Releasing Players- 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.
- The hit against the cap is rounded to the nearest $500,000. Therefore, if it ends up being less than $250,000, the hit to the cap will be zero for that year.
- You may not bid on a player that you have released for a period of 30 days. If you resign a player, their original contract is restored.
- Any player released under a prospect contract will not cause a hit to the cap.
Contract BuyoutMoney 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.Money owed to a player released under contract may be financed through a contract buyout. This is done by first releasing the player by using the aforementioned formula (Releasing Players). Then the remaining contract amounts are added together, multiplied by 1.1, and the total is rounded up to the nearest $0.5m. 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.
Contract Buyout One time paymentSP Chacin, Jhoulys, $4.5m (2017)
2015 $4.5M- (75%) $3.5M CAP Hit for 2015
2016 $4.5M- (50%) $2.5M CAP Hit for 2016
2017 $4.5M- (25%) $1M CAP Hit for 2017
Take Jhoulys Chacin cap hits ($3.5 + $2.5 + $1) all this year. $7m total*1.1 = $7.7m rounded up to $8M
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.
Now, the Dodgers don't have the room to take on such a hit, so what if they wanted to arrange something for 2010 instead of 2009? I would vouch for an additional rule to say that when a cap hit is consolidated, it must start in the current year and not increase in any future years. Also, the number of years of the buyout must be less than or equal to the number of years in the current cap hit. Say the Dodgers only have $4.5m in cap room, but they wish to max that out for Jones' contract buyout. Now, note that Jones already has a $5m cap hit in 2009, so that needs to be taken out of the equation. They really have $9.5m in cap room without Jones' liability.
They may now divide the $22m liability in a myriad of different ways as long as it does not go beyond 2014 and is never increasing from one year to the next...
- $9.5m, $9.5m, $3m
- $9.5m, $8m, $4m
- $8m, $7m, $7m
- $7m, $6m, $5m, $4m
- $6m, $5m, $4m, $4m, $3m
The point of consolidating the cap hit is to relieve your team from liabilities in future years, so I imagine the first option would be taken. Let's do another example with Carlos Silva, formerly of the Seattle Mariners.
Silva, Carlos, Released under contract (2012 option not exercised), $7m in 2010, $3.5m in 2011, $11m in 2009The lump sum is $21.5m (10% is $2.15m, rounded up to $2.5m), so the buyout lump sum is a whopping $24m. With no room under the cap, a buyout isn't possible for 2009. The team will have to wait until the offseason, so they can arrange a 2010 buyout. Assume the Mariners have tons of cap room in the 2009-2010 offseason, so they arrange this buyout as one of the top priorities. The lump sum is now $10.5m (10% is $1.05m, rounded up to $1.5m), so the buyout lump sum is $12m. They may decide to take it all in 2010, or split it between 2010 and 2011 where the 2010 cap hit is not less than the 2011 cap hit.
Another example with a mid-market team that has some room under the cap for 2009...
Riske, David, Released Under Contract, $2.5m in 2010, $4m in 2009The 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.
