Sir Nicholas de Mimsy-Porpington said:
Thinking about a potential Murray buyout lead me to wonder how the annual cap hits are calculated in these cases. Obviously the actual spend is over twice the length of the remaining contract, but how do they work out the cap hit? In all the cases I've seen Y1 seems to be the most expensive and the post expiry years the cheapest, so clearly that is not shared out evenly as the actual spend is.
The actualy amount paid in the buyout is 2/3 of the remaning salary over twice the remaining term.
The cap hit is the original cap hit minus how much actual money you save that year.
Murray is paid 8.0M in actual salary for this coming year, which is also the total amount left on the contract.
A buyout would be 5.3M (2/3 of 8M), or 2.67M per year for 2 years.
The savings this year is 8M - 2.67M, or 5.33M
The original cap hit is 6.25M. So the cap hit minus savings (6.25M - 5.33M) is 920k which is the cap hit.
Because ottawa Retained 25%, the cap hit of the buyout is split 75/25.