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Explaining the “Luongo rule” in the new CBA

Jan 8, 2013, 11:04 AM EDT

source: Getty Images

In case you missed it, the CBC’s Elliotte Friedman and ESPN’s Pierre LeBrun have provided details of what some people are calling the “Roberto Luongo rule” (and others are calling the “punish the teams that made Gary Bettman look bad by signing long, back-diving deals that circumvented the salary cap” rule.)

The new rule applies for any contract in excess of six years, including ones that were signed under the last CBA.

LeBrun explains:

To wit: let’s say the Canucks trade Luongo soon. Luongo has played two years of his 12-year contract, the Canucks paying him $16.716 million in salary but only absorbing a $5.33 million cap hit each year. That’s a cap savings of $6.056 million over two years so far for Vancouver. Under this new rule, should the Canucks trade him now and he retires with three years left on his contract, Vancouver would be charged that $6.056 million in cap savings over the final three years left on his deal from 2019 to 2022. However, let’s say for argument’s sake Luongo gets traded to Toronto, the Maple Leafs also would be subject to cap penalties if Luongo retires before the end of his deal.

To wit, part 2: If Luongo were to play the next seven years of his deal in Toronto before retiring, the Leafs would be paying him $43.666 million in salary but only counting $37.31 million against the cap over those seven years, a cap savings of $6.356 million. So if Luongo retires with three years left on his deal (because his salary falls to $1.618 million in the 10th year and then $1 million in the last two years of the deal), the Leafs would get charged that $6.356 million on their cap spread evenly over the remaining three years of his deal.

Of course, this rule doesn’t just apply to players that are traded. If Luongo stays with the Canucks and retires three years early, they’d have to spread a $12.4 million cap hit over three years.

Now, one thing to keep in mind is that either the players or owners can opt out of the soon-to-be-ratified CBA after eight years, at which point Luongo would still have three years left on his contract and Bettman would likely no longer be commissioner. Translation: maybe they just scrap the rule as part of a new CBA and nobody gets punished.

Also, as Friedman points out…

…there may just be a loophole. From what I understand, Long-Term Injury Reserve still exists. (For example, it allows Chris Pronger to come off the Philadelphia cap while he recovers from concussions).

God forbid Luongo (or anyone else) goes through that. But he will be 40 in the summer of 2019. Who knows what happens to a goalie’s body by then? Maybe he’s had enough and is battling some nagging groin or hip or knee problem. He goes on LTIR, still gets paid and neither Toronto nor Vancouver gets any kind of penalty.

At any rate, neither team would have to pay a penalty until Luongo retires. And given the way some general managers have a habit of kicking the can down the road, we doubt this rule would be the only thing that stands in the way of a trade.

Plus, you never know – in 2020, $12 million might be the league minimum. (Or, if there’s hyperinflation, the price of a cup of coffee.)

Related: Luongo on possibility of playing in Toronto: “It’s something I can handle”

  1. davebabychreturns - Jan 8, 2013 at 11:35 AM

    Good to know they didn’t just go after the teams signing the deals – if a player like Luongo is traded the acquiring team would be accruing plenty of benefit (to the tune of $1.4m extra cap space every year) while they had Luongo or any other player under a similar contract so there’s not much sense – beyond Gary Bettman’s personal vendetta – holding the original team accountable for that.. particularly considering the league already signed off on the contracts. Twice, no less.

  2. klownboy - Jan 8, 2013 at 12:02 PM

    Screw Gary Bettman. That is all…

  3. macjacmccoy - Jan 8, 2013 at 1:23 PM

    Luongo rule? If anything its the screw Holmgren rule. The Flyers basically invented the idea of long back diving contracts and have given out more then any other team. Hell if they dont opt out in 8 years the Flyers will have no players on their team but have the highest salary.

    • tcclark - Jan 8, 2013 at 7:23 PM

      seriously. Holmgren signs Richards, Carter, Pronger, and Bryzgalov to massive deals, but this is the Luongo Rule….

  4. pooinyourface - Jan 8, 2013 at 4:21 PM

    when are you dummies gonna realize its the DiPietro Rule?

    • tcclark - Jan 8, 2013 at 7:23 PM

      i think they’re using that name for the amnesty clauses

  5. hawkeyplayer - Jan 8, 2013 at 5:40 PM

    who cares.

    not my busniess to deal with

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