Performance Bonuses & LTIR
The Oilers will operate in LTIR this year. If Philip Broberg is on the Oilers roster on day one, then his potential performance bonuses wouldn't count against the cap. My understanding is that if Broberg was to be sent down and recalled at any point during the season, then his potential performance bonuses would count towards his cap hit. Is that right, or could Broberg be sent down and recalled without his potential performance bonuses counting against the cap if he was to be on the Oilers roster on day one?
Answer
When a team sets their LTIR pool (read more on this here), they are actually setting two pools.
One is the salary pool, which relates to cap hit and is the pool most often discussed. The other is the performance bonus pool. When the LTIR pool is set, for any player on the NHL roster that has performance bonuses in their contract, the average annual amount of their potential performance bonus goes into the performance bonus pool.
In the case of Broberg it’s $850,000 and Holloway $516,667. It doesn’t matter if the bonuses were achieved. The total of all those average annual potential bonuses becomes the LTIR performance bonus pool.
If the total average annual amount of potential performance bonuses on the active roster ever exceeds the LTIR performance bonus pool while the team is in LTIR, the difference results in reduced cap space. That’s why teams try to have players with performance bonuses on the NHL roster when they set their initial LTIR pool, so that they have enough in the pool to cover players coming up during the season.
For the specific questions above, if the total average performance bonuses on the Oilers roster does not exceed the $2.1 million pool set on opening day, then there is no reduction in cap space. That means that if the only Oilers players with performance bonuses on the roster are Holloway and Evan Bouchard, once Broberg is recalled only his $863,334 Cap Hit takes up cap space, and his performance bonuses do not impact cap space.
However, if Broberg and Xavier Bourgault ($242,500 average annual performance bonuses) were both recalled with Holloway and Bouchard still on the active roster, the $242,500 in bonuses for Bourgault would result in a reduction in cap space, effectively making his cap hit $1.1675 million.
