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Mike Rathje And The Flyers Cap
by PuckStopsHere on 11/23/09 at 11:05 AM ET
Comments (14)
Mike Rathje has not played an NHL game since early in the 2006/07 season, yet he is an important part of the Philadelphia Flyers salary cap strategy. At the conclusion of the lockout (in 2005), Rathje signed a $17.5 million five year contract with the Flyers. This deal turned out to be one that the Flyers soon regretted. They found a solution which has allowed them to have a payroll exceeding the cap in the many years that Rathje has been hurt. The Flyers placed him on long term injured reserve with back and hip problems in 2006 and have left him there ever since. Rathje last attempted to play in the 2007 training camp, but when he couldn’t make the team he stayed on the LTIR.
The CBA rules allow team to exceed to salary cap by the salaries of LTIR players if this is needed to pay for the replacements for those players. This means that the Flyers can have up to $3.5 million in extra salary cap room by leaving Rathje on LTIR (assuming they are at the cap when his salary hit is taken each year). This is a preferable situation to buying out his contract. If they buy out his contract (although they pay him less), their salary cap room is reduced by the amount of the buyout.
It is clear that Mike Rathje has no intention of playing again. His wikipedia page lists him as retired, which is essentially correct. What else would you call somebody who hasn’t played a hockey game in three years? He is only active because of his contract. His contract has been kept alive because it gives the Philadelphia Flyers more salary cap space.
This situation shows one unpublicized salary cap loophole. There needs to be a limit to long time injury reserve. When a player spends the last 3.5 years of a five year contract on the LTIR and never plays again, he isn’t injured. He is retired. A larger market team that can easily afford to spend in excess of the salary cap can use this as an advantage. With the very long term contracts that the NHL is seeing, it is just a matter of time before a player in one of those contracts suffers a career ending injury (assuming Rick DiPietro has not done it already). Will that contract be used to allow a team to exceed the salary cap for many years as the player sits on the LTIR with no intention of ever playing again? At this point, Mike Rathje is an isolated case, but it is a loophole that other teams may use in the future. Will anything be done to prevent this?
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Tags: Mike+Rathje, Philadelphia+Flyers,
Comments
Because—in little gary’s world—it’s wrong, shameful and borderline illegal for any GM or organ-i-zation to be or even appear to be smarter than lg himself.
Posted by YzermanZetterberg on 11/23/09 at 11:53 AM ET
The Flyers love to cheat in any way possible. It’s funny that they also haven’t been able to win anything in years. Thank you for bringing this to the forefront and embarrassing that sorry franchise even more.
Posted by jwalk from Walston on 11/23/09 at 11:54 AM ET
yea.. cause everything on wikipedia is true… lol
Posted by kenora_guy from kenora on 11/23/09 at 01:41 PM ET
So if the alternative were enforced, i.e., that Rathje is really retired and not suffering a long-term injury, wouldn’t that mean that his salary just comes off the books altogether? I’m thinking of Naslund in New York as an example. At least this way, the Flyers are punished for handing out such a dumb contract, no?
Posted by Stephen on 11/23/09 at 01:46 PM ET
Why would this loophole even exist? Something isn’t right here.
If a player is on LTIR, doesn’t his salary come off the cap? And if so, why would a team need even more extra cap room to replace him?
Look at it this way… for easy math, let’s say the cap is $50M and a player makes $5M. That means the team has $45M left to spend on everyone else. But Johnny Superstar gets hurt and goes on LITR. His cap hit disappears, so the team gets an extra $5M to spend. Is this how it works?
Because if so, there’s really no loophole here. The team isn’t gaining any advantage by having the injured guy around. It would be better for the team if he retired, since they’d have no cap hit and they wouldn’t have to pay him.
Or are you saying that the team not only loses Johnny’s cap hit, but then gets an additional $5M to spend on top of their $50M?
That can’t be right.
Posted by Down Goes Brown from Ottawa on 11/23/09 at 01:56 PM ET
@Down Goes Brown
With the way the LTIR currently works, and to use your numbers as an example, the team would be allowed to go over the cap by the same amount as Johnny Superstar’s cap hit while he is on LTIR. So while they would still be paying Johnny’s salary, they would be able to spend an extra $5M on a replacement. They would be allowed to spend $55M in a world where the cap is $50M.
If Johnny just retired, then that $5M would come off the books and the team would have an extra $5M (money they would have formerly had to pay Johnny) to spend. They would not be allowed to go over the cap.
