Quoting: Salzy
While this is mainly pertaining to Ryan Kesler, who may get career ending hip replacement surgery -
Article it also relates to Luongo as the retirement rumors have been following him as well. What are the cap/money ramifications of these players retiring? Thanks in advance for anyone that can answer
As already stated, generally there are two scenarios that occur:
1. Early retirement (Example: Lecavalier), this is a true retirement, player retires from NHL without an injury, and they cease earning a salary. The team no longer has a cap hit (unless their is a recapture penalty, of which can't occur for any contract signed since the 2013 CBA)
2. "LTIRetire" The player is injured for the remainder of their career (See: Pronger, Hossa, MacArthur, etc, etc) and they "retire" from hockey; however, it is not an official retirement: The player continues to receive a salary, and therefore the team incurs a cap hit. Generally the contract is covered partially by insurance (usually 80%), and the team, if they need to exceed the upper limit, can place them on LTIR
Unless there is a recapture penalty, point 1 is beneficial for the team, but not for the player, for that reason option 2 is much more common.
Exception: payers on multi-year 35+ contracts who retire, their team does not receive a cap hit benefit.