Introduction
The National Hockey League (the "NHL") and National Hockey League Players' Association (the "NHLPA") recently ratified a new collective bargaining agreement (the "New CBA"), which is set to take effect beginning with the 2026-2027 season and will run through 2030.
We have discussed several key changes in a series of articles, which can be viewed below:
- Newly Ratified NHL-NHLPA Collective Bargaining Agreement: Standardized Retention of Draft Pick Rights
- Newly Ratified NHL-NHLPA Collective Bargaining Agreement: CBA-Driven Schedule Growth Sets NHL Apart
- Newly Ratified NHL-NHLPA Collective Bargaining Agreement: Impact of Shorter Maximum Contract Lengths
At present, the NHL's salary cap system is perhaps more restrictive than any other major North American professional sports league. Since 2004-05, NHL teams ("Clubs") have been restricted in how much they can spend on players' average annual salaries and bonuses (in respect of each player, their "Average Salary") with little room to exceed the salary cap's upper limit.
One way in which Clubs may temporarily exceed the salary cap, however, comes in the form of long-term injury relief. Article 50.10(d) of the NHL's current collective bargaining agreement (the "Current CBA") creates a "Bona-Fide Long-Term Injury/Illness Exception to the Upper Limit" ("LTIR") which grants Clubs relief from the salary cap when a player is unfit for a prolonged period. The amount of relief available to Clubs may be up to the amount of the unfit player's Average Salary.
In recent years, the LTIR system has been lamented by many as a loophole through which Clubs can bolster their rosters ahead of the playoffs. By holding players out of their lineup during the regular season and relying on LTIR, Clubs can obtain salary cap relief to add replacement players for use in the playoffs when the unfit player returns. This is because, until now, the salary cap has applied only to the NHL's regular season and not the playoffs. Critics have pointed to two examples in particular in making their case for reform: the Tampa Bay Lightning with Nikita Kucherov and the Vegas Golden Knights with Mark Stone; in both cases, the players were placed on LTIR for several months at the end of the regular season before returning at the beginning of the playoffs.
Such criticisms have resulted in changes to the LTIR system, which will come into effect on September 16, 2026,1 under the New CBA. In this article, we will compare and contrast the current and upcoming LTIR protocols and address some continuing observations with the revamped system.
The Current LTIR Landscape
The current LTIR system allows Clubs to exceed the salary cap when a player is unfit due to either injury or illness. To qualify for LTIR relief, the Club's physician must attest that such player will be unfit for at least 24 calendar days and 10 NHL regular season games. Once the NHL regular season concludes, LTIR no longer applies because, under the Current CBA, Clubs do not have to comply with the salary cap in the playoffs.
Where the unfit player is expected to be out of the lineup for the requisite period or longer, and the Club desires to temporarily replace such player on their roster, the Club may add a replacement player or players. The Average Salary of the unfit player continues to count against the salary cap. However, the Club will be permitted to exceed the salary cap, if necessary, by an amount not exceeding the Average Salary of the unfit player. This only applies for the duration of the unfit player's absence, and the Club will need to become salary cap-compliant by the time the unfit player is again fit to play.
Of note, the current LTIR system does not always allow Clubs to exceed the salary cap by an amount equal to the unfit player's Average Salary nor does it allow them to remove that player's Average Salary from their payroll entirely. Rather, Clubs are permitted to add a replacement player or players to their roster whose aggregate salaries count against the Club's salary cap until the Club reaches the salary cap. Once the Club reaches the salary cap, they are permitted to exceed it by the remaining amount of the replacement player's Average Salary until the unfit player returns to the lineup.
As an example of the current LTIR system, suppose Player X has been injured and will be unfit for 24 calendar days and 10 NHL regular season games. Player X has an Average Salary of US$4,500,000. The Club's payroll is US$94,500,000 and the NHL's salary cap is US$95,500,000. The Club recalls Player Y from their AHL affiliate whose Average Salary is US$2,000,000. The first US$1,000,000 of Player Y's Average Salary counts towards the Club's salary cap, bringing them to the cap of US$95,500,000. The Club is then permitted to exceed the salary cap by another US$1,000,000 for the duration for which the unfit player remains unfit.
As a further example, suppose Player X has been injured and will be unfit for 24 calendar days and 10 NHL regular season games. Player X has an Average Salary of US$2,500,000. The Club's payroll is US$90,500,000 and the NHL's salary cap is US$95,500,000. The Club recalls Player Y from their AHL affiliate whose Average Salary is US$2,000,000. The entirety of Player Y's Average Salary counts towards the Club's salary cap, bringing them up to US$92,500,000. The Club is not permitted to exceed the salary cap in this case because LTIR relief is only triggered if the Club has reached the salary cap.
