Colorado Avalanche see their salary cap shrink next season due to ELC bonus overage

The Avalanche must account for bonus overages against the salary cap next season

Joe Sakic’s offseason has become a little more difficult. Thanks to performance bonuses in the entry-level contracts for Cale Makar and Alex Newhook, the Colorado Avalanche will have $1.744m in salary overage that will count against next year’s salary cap.

In the NHL, the only contracts that can have performance bonuses are the ELCs. These bonuses are paid out and are allocated to whatever cap space a team has left at the end of the season. When a team doesn’t have enough cap space to cover the bonuses, the money must be allocated to the following season’s salary cap. Some teams take this into account while playing out the seasons – keeping free cap space to cover any bonuses – but most do not.

The Avalanche ended last year right on the cap ceiling so they will have to count the bonuses next season. This means that instead of the $81.5m salary cap, Sakic only has about $79.76m to work with.

According to PuckPedia and CapFriendly, the bonuses are allocated in the following way:

Alex Newhook – $34,000 (games played bonus)

Cale Makar – $1.71m ($850,000 Series A bonus, $1.65m Series B bonuses that will be pro rated)

With a number of big contracts still to sign this summer, this will give the Avalanche less flexibility that originally expected. They still have more than enough to re-sign Gabriel Landeskog, Cale Makar and Philipp Grubauer but it be difficult to bring back Brandon Saad or add another significant piece to the lineup for next season.

It’s worth noting that the Avalanche have the potential for another $3.35m in bonues to be reached next season if rookies Alex Newhook and Bo Byram max out their performance thresholds.