Can someone try to explain this term in as basic and elementary a way as possible? I just read an article on sportsnet that suggested this tool could "hypothetically" be used to mitigate lost revenue and a flat salary cap in wake of the health crisis. What're the major differences, if any, from regular buyouts?

For example, how would it work if, for example, the Panthers used a compliance buyout on Bob? How much cap relief would they get? What percentage of Bob's remaining $60M would he be owed? How do bonuses factor into the buyouts? Is it the same as a regular buyout? And finally, why would the NHLPA ever agree to this? Less money for the players under any circumstances seems to directly contradict their mission, right?

Thx for the help!

From what I understand, it is exactly the same as a regular buyout (which you can read more about on CF in the buyout section). The only difference is that it doesn't count against the cap.

From an NHLPA perspective, the compliance buyout eliminates the bought out player's cap hit while still paying the player a good amount of money, even if not the full amount. If the team ends up filling out that newly-found cap space with 1-2 more players on cheaper deals, that's no lost money from an NHLPA perspective. In fact, you could argue they make more money since the bought out player is still earning two-thirds of his original contract. So the buyouts free up cap space for more jobs (roster spots) while still paying the player. The NHLPA is probably willing to take the 1/3 reduction in salary for the one player in exchange for the likelihood that the team uses that cap space to give jobs to 1-2 more players. Greater good and all that.

I'm sure i've asked you this before, but who's your favourite team? I don't think i've ever found out.

Good stuff. Thx.

Dallas

Isn't there the chance that the NHLPA would argue that the sudden and unexpected benefit accruing solely to the teams should be balanced by requiring the teams to adhere to the original terms of the contract? Otherwise, the players being bought out are being affected by an "act of God."

I would think this would be an issue that the league would contend with their insurance carriers. Obviously, there's gonna be major losses in revenue. I think the possibility of a compliance buyout will be negotiated with the NHLPA. I just don't see the players agreeing to this unless the 2020-21 season is shortened or if the virus persists to the point where fans can't attend games live.

You bring up an interesting issue, though. There are so many unanswered questions right now. Maybe a government bailout will be in the works. I wanna do some research into other work stoppages to come up with a better answer, but this is truly a unique situation.

Since the cap is based on revenue, I gotta think that NHLPA and owners will agree to salary cuts across the board. It's a dream to think the cap should be 86m in 2020/21 when the league lost 25% of its revenue in 2019/20. And no reason to think revenues will rebound due to wide spread economic downturn we are going to experience for years. People won't have discretionary money to buy tickets to sports events or to buy sports merchandise. Some businesses will stop buying tickets for their customers....The business may not exist and neither are the customers.

I totally agree. I'm sure the league will try to be prepared for all scenarios. Right now, I think the league and fans should be prepared for this eventuality: There's certainly no guarantee we will have hockey in October, let alone this season. I hope I'm wrong, but we need to be realistic. Also, playing games w/o fans live is nothing more than a short-term stopgap. No chance the league can normalize this scenario. They might need a government bailout to mitigate loses.

Governments are going to trouble justifying bailouts when the average NHL player makes 2.5m, NFL about 3m NBA about 16m.
Yea, filled sports arenas/stadiums at any league level soon.....seems like a fantasy. Even discussing cap in our CF has no logic since we don't know rules. Interesting though, when many CapFriendly guys write about a flat cap, it seems that the Leafs and only the Leafs have cap issues.

Tax payer money usually subsidies arena construction. It's def. in the best interest of North American cities to have sports up and running asap. Sports generate billions for local economies. Restaurants, hotels, public transportation, jobs, etc...

Congress just gave $25M of taxpayer money to the Kennedy Center in DC, which in turn, layed off it's workforce. Also, most sorts franchises are profitable businesses. They could, in theory, pay back the money if they had to.

It's time to abandon the hallucination that this season can somehow be completed, with or without the playoffs. Such an effort would only de-legitimize not just this year but 2020-2021, too, because it would require truncating the off-season egregiously. The draft combine, the draft itself, the free-agency period and an adequate-length training camp are all more important to the health of the sport than the rest of 2019-2020.

I think that a "compliance buyout" is inevitable because the owners will seize any opportunity to save money in the face of the enormous loss of revenue caused by the shut-down. I think that most teams will vote for it even if it helps some teams (e.g., Tampa and Vancouver) more than others (Anaheim, Boston, Los Angeles). I wonder what the vote has to be for this idea to carry -- 3/4? 2/3? It can't be a simple majority.

I gotta think the players and owners have to agree on a compliance buyout also. It actually helps the players as it keeps the cap high for the majority members and 31 players cut a pay cut (buyout) for not working. But realistically the revenue and cap for 2020/21 should be 70m. Now how do the owners and NHLPA members divide that cap of 70m among 23 players per team. Yea maybe it's 77m. But gotta think the owners and the NHLPA will agree that ALL players will take a pay reduction..

Wow!! That's an interesting idea. It didn't occur to me that players would surrender contractual benefits that have already vested. But you're right: anything can be granted even if it can't be compelled.

But the "players" don't give up contractual benefits. The cap is based on revenues, so the owners can say with cause...,the cap should be 70m. The majority of NHLPA members are mid to low salaries. They aren't taking so much less just because some big names already have their contracts. Let the players vote.
Actually once the cap is agreed upon, the owners don't really care how the cap is divided. Most owners generally spend near the cap away. So if the cap is 77m and players don't want a pay cut...OK, gonna be a lot of 20/21 man rosters and players without contracts signed are going to be 800,000 contracts. All because some big name players won't take 500,000 to 1m pay cut? No I think the majority of the NHLPA will vote for pay cuts across the board if the cap has to be reduced.

My suggestion earlier was the contracts/arbitration should be based on 86m pre Covid expectation. Then if the cap is reduced 20%, all the players take an equal haircut in salary.

If you have a contract that says you get $1 million per year, and then you agree ("vote") to have that reduced to $800,000, then you're giving up contractual benefits. It doesn't make any difference how we got there. But your underlying theory has validity.

I def. agree with your proposal that all players be impacted.

They could vote for a sliding pay cut. Sort of like income taxes. A player making $10M AAV might have to surrender 12% while a player making $1M might lose 5%. A player making $4M maybe loses 8%. My issue with the compliance buyout vote is that the only players who'd vote against it are the ones in danger of being bought out, right? I mean 95% of the league would be unaffected. With league-wide pay cuts, every single player would share the losses.