Since the Average Salary of the replacement player cannot exceed the Average Salary of the unfit player, a Club could not rely on the LTIR procedures to replace, for instance, an unfit player making US$1,000,000 with a replacement player making US$1,500,000.
The New LTIR Landscape
The New CBA aims to close the LTIR "loophole." Beginning with the 2026 NHL playoffs,2 Clubs will have to comply with the salary cap in the playoffs, albeit with different protocols than those that apply during the regular season.
During the regular season, a Club's payroll, or Averaged Club Salary (as defined in the Current CBA), is calculated daily and cannot exceed the salary cap. It generally includes the aggregate amount committed by the Club in the year as Average Salaries to certain enumerated classes of players (including those on the active roster and injured reserve). It also generally includes amounts in respect of players whose contracts have been bought out, players on one-way contracts who have been loaned to the minors and traded players whose salaries have been partially retained.
In contrast, the components of a Club's payroll which count towards the playoff salary cap pursuant to the New CBA will include the following and be calculated on a game-by-game basis:
- the total amount of the non-pro-rated average annual salaries and bonuses (except for certain bonuses and retained salaries) of the 18 skaters and two goalies playing in the applicable playoff game;3 plus
- certain amounts charged to a Club's salary cap during the regular season, including buyouts, salaries of players aged 35 or older, the non-buried salaries of loaned players on one-way contracts, pro-rated retained salaries, grievance awards and salary cap recapture penalties.
As above, during the regular season, it is not just the 20 active players in a team's lineup that count towards the salary cap. Injured players' Average Salaries also count, necessitating the LTIR system. Due to this distinction, Clubs will not require LTIR relief in the playoffs as they do in the regular season because the unfit player will be out of the active lineup and their Average Salary will not count towards the cap.
As an illustration of how the playoff salary cap will work, assume the NHL salary cap in 2026-27 is US$95,500,000. A Club has the following amounts charged to its payroll during the regular season: US$3,000,000 for buyouts, US$2,000,000 for salaries of players aged 35 or older, US$500,000 for loaned players on one-way contracts, US$0 in retained Salaries, US$0 in salary cap recapture and US$100,000 in grievance awards. The Club is, therefore, permitted to dress a lineup of players in a particular playoff game with their combined salaries not exceeding US$89,900,000. If Player X, with an Average Salary of US$5,000,000, becomes unfit, replacement Player Y can be inserted into the Club's playoff lineup so long as the combined salaries of the Club do not exceed US$89,900,000.
Aside from these changes, the New CBA also modifies the LTIR system for the regular season. Pursuant to p 50.10(d)(iii) of the New CBA, the Average Salary of a replacement player or players generally cannot exceed the average Average Salary across all NHL players (the "League Average") in the prior season except where (i) the unfit player is deemed unfit for the remainder of the regular season and playoffs, or (ii) with approval of the NHL and the NHLPA. In the case of (i), the Club will be entitled to the full LTIR relief currently available under the Current CBA. Other than this change to p 50.10(d)(iii), the LTIR system in the New CBA remains the same as in the Current CBA.
Continued Challenges and Other Observations
Despite the best efforts of the NHL and NHLPA to do away with any perceived unfairness in the playoffs by making the changes described above, challenges remain.
First, in terms of the new LTIR system, Clubs can continue to replace unfit players but are generally restricted to acquiring replacement player(s) whose salaries do not exceed the prior season's League Average. This is a less flexible approach than the current system and would generally restrict Clubs from acquiring similar-value replacements. For example, League Average during the 2024-25 season was roughly US$3,800,000. If a player with an Average Salary of US$6,500,000 became unfit on November 1 and was expected to remain out of the lineup until March 1, the Club could only replace the unfit player with a player whose Average Salary was US$3,800,000 or less. While this is likely aimed at preventing Clubs from stockpiling expensive players, this could unduly punish Clubs who lose high-Average Salary players to injury or illness during the season and who are forced to play most, but not all, of the regular season and playoffs without them.
Second, these changes may limit player movement and fan excitement. Each year, one of the most-pressing questions leading up to the trade deadline is whether middling teams with players on expiring contracts will look to trade those players to playoff-bound teams in order to recoup assets. Take the following example from the Current CBA:
"Assume the [salary cap] is $70 million and a Club has a [payroll] of $69 million (and [cap space] of $1 million). At the halfway point of the season, the Club may acquire a one-year [contract] with a face value of $2 million (i.e., the [Average Salary] to be earned by the Player from the date such [contact] is acquired through the end of that season would be $1 million, which fits within the Club's [cap space])."
