  The lump sum for Riske's contract is $6.5m (10% is $650k, rounded up to $1m), so the buyout lump sum is $7.5m. They may opt to consolidate the cap hit into 2009.

[shooter47]

The rule clearly states that the 10% penalty is on the entire original remaining amount,  NOT on the discounted cap hits.  The buyout would be $4.5m unless the rule is re-written.

Contract Buyout
Money owed to a player released under contract may be financed through a contract buyout.  This can be done by adding up the total remaining contract amount, multiplying it by 1.1 rounded up to the nearest $500k.  This amount may be divided up any way you choose as long as the number of years is not more than what it was before AND that no salary owed in any year is more than an amount in a prior year.  I will use some current examples to highlight the effects of the buyout and its 10% tax.

Jones, Andruw, Released Under Contract ($5m in 2009, $3m from 2010 to 2014)
Jones' salary hit doesn't fall under the 90/60/30 cap hit rules because these liabilities were inherited. The lump sum as of 2009 is $20m.  Applying the buyout tax of 10% ($2m), and the cap hit can be consolidated into $22m for 2009.

Riske, David, Released Under Contract, $2.5m in 2010, $4m in 2009
The Brew Crew is $5.5m under the cap, but without Riske in the situation, they are $8m under the cap.  The lump sum for Riske's contract is $6.5m (10% is $650k, rounded up to $1m), so the buyout lump sum is $7.5m. They may opt to consolidate the cap hit into 2009.

The examples state that the players were released under contract but they were also written a long time ago. They also show contracts with values that differ from year to year. Maybe Colby can explain how this rule is to be interpreted.

[Brent]

The examples state that the players were released under contract but they were also written a long time ago. They also show contracts with values that differ from year to year. Maybe Colby can explain how this rule is to be interpreted.

That would be great.

[joeshmoe]

The rule clearly states that the 10% penalty is on the entire original remaining amount,  NOT on the discounted cap hits.  The buyout would be $4.5m unless the rule is re-written.

Contract Buyout
Money owed to a player released under contract may be financed through a contract buyout.  This can be done by adding up the total remaining contract amount, multiplying it by 1.1 rounded up to the nearest $500k.  This amount may be divided up any way you choose as long as the number of years is not more than what it was before AND that no salary owed in any year is more than an amount in a prior year.  I will use some current examples to highlight the effects of the buyout and its 10% tax.

Jones, Andruw, Released Under Contract ($5m in 2009, $3m from 2010 to 2014)
Jones' salary hit doesn't fall under the 90/60/30 cap hit rules because these liabilities were inherited. The lump sum as of 2009 is $20m.  Applying the buyout tax of 10% ($2m), and the cap hit can be consolidated into $22m for 2009.

Riske, David, Released Under Contract, $2.5m in 2010, $4m in 2009
The Brew Crew is $5.5m under the cap, but without Riske in the situation, they are $8m under the cap.  The lump sum for Riske's contract is $6.5m (10% is $650k, rounded up to $1m), so the buyout lump sum is $7.5m. They may opt to consolidate the cap hit into 2009.

I am talking about releasing a player under contract, the 10% tax is only if a team decides to buyout over multiple years.  All the money owed upon release can be paid up front for no tax and the buyout would be merely 3m.  Per the rules.

[Flash]

Last season I utilized a contract buyout for Ronnie Paulino.  There was some question regarding the rules at that time because Colby, one of the original founders of Franchise GM had a different interpretation of the rules than Roy.  Colby claimed that you dropped the players and their remaining contract amounts were multiplied by 1.1%.  Roy overruled that interpretation and stated that I was to add the total amount of the current contracts and then multiply by 1.1% (in each case rounding up to the nearest $.5m).

In regards to MI Nishioka, Tsuyoshi, $2m (2014), the buyout is $4.5m

$2m (2013) + $2m (2013) + $0.5m (1.1% buyout tax) = $4.5m

Roy made this ruling on August 8, 2012 in a post I no longer can access.  I kept the PM with the ruling link.  Maybe someone with moderator's rights can access this link:

http://www.profsl.com/smf/index.php?action=post;msg=370169;topic=67744.0

In short, we cannot drop a player and then get a reduced buyout amount.  We have to eat the entire amount and add the 1.1% buyout fee (rounded up to the nearest $0.5m unless the amount is less than $0.25m).

I'm not sure about spreading a buyout over multiple years when you are still required to pay the full amount of the original contract plus 1.1%.  See the current rules regarding contract drops and their corresponding percentage drops in the rules below.

---Any player dropped before the trade deadline still has part of his contract count against the cap in the following manner:  Current year: 90%, Next year: 60%, All future years after: 30%.
---If the player is dropped after the trade deadline, then the hit to the cap changes to 75%, 50%, 25%, respectively.