So, buyouts are weird.
You basically pay a player to not play for your team. And, until recently, I — like many others — only focused on the buyout number that affects a team’s available cap space. PuckPedia even offers a handy buyout calculator to break down the impact of a team trying to get out of a contract early.
But here’s the thing: That number only tells half the story.
🚨 Before we get too far — if you have an aversion to math, now’s your chance to turn back.
The buyout figure you see being counted against a team’s salary cap isn’t the actual dollar amount that player receives. Instead, it functions more like the average annual value (AAV) of the salary cap — averaging the financial impact over time. In the short term, this can be beneficial. In the long run? If done wrong, it can be a major headache (looking at you, Minnesota).
Some key terms:
- Average Annual Value (AAV): This is what determines how much a player counts towards the salary cap, but the actual salary a player receives can fluctuate year to year based on contract structure.
- Base Salary: I used to think this was just for tax purposes, and it is, mostly. But it’s essentially what a player sees on their paycheck every month. It also plays a role in long-term injured reserve (LTIR) shenanigans since it’s only paid during the regular season — making the cap irrelevant in the playoffs.
- Signing Bonus: Again, I assumed this was just a tax thing. It’s a one-time payment “earned” in the state where the team is located and disbursed in installments every July 1. They’re buyout-proof and lockout-proof, but they’re taxed just like regular salary. This is one reason why people debate whether teams in income tax-free states like Texas have an advantage.
However, all of these nuances play a factor in both the amount counted against the salary cap, and how much money a player who is bought out actually earns.
Why does this matter?
Understanding how much a player is actually earning in real dollars is crucial when discussing contract negotiations. For Dallas Stars fans, this is especially important, as it could be a key factor in Matt Duchene’s next contract.
If you hop on over to PuckPedia and see that the Nashville Predators’ cap hit for Duchene is $6.56 million for next season, you might think:
“Wow, he’s getting paid $6.5 million by the Preds! Surely, he’ll take another cheap contract to stay on a Cup contender.”
Not so fast. Just like AAV, that cap hit isn’t the actual amount Duchene will be paid by Nashville.
So how do we know how much he’s actually getting paid from his previous contract? Well, luckily, we can use a little research and a little math to figure that out.
According to PuckPedia:
Cost of Buyout
For players that are 26 or older, a buyout is 2/3 of the remaining salary owed on the contract.
For players that are under 26, a buyout is 1/3 of the remaining salary owed on the contract.
All buyouts are spread out over twice the remaining years of the contract.Signing Bonuses
Players receive signing bonuses regardless of the buyout. That means that when calculating the buyout amount and cap hit, signing bonuses are excluded.
Still confused? Yeah, it’s about as clear as mud. Let’s break it down with real numbers.
Here’s the final stretch of Duchene’s contract, with the buyout years highlighted — shoutout to PuckPedia for the details:
First things first — Nashville is responsible for all the signing bonuses. That means Duchene will receive $2 million per year in signing bonuses for each season of the buyout. Keep that in mind.
Here comes the math — don’t say I didn’t warn you.
Now, let’s tackle the base salary.
The remaining base salary adds up to $14 million ($7M + $4M + $3M). Since players over 26 are bought out at 2/3 of their remaining base salary, we multiply $14 million × 2/3, which gives us $9,333,333.
However, that total isn’t paid out all at once. Instead, it’s spread over twice the remaining contract length—so in this case, 3 years × 2 = 6 years.
Here’s the formula:
total remaining base * age multiplier
________________________________
years remaining * 2
With Duchene’s numbers plugged in:
$14,000,000 * (2/3)
______________________
3 * 2
Which gives us $1,555,556 per year in base salary payments for six years.
Now, add in the $2 million signing bonuses each year, and Duchene is actually being paid $3,555,556 per year from the Nashville Predators.
That’s a solid paycheck—$3.56 million is nothing to scoff at—but it’s far from the $6.56 million cap hit that Nashville is carrying and that many assume Duchene is actually receiving.
So, does this mean Duchene might stick around on a cheap contract again? Well, it worked this year, so there’s a chance. Just keep in mind that the actual dollars paid aren’t the same as what you see on PuckPedia or other buyout calculators.
But What About the Cap?
I’m so glad you asked! That number comes from a different calculation using the buyout base salary we worked out above. Here’s how PuckPedia explains it:
Cap Hit
The actual annual cap hit of the buyout is calculated year by year as follows:
-
Add together the Original Cap Hit and the Contract Signing Bonus for that year
-
Subtract the Contract Total Salary for that year (base salary + signing bonus)
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Finally, add the Annual Buyout Cost as calculated above (2/3 of remaining contract divided by twice the remaining years of the contract).
Again, clear as mud.
For some reason, PuckPedia (and pretty much every other site with buyout information) includes adding and then subtracting the signing bonus — it’s likely a quirk in the NHL’s Collective Bargaining Agreement for legal reasons. But practically speaking, it cancels itself out, so you can ignore it for now.
This formula is how I think of it:
AAV – Base Salary + Buyout Base = Buyout Cap Hit
Which, to me, is much more straightforward.
Let’s use Tyler Seguin’s contract just so we can use real numbers again to get the full picture (but really so I can show people how unrealistic it would be).
Here’s Seguin’s remaining contract – thanks again PuckPedia (ignore the red, that’s just when the CBA needs to be renegotiated):
So, to see how much it would cost cap-wise to buy out Seguin, you could just use the buyout calculator. But, if you’re like me and want to know where the heck they got that number, here’s how to do it.
First use the buyout base salary formula and plug in Seguin’s numbers:
$2,100,000 * (2/3)
______________________
2 * 2
Seguin’s buyout base would be $350,000 a year. Now, plug that into the Salary Cap Hit formula:
AAV – Base Salary + Buyout Base = Buyout Cap Hit
For ’25-’26 buyout cap hit:
$9,850,000 – $1,100,000 + $350,000 = $9,100,000
For ’26-’27 buyout cap hit:
$9,850,000 – $1,000,000 + $350,000 = $9,200,000
So, the Stars would save a whopping $750,000 in ’25-’26 and $650,000 in ’26-’27, or less than league minimum for each season. Seguin has a compensation structure so heavily weighted towards bonuses it makes his contract essentially buyout-proof.
Will Duchene Sign Another Below-Market Contract?
Hopefully, this gives you a clearer understanding of how buyouts affect both the salary cap and a bought-out player’s incentive to take a below-market deal.
Sure, it’d be great if Duchene took another bargain deal — but now you know he’s “only” getting $3.56 million per year, not the $6.56 million you might assume. That’s a big difference, and it might make him more inclined to chase a higher salary rather than settling for another discount.
In my opinion, it seems unlikely he’ll leave. But it doesn’t seem quite as far fetched once you realize he’s making $3 million less than you thought.