How the salary cap works

A contract counts against the ceiling at its cap hit, and the cap hit is the same every season: the total value of the deal, signing bonuses included, divided by its length. A player on a four-year, $20 million contract has a cap hit of $5 million in each of the four seasons, whatever he is actually paid in any one of them.

That is why the salary and the cap hit on a player page are often different numbers. A front-loaded contract pays most of its money in the early seasons and less later, but it counts the same throughout. Clubs use the structure to suit the player or their own budget; the cap sees only the average.

Performance bonuses are the exception. They are not part of the cap hit and count only when they are earned, which is why a club can finish a season slightly over the ceiling and carry the excess into the next one as a bonus overage.

A club's cap total is the sum of four kinds of charge:

• Roster cap hits. Every player on the NHL roster, including those on injured reserve and long-term injured reserve. An injured player's contract does not stop counting.
• Buried contracts. A player on a one-way contract sent to the minors sheds only the league minimum plus $375,000 of his cap hit, $1,225,000 in 2026-27. Whatever is above that line stays on the club's books. A player paid less than the line costs the club nothing in the minors, and a player on loan to a junior club does not count at all.
• Dead cap. Charges for players who are no longer on the roster: buyouts, salary the club retained in a trade, and last season's bonus overage. They are explained in the guide to dead cap.
• Performance bonuses as they are earned, as above.

Cap space is the ceiling minus all of that. It is the figure at the top of every team page, and the one everybody means when they ask whether a club can afford a player. A club on long-term injured reserve is a special case, with a guide of its own.

From July 1 until the last day of training camp, the upper limit is raised by 10%. The agreement allows it so that clubs can sign free agents, carry their draft picks and prospects into camp and sort the roster out before the games count. That is why a club can be shown over the ceiling in August and nobody is alarmed.

From the day after camp closes, every club must be at or under the upper limit, and it stays that way through the regular season. The scramble of September, with players sent down, traded or waived in the final days of camp, is clubs getting under the line.

• No player may count for more than 20% of the upper limit, $20,800,000 in 2026-27.
• Term is capped. For contracts signed from September 16, 2026, a club may give a player it is re-signing at most 7 years, and any other player at most 6. The longer term is for a player who was on the club's roster at the last trade deadline.
• No contract may pay less than the league minimum, which rises on a published schedule season by season.
• A club may hold at most 50 player contracts, NHL and minors together, and dress at most 23 players on the active roster. Players on injured reserve do not count toward the 23.