The only way this is really a loophole is if Johnny is not actually hurt but just plain sucks. You can try and keep the player on LTIR so you get some cap relief. There are provisions in the CBA that allow NHL doctors to examine the player and determine whether he really is injured, though.
Posted by Stephen on 11/23/09 at 02:12 PM ET
The loophole is that the Flyers have made Rathje’s contract go away (as far as the salary cap is concerned - and I am sure insurance is paying it and not the team). It is true that other methods exist to make contracts go away (see for example Markus Naslund), but that is irrelevant to this contract.
Other teams have bought out players who are in similar situations to Rathje (Dan Cloutier, David Tanabe are examples) and this has their buyouts counting against the salary cap. The Flyers meanwhile have chosen not to buyout Rathje and get the cap space that should be going to his buyout. Is it really reasonable for his contract to still be there when he is not even attempting to make a comeback anymore?
Posted by PuckStopsHere on 11/23/09 at 02:18 PM ET
@PuckStopsHere
If he’s too injured to play, he could retire and the cap hit would disappear entirely. If he’s not really injured but has been “persuaded” to maintain some sort of injury in order to get cap relief and avoid the Flyers from having to play him (or buy him out) then you may be on to something. There are provisions for the NHL to obtain an opinion from their own doctors to determine the bona fides of the injury to, presumably, reduce this kind of thing from happening.
So are you advocating that teams should have to pay players regardless of whether they are suffering through a long term injury that renders them incapable of playing? Or are you saying Rathje and the team should end the charade and Rathje should just retire (the end result, you will note, will have the same effect on Philadelphia’s cap situation and require them to pay less than they are now)?
Posted by Stephen on 11/23/09 at 02:29 PM ET
I am advocating neither of those positions. I am saying that in a situation where it is clear that a player cannot fulfill his contract like this he should have to be bought out and this would put a clear salary cap hit on the Flyers.
If we have to live in a salary capped environment, there shouldnt be ways for contracts to disappear from the books be it retirement, shipping players off to Europe, players on LTIR for years. That is assuming the cap is there to level the playing field and not just to give teams larger profits.
Posted by PuckStopsHere on 11/23/09 at 02:33 PM ET
Ah, OK. And here I was already figuring out how the Leafs could spend Mike Van Ryn’s money.
But I still don’t really see this as a loophole. Seems like teams have two choices: opt for a buyout, pay two-thirds and take a cap hit; or leave the guyon LTIR, take no cap hit, and pay the player his full salary. OK, in some cases it may be the insurance company that pays, but then that’s why you buy insurance.
I can’t see how you could force a player to retire, since my understanding is that retired players don’t get paid. There’s a lot of money at stake for Rathje here, regardless of who pays it.
Posted by Down Goes Brown from Ottawa on 11/23/09 at 02:40 PM ET
Duh - I’m not really hurt. The Fliers pays me hush monies to pretend I’m is hurt.
Posted by Mike Rathje from filladelfia on 11/23/09 at 03:39 PM ET
Down Goes Brown
I am not saying Mike Rathje should retire or not retire. The idea that a player can retire and suddenly his contract disappears is another problem with the CBA - if it needs a salary cap. I am saying that in this case it makes more sense for Rathje to have had his contract bought out several years ago then to have him sitting on the LTIR for 3.5 years.
If he chooses to retire after a buyout that is entirely up to him, though it looks like he has already chosen to retire.
Posted by PuckStopsHere on 11/23/09 at 04:15 PM ET
I’m wondering if this is a “tradeable” comodity. Could the Flyers trade Mike “as-is” for something? I’m thinking that perhaps as part of another deal, using the “cap headroom factor” of Mike’s contract to offset a salary differential in the actual trade.
“Here, take Player A plus Rathje’s cap exception, in exchange for Players B and C.”
Or even sell it outright.
Posted by nic from San Francisco on 11/23/09 at 05:51 PM ET
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Sure, the Flyers have taken advantage of the rules, just like they did with the Pronger contract. But their moves also benefit the players. In the case of Rathje, he would have been bought out if he was not on LTIR—for less than what he makes today. In the case of Pronger, the Flyers used the salary cap system to be able to pay Pronger what he is worth today and lower their cap hit at the same time. Are the Flyers using the rules to their advantage? Sure. My question to you—why shouldn’t they?
Posted by memphisbrando from Memphis on 11/23/09 at 11:22 AM ET