In my continued attempts to become an NHL Salary Cap jockey, I have built up enough confidence to pass on the cap knowledge to you, dear reader. Here are the basics of what you need to know to make trades and signings easier to understand.
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What is the Salary Cap?
After a few work stoppages, the NHL seems to have its revenue situation under control. The last time their CBA was up for discussion, both the Players and the Owners renewed it early. Imagine that in other sports? Anyway, the plan in place now has the cap growing significantly into the near future.
- 2025-26: $95.5m
- 2026-27: $104m
- 2027-28: $113.5m (estimate)
- 2028-29: $127.5m (estimate)
That’s close to 10% jumps each year, so it wouldn’t be crazy to see $140m+ by 2030.
Very simply, once the regular season starts teams cannot go above the hard-line salary cap. There is one exception though, Long Term Injured Reserve (“LTIR”). LTIR is a tool that allows teams to essentially place a player’s salary outside the Salary Cap for a period of time (they must be out up to 24 days and 10 games). It’s not that simple though.
A team’s individual cap is calculated each day of the season by accruing players’ game checks rather than their full salary. When a player goes on LTIR, those game checks accrue outside the cap. There are two versions of this. For players who are set to return during the season, teams are limited to relief at a max of the previous year’s average player salary ($3.82m for 2026-27). If a player is out for the season, the team can get full cap relief for that salary.
Teams can have up to 23 players (20 skaters and 3 goalies) on their active roster, but only 20 dress for each game. Come playoff time, rosters are limited to 20 skaters (18 skaters and 2 goalies). Their combined cap hits must be lower than the salary cap.1
There is also a salary floor in place to make sure teams aren’t just pocketing revenue. For 2026-27, that floor is $76.9m.
Individual Contract Caps
Individual player contracts have certain guidelines and limits. This used to be the wild west with poison pills lasting well over a decade for any amount with bonuses and deferred money complicating things further. All of these open ends have been closed to save teams from themselves.
Starting next season, players changing teams will only be allowed to sign new contracts with a maximum term of 6 years. Players staying with their current teams get to add a 7th year. This is why you saw several 8 year contracts signed this past season, it was the last year they could get them in.
The individual contracts have a maximum yearly value of 20% of the salary cap. This is how Cale Makar just signed an 8/$163.2m deal, getting the max of $20.4m per season. On the other side, the minimum contract is now $850k and will go up another $50k in each of the next 3 seasons.
Makar’s contract also shows that teams can’t front load deals or have deferred money anymore either. He simply gets his $20.4m like clockwork throughout his 8 seasons, end of story…unless he’s bought out.
Buyouts
While contracts in the NBA and MLB are fully guaranteed unless a player voluntarily decides to cut his pay, that is not how the NHL works. Teams may buyout the remaining years on a contract at a percentage of the total depending on the player’s age. If the player is 25 or younger, the team is only responsible for 1/3 of the contract. If they are 26 or older, the team must pay 2/3 of the contract. This money is owed and spread to the salary cap at double the length of the remaining contract years.
For example, if a player is 30 years old and has 3 years remaining at $10m per year, then they would have 6 years to pay out $20m equally.
To be eligible for a buyout, the player must be placed on waivers first assuming they do not have a no-movement clause in their contract.
Free Agency and Compensation
Before we get to free agency, there is something called an Entry Level Contract. This is the deal that rookies sign when they get in the league and comes with no bargaining power. Players who are under 21 get a 3-year minimum salary deal; 22–23-year-olds get a 2-year deal; and 24-year-olds get a 1-year deal.2
There are two types of free agency, restricted and unrestricted. Unrestricted free agents are free to sign with whoever they choose while restricted free agents can entertain other offers but give their current teams the right of first refusal on any new deal.
The most common unrestricted free agent is a veteran age 27 or older with 7+ seasons under their belt and has their current contract expire. They are free to do as they please.
A restricted free agent is someone who is no longer on their Entry Level deal but also does not qualify as an unrestricted FA like above. If the team and player cannot work out a deal, the team can either release the player or issue a qualifying offer. If they receive a QO, they can sign an offer sheet with a new team (for the most part). An offer sheet is a contract just with no team filled in. The original team can fill in their own name and match the OS or they can pass and let the new team put their name in. The old team would be eligible for compensation though.
Compensation is VERY fun and it depends on the size of the newly signed contract. The higher the yearly value, the more owed compensation. These were the compensation levels this past offseason and will go up this summer:
- $1,575,969 to $2,387,832 = 3rd round pick
- $2,387,832 to $4,775,666 = 2nd round pick
- $4,775,666 to $7,163,498 = 1st and 3rd round picks
- $7,163,498 to $9,551,332 = 1st, 2nd, and 3rd round picks
- $9,551,332 to $11,939,166 = Two 1sts, a 2nd, and a 3rd round pick
- $11,939,166 and up = Four 1st round picks
A restricted free agent can also choose to accept the qualifying offer which gives them a slight raise. Certain players qualify for a process called arbitration. This is a judicial process with a private arbitrator taking the place of a judge to pick between proposed salaries from either the player (higher) or the team (lower).
More
There is much more minutia to the cap than this including performance bonuses, waiver claims, and buried contracts, but for the most part you don’t need to know that. More importantly though, I do not understand any of that enough to write it in a consumable fashion that wouldn’t waste your time.
- Previously there was no playoff salary cap and teams would use LTIR to stash healthy players and maximize roster talent come playoff time. This loophole was closed after the last CBA was ratified. ↩︎
- Ages are calculated by September 15th each season ↩︎
Source: Puckpedia.com
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