The 2005 CBA contained a loophole though which clubs could make a player’s cap hit “disappear” by sending the player to the AHL. This was commonly referred to as “burying” a contract. The 2013 CBA closed this loop-hole.
The new rule, in its simplest form: for all players in the minors, any cap hit above $925K still counts against the cap.
This number goes up every couple of seasons, and is actually defined as that year’s minimum salary plus $375K. This up-coming season, that amounts to $925K. Last season, it was $900K. (See the end of this post, for the complete minimums over the course of the new CBA.)
This new wrinkle is what’s commonly referred to as “The Redden Rule.” Wade Redden, I’m sure, wishes they would have thought of it sooner, since he would never have been buried in the AHL in the first place.
So, as a practical matter, players making less than $925K don’t count against the cap when they’re in the AHL. Players who make more than $925K continue to count against the cap, less the $925K. If you send down a player whose cap hit is $1MM, his cap hit is reduced to $75K. If you send down Drew Doughty, his cap hit goes down to $6,075,000.
That’s the simple version. However:
ARTICLE 50: TEAM PAYROLL RANGE SYSTEM
(5) [For] a Player who is in the second or later year of a multi-year SPC which was signed when the Player was age 35 or older [...] playing under his SPC in the minor leagues [...] only the [cap hit] in excess of $100,000 shall count towards the [cap];
So there’s your first exception. Players on 35+ contracts are even less profitable to bury. You only save $100K, not $925K.
(6) For any Player on a One-Way NHL SPC who is [sent to the minors], the [cap hit] [is reduced by] the sum of the Minimum Paragraph 1 NHL Salary and $375,000 for that League Year [...] [$925K in 2013-14].
(7) For any Player on a Two-Way NHL SPC who is [sent to the minors], [if the player's minor league salary is bigger than his NHL salary minus $925K, then the cap hit is the minor league salary.]
A one-way contract is a contract where the player is paid his NHL salary whether he’s playing in the NHL or playing in the minors; a two-way contract is a contract which defines different salaries depending on whether the player is playing in the NHL (big salary) or the AHL (small salary). ELCs (Entry Level Contracts) are two-way contracts. The players don’t get paid the big bucks till they actually make it to the big club.
Here are those minimums:
11.12 Minimum Paragraph 1 Salary. [...]
2012-13 – $525,000
2013-14 — $550,000
2014-15 – same
2015-16 – $575,000
2016-17 – same
2017-18 – $650,000
2018-19 – same
2019-20 – $700,000
2020-21 – same
2021-22 – $750,000