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How does long-term-injured reserve (LTIR) work?

Teams are eligible to receive cap relief when a player is considered to have a "bona-fide long-term injury" — injuries that cause a player to miss at least 10 games and 24 days. In such cases, the team can place the player on long-term injured reserve (LTIR).

The placement of a player on LTIR does not remove the player's cap hit from the team's cap payroll — the cap hit continues to count toward the team’s cap payroll as it always did. The placement of a player on LTIR also does not provide the team with any additional cap-space savings that can be “banked” for future use while the team operates below the upper limit.

Placing a player on LTIR only provides relief if the team's cap payroll or "Averaged Club Salary" begins to exceed the upper limit. The amount of LTI relief is limited to the amount by which the team has exceeded the upper limit — less the amount of cap space the team had at the time the LTIR transaction took place. That means the amount of LTI relief is not the entire amount of the injured player's salary, although teams often make small transactions to ensure it is close.

Eligible long-term injury space is calculated on the day the player is placed on LTIR.


BASIC IN-SEASON EXAMPLE

The upper limit is $70.0M. A team has a cap payroll or Averaged Club Salary of $69.0M on the day a player with a $4.0M cap hit is placed on LTIR. The team is now eligible to spend up to a new upper limit of $73.0M ($69.0M + $4.0M).

However, had the team recalled a player with a $750K cap hit prior to the LTIR designation, increasing its cap payroll or Averaged Club Salary to $69.75M, it would have been eligible to spend up to a new upper limit of $73.75M ($69.75M + $4.0M).

Likewise, had the team recalled two players each with $500K cap hits prior to making the LTIR designation, increasing its cap payroll or Averaged Club Salary to exactly $70.0M, it would have been eligible to spend to a new upper limit of $74.0M ($70.0M + $4.0M).

In the above example — where the team maximized their cap space with the $1.0M recall to get a new upper limit of $74.0M — the team could demote the two $500K players the day after the LTIR designation is made, reduce their cap payroll or Averaged Club Salary to $69.0M, and have the ability to add a cap hit via trade of exactly $5.0M.

That, of course, would only be a viable option if the player projects to be on LTIR through to the final day of the regular season. In addition, that $5.0M figure does not increase as the season progresses, because as mentioned above, LTI cap space cannot be “banked” for future use.

These simple examples illustrate why teams in LTI situations often make what sometimes appear to be inexplicable one-day recalls and demotions. They’re manipulating their team’s cap payroll or Averaged Club Salary in order to maximize their cap space going forward.

Please note the numbers and scenarios in this example are simplified for ease of understanding.


LTIR AT THE START OF A SEASON

At the start of a season, teams facing long-term injury situations essentially have two options if they want to maximize their cap space for the rest of the year.

OPTION 1: Build the injured player into their opening-day roster and have that roster fit as close to the upper limit as possible without exceeding it, then place the player on LTIR.

By way of example, the upper limit is $70.0M and a team’s Averaged Club Salary or cap payroll on the final day of training camp is $71.5M, including an injured player with an Averaged Amount or cap hit of $2M. The same day, the team demotes two players each with $750K Averaged Amounts, reducing their Averaged Club Salary to exactly $70.0M. Then it files its opening-day, 23-man roster to the league and places the injured player on LTIR. The team’s new upper limit is $72.0M instead of $70.0M for as long as the player remains on LTIR.

Had the club demoted $2.0M in Averaged Amounts instead of the $1.5M in the example above, their Averaged Club Salary would have been reduced to $69.5M from $70.0M, and their new upper limit would be just $71.5M as opposed to $72.0M. This highlights the importance of having the roster fit as close to the upper limit as possible before making the LTIR designation.

OPTION 2: Put the injured player on LTIR on the final day of training camp and, including the injured player’s annual average salary or cap hit, build a roster that exceeds the upper limit by an amount that is as close as possible to the injured player's annual average salary.

By way of example, the upper limit is $70.0M and a team’s Averaged Club Salary or cap payroll on the final day of training camp is $71.5M, including an injured player with an Averaged Amount or cap hit of $2M. The team places the player on LTIR on the final day of training camp and is deemed to have already fully replaced the injured player, meaning the team’s new upper limit is $71.5M instead of $70.0M.

Had the team recalled a player with a $500K cap hit prior to making the LTIR designation, its Averaged Club Salary would have increased to $72.0M from $71.5M, and likewise its new upper limit would have increased to $72.0M from $71.5M. This highlights the importance of a team having its Averaged Club Salary exceed the upper limit by an amount as close as possible to the injured player’s Annual Average before making the LTIR placement in order to maximize cap space.


REAL-WORLD EXAMPLES

Opening day of the 2013-14 featured several "real-world" examples of LTIR manoeuvring.