However, the New CBA provides that the "face value" of the Average Salary for each player in a Club's playoff lineup generally applies to the salary cap.4 That means the player in the above example, with a face value of US$2,000,000, would result in a US$1,000,000 salary cap charge during the regular season but a US$2,000,000 salary cap charge during the playoffs. As a result, Clubs might avoid acquiring costly players whose full salaries would push them over the playoff salary cap when added to the lineup.
Third, despite the NHL's efforts to enhance parity in the playoffs, there may be a continued advantage for wealthy teams. For instance, Clubs with higher revenues could rely on LTIR relief available during the regular season to acquire relatively better replacement players from Clubs who may agree to retain part of the replacement player's Average Salary, particularly where the actual salary and bonuses payable to the acquired player in that particular season (such player's "Actual Salary") is less than such player's Average Salary.5 In the playoffs, the Average Salary of such player, less any amount thereof retained by his former Club, would apply to the new Club's playoff salary cap. While this is available to all Clubs, wealthier Clubs may be better positioned as they may be more willing to incur greater Actual Salary on their payroll for a longer duration. Less-wealthy Clubs, on the other hand, may prefer in certain circumstances (especially where they can recoup assets such as draft picks or prospects) to retain part a player's Average Salary in order to remove most of his Actual Salary from their books.
As an example of the above, suppose that Player X is traded from Team A to Team B. Team A agrees to retain 30% of Player X's Actual Salary and Average Salary. Player X's Average Salary is US$4,000,000, but his Actual Salary for this season is US$3,000,000. Team A is a small market team and is happy to retain 30% of Player X's Average Salary (US$1,200,000) in order to remove 70% (US$2,100,000) of Player X's Actual Salary from their books. Team B is less cost-sensitive and is happy to acquire Player X at a reduced Average Salary of US$2,800,000, which may make it easier to fit Player X within Team B's playoff salary cap.
As an additional observation, the playoff salary cap protocols in the New CBA require Clubs to submit their initial playoff lineups and any changes thereto by the earlier of 3:00 p.m. local time or five hours before the respective Club's playoff game. In the past, Clubs have sometimes tactically withheld information about their lineups, often in an effort to add uncertainty to their opponent's game planning. Fans and media personnel have expressed concern with how this could affect sports betting, as bettors may be reluctant to place bets until a Club's lineup is announced. Better advance lineup information will allow fans and other parties seeking to predict outcomes a clearer basis on which to do so, impacting the chance/skill paradigm in a positive fashion that will undoubtedly increase betting activity.
Conclusion
The LTIR and playoff salary cap reforms in the New CBA represent a significant shift in how Clubs must manage rosters, both during the regular season and in the playoffs. While the changes aim to address perceived loopholes and enhance competitive balance, they also introduce new challenges that may restrict roster flexibility, limit player movement and reinforce financial disparities among Clubs. As the 2026 playoffs and the 2026-27 season approach, it will be important to monitor how Clubs adapt to these changes in practice and whether the intended goals of fairness and parity are ultimately achieved.
The Sports, Media & Entertainment Group at Aird & Berlis LLP assists clients in navigating contracts, transactions, regulations, disputes and more. Please contact the authors or a member of the group if you have questions or require assistance.
Footnotes
1. However, a playoff salary cap will be introduced during the 2026 playoffs. See below.
2. Notwithstanding the New CBA coming into effect at the start of the 2026-27 NHL season, the NHL and NHLPA have reportedly agreed to implement the playoff salary cap starting with the 2026 playoffs. See: https://www.sportsnet.ca/nhl/article/report-nhl-to-implement-playoff-salary-cap-this-season/.
3. Of note, Clubs will be able to change their playing rosters from game-to-game.
4. One exception to this is with respect to retained-salary transactions, which are discussed herein. As an example, suppose the face value Average Amount of a newly acquired player is US$2,500,000. The former Club agrees to retain 50% of that amount. For purposes of calculating the new Club's payroll applicable to the playoff salary cap, such player's face value Average Salary will be US$1,250,000.
5. In both the Current CBA and the New CBA, there is an important distinction between Average Salary and Actual Salary. Average Salary is the averaged annual amount of the salary and bonuses payable to a player during their contract (i.e., if Player X has a three-year contract pursuant to which he will be paid a total of US$9,000,000, his Average Salary is US$3,000,000). Actual Salary is the amount that a player is actually earning during that season (if Player X has a three-year contract pursuant to which he will be paid a total of US$9,000,000, his contract may specify that his Actual Salary for year one of his contract is US$4,000,000). It is a player's Average Salary, rather than Actual Salary, which applies to the salary cap.
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