Sharks, Evander Kane settle grievance with unprecedented retroactive cap penalty

Frank Seravalli
Frank Seravalli(frank_seravalli)
Sharks, Evander Kane settle grievance with unprecedented retroactive cap penalty

The San Jose Sharks and Evander Kane formally settled Kane’s outstanding grievance for wrongful contract termination on Friday, ending the saga more than eight months after the Sharks terminated his deal. Kane has since signed two contracts with the Edmonton Oilers, who are unaffected by Friday’s settlement terms.

The Sharks’ salary cap this season and beyond will also be unaffected by the unprecedented settlement.

That’s because San Jose’s penalty will be applied retroactively to last season’s cap, according to multiple sources, something that is believed to never have occurred in the 17 years since the NHL moved to a cap system in 2005.

While no party directly involved in negotiations would confirm exact details to Daily Faceoff, the settlement is designed to essentially make Kane ‘whole’ from the difference between the amount of money remaining on his contract with the Sharks and the new one he signed with the Oilers.

The Oilers signed Kane to a four-year, $20.5 million extension on July 12 in the hours before free agency opened. His new contract calls for $16.5 million to be paid over the first three years, the term remaining on Kane’s original deal in San Jose, which was through 2024-25.

San Jose owed $19 million to Kane over those three seasons, leaving a difference of $2.5 million.

As a result, Kane will receive a one-time cash payment from San Jose in the neighborhood of that $2.5 million to make him whole. (One source quibbled with that number, saying Kane was not ‘fully’ made whole, but that it was close to that number.)

Since the Sharks ended last season with just over $4.97 million in salary cap space, according to CapFriendly.com, all of that approximate $2.5 million penalty will be retroactively applied and San Jose will have no cap consequences moving forward. It’s the best-case scenario for San Jose; they simply cut a check and move on.

All of the previous salary cap penalties enacted – most notably Mike Richards’ contract termination grievance with the Los Angeles Kings in 2015 – impacted future season’s salary caps. The Kings are carrying a penalty for Richards until 2032; this season the hit is $900,000, which is more than the league minimum salary.

“We are satisfied that its terms will not adversely impact the team, either financially or competitively, in this or future seasons,” the Sharks said in a statement on Friday.

For Kane, who has filed for bankruptcy, the $2.5 million lump sum payment is welcomed relief – on top of the $6.125 million he has earned in the 2022 calendar year in signing bonus alone.

“I played some of my best hockey in San Jose and gave everything I had on the ice,” Kane said in a statement on Friday. “I really enjoyed playing in front of the Sharks fans and appreciate my loyal fans who have supported me throughout. Adversity can either break you or make you stronger, it certainly made me stronger. I’m happy to finally close that chapter of my hockey career. Edmonton let’s go!”

A settlement was always the most likely outcome for this case as it mitigated the risk for both sides of an all-or-nothing decision from a neutral arbitrator. It also eliminated the possibility for the Oilers (and Kane) that his deal would be reinstated by the arbitrator, voiding his new deal in Edmonton.

Now, with the relative ease in which the Sharks erased more than $20 million from their books, the question is whether this outcome will embolden other NHL teams to take a similar step with a player or contract they deem problematic.

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