Revisiting the Over-35 Bonus Cushion: Jarome Iginla and the Hidden Genius of Cap Deferment
Last July, I wrote a piece about an interesting component of the CBA which allows teams to give out contracts to a specific set of players that could give a team a leg up on creating a winning roster. According to Capgeek, there are seven teams who took advantage of this potential benefit by signing a player over 35 to a single-year deal with bonuses:
Detroit - Daniel Alfredsson
Dallas - Tim Thomas (Signed by Florida)
Boston - Jarome Iginla
Chicago - Nikolai Khabibulin
New Jersey - Jaromir Jagr
New Jersey - Marek Zidlicky
Anaheim - Saku Koivu
St. Louis - Carlo Colaiacovo (signed in November)
The bonuses for these players range from a paltry $200K (Colaiacovo) all the way up to a meaty $4.2M (Iginla). It's not clear that all of these were signed with a mind to the bonus cushion advantage, but each of these teams could end up carrying part of these cap hits over to next season as a result of bonuses paid putting them over the cap.
For Boston, it certainly does look like their single-year over-35 contract was signed with a mind to take advantage of this CBA quirk to gain a bit of a leg up on the competition, and it appears to be working perfectly. We'll look at Iginla because his is the biggest of these deals and also seems to be working out as the best (although the $2M benefit on the Jagr and Alfredsson deals worked out ok for their squads as well).
Jarome Iginla was the third-leading scorer for the Bruins this season. He tied with Patrice Bergeron for the team lead in goals with 30. He's been an excellent force for Boston's run this season. Even better? For all intents and purposes, Iginla did all of this with a cap hit of $1.8M thanks to the unique features of his being over 35.
Iginla's full salary this season will likely end up being the full $6M of his deal, but of that, only $1.8M of it was actually guaranteed Paragraph 1 salary. The other $4.2M is payable in bonuses that, if needed, can be counted toward's next year's salary cap, and likely will be.
So what? At least the Bruins will have to take a cap penalty. They'll start next season at a disadvantage because they'll have $4.2M in cap space less than another team. This is true, but when it works out this well, it's a wonderful way to limit that disadvantage. You see, $4.2M next year isn't the same as $4.2M this year.
Under a $64.3M cap, the bonus amount for Iggy takes up 6.5% of all available cap space. If the cap goes up to the rumored $71.1M amount, that percentage drops down to 5.9%. It's not huge, but it's about $426K in spendable dollars. Looking at it the other way, it's not really a $4.2M amount for Iginla; it's effectively $3.8M in 2013-14 dollars.
Besides, that's only a consideration of how "disadvantaged" the Bruins are next season (where they could presumably just do another 35+ bonus-laden deal and keep passing it forward).
The real advantage is in this season. Without being able to utilize performance bonuses for Iginla, the Bruins would have either had to have talked him down to taking a ridiculously small contract (which wouldn't have happened), or they would have had to have found a way to live without $4.2M worth of cap hit taking up space elsewhere on their roster. For argument's sake, Loui Eriksson's cap hit this season was $4.25M. That's 10 goals and 37 points off their roster.
Now I'm not saying Boston isn't good if they lack either Eriksson or Iginla, but they're certainly not AS good. Fortunately, Peter Chiarelli found a way to avoid having to confront that reality. It's not a move that makes sense everywhere, but for the 44 pending UFA players who are currently over 35, there's a handful of them who could find their way onto the rosters of competitive teams that might not otherwise be able to fit them in financially.