EXAMPLE 1: The Detroit Red Wings followed Option 2. The upper limit was $64.3M and the Red Wings’ Averaged Club Salary or cap payroll on the final day of training camp was $66,137,878, including two injured players, Darren Helm ($2.125M cap hit) and Patrick Eaves ($1.2M cap hit), with an aggregate Averaged Amount of $3.325M. Rather than simply place Helm and Eaves on LTIR, a move that would have left them with no cap space and a new upper limit of $66,137,878, they recalled Jordan Coreau ($792.5K) and Xavier Ouellet ($670K), two players with an aggregate Averaged Amount totalling $1,462,500. That increased their Averaged Club Salary to $67,600,378 — $3,300,378 above the upper limit or almost exactly the $3.325M aggregate of Helm and Eaves. Only then did they place Helm and Eaves on LTIR, leaving the Red Wings with an upper limit to $67,600,378 for the duration of the LTIR designations. The Red Wings demoted Coreau and Ouellet the next day, bringing their Averaged Club Salary back down to $66,137,878, while leaving them with the flexibility to add $1,462,500 in Averaged Amounts, space created by the one-day recall of Coreau and Ouellet.

EXAMPLE 2: The Pittsburgh Penguins followed Option 2. The upper limit was $64.3M and the Penguins’ Averaged Club Salary or cap payroll on the final day of training camp was $65,990,000, which included a healthy Beau Bennett ($990K cap hit) and an injured Tomas Vokoun ($2M cap hit). Rather than simply place Vokoun on LTIR, a move that would have left them with no cap space and a new upper limit of $65,990,000, they demoted Bennett and recalled Harrison Ruopp ($650,833 cap hit) and Chris Conner ($550K cap hit), two players with an aggregate Averaged Amount totalling $1,200,833. That increased their Averaged Club Salary to $66,290,833 — $1,990,833 above the upper limit or almost exactly the $2M cap hit of Vokoun. Only then did they place Vokoun on LTIR, leaving the Penguins with an upper limit of $66,290,833 for the duration of the LTIR designations. The Penguins recalled Bennett and demoted Ruopp and Conner the next day, bringing their Averaged Club Salary back down to $65,990,000, while leaving them with the flexibility to add $300,833 in Averaged Amounts, space created by the one-day swap of Bennett for Ruopp and Conner.

EXAMPLE 3: The Boston Bruins followed Option 1. The upper limit was $64.3M and the Bruins’ Averaged Club Salary or cap payroll on the final day of training camp was $66,086,309, including healthy Dougie Hamilton ($894,167 cap hit) and Torey Krug ($916,667 cap hit) — whose aggregate Averaged Amount was $1,810,834 — and injured Marc Savard ($4,027,143 cap hit). Rather than simply place Savard on LTIR, a move that would have left them with no cap space and a new upper limit of $66,086,309, the Bruins demoted Hamilton and Krug on the final day of training camp, reducing their Averaged Club Salary from $66,086,309 to $64,275,475 — just $24,525 under the upper limit. Only then did the Bruins place Savard on LTIR, giving them a new upper limit of $68,302,618. The Bruins then recalled Hamilton and Krug and included them on their opening-day roster, bringing their Averaged Club Salary back up to $66,086,309, with the flexibility to add $2,216,309 more in Averaged Amounts, cap space that would not have existed without the one-day demotion of Hamilton and Krug. It’s important to note that the Bruins had performance bonuses exceeding the bonus cushion that reduces the figures listed in this example, but they are ignored for ease of understanding the example.


ADDITIONAL NOTES

Once the injured player is healthy, the team must reduce its cap payroll or Averaged Club Salary below the upper limit before the player can be removed from LTIR.

CapGeek.com's off-season estimates do not take into account the possibility of LTIR due to the obvious unpredictable variables and the complexity of calculations. During the season, CapGeek.com's cap space figures estimate maximum potential LTI relief, essentially assuming the team's cap payroll or Averaged Club Salary was equivalent to the upper limit at the time of the LTIR designation.

There is no formal designation of "replacement players." The league can challenge the determination of a club physician that a player is unfit to play for purposes of LTIR.

If fewer than 10 games remain in the regular season, a team can still place a player on LTIR, but the player is not eligible to return until the following season. Typically, a team would only exercise this option if the player is expected to miss the entire playoffs. Meanwhile, if 10 or more games remain in the regular season but not 24 days, a team can still place a player on LTIR because the days requirement can extend into the playoffs. This occurred in 2013-14 with the Pittsburgh Penguins and Evgeni Malkin. Injured in a March 23 contest with 11 games and 21 days left in the regular season, Malkin was placed on LTIR on March 24.

CBA Reference: Section 50.10 (d) (PDF Pages: 310-314; Document Pages: 290-294)