Will performance bonuses, specifically Couture's, reduce Sharks cap space in 2011-2012?

As many will recall, the San Jose Sharks were levied a cap reduction this year due to bonus overages during the 2009-2010 season. It accounted for a hit of $327,500, essentially mince meat in the professional sporting world, but that penalty could have a marginal effect on acquiring a top three defenseman at the trade deadline considering San Jose's decision to spend near the salary limit once again this year. The consequences of this reduction haven't been realized yet, at least in the public sphere. That's not to say they aren't (or potentially won't) be there.

This season San Jose is in a much better position to handle any overages. Logan Couture, Jamie McGinn, Benn Ferriero, and Justin Braun are the only known players with performance bonuses built into their contracts. All four skaters have entry-level contracts, which more often than not will include bonuses for significant stat lines-- it's a way to reward NHL rookies for playing well and contributing to their team's success. Entry-level deals are capped by the NHL's Collective Bargaining Agreement, meaning that the only way for players aged 25 and under to break the $1.0MM mark during their first professional contract is to take advantage of the bonuses built into their deals.

According to CapGeek, a rich and detailed source for any individual desiring to take a better look at the business side of the game, here are the potential ways these players could earn performance bonuses:

Schedule A

1) Ice time (aggregate or per game, minimum of 42 GP). Forwards must be in the top six, and defenseman in the top four, for this bonus to be achieved.
2) Goals, assists, and points. Each category is separate, meaning a player could hit one mark and receive a bonus (hitting all three would result in a higher bonus payout). Forwards need 20 G, 35 A, and/or 60 PTS for this bonus to be achieved, while defenseman need 10 G, 25 A, and/or 40 PTS.
3) Points per game (minimum of 42 GP). 0.73 PTS/GP for forwards, and 0.49 PTS/GP for defenseman.
4) Plus/Minus (minimum of 42 GP). Forwards must be in the top three amongst forwards, and defenseman must be in the top three amongst defenseman, for this bonus to be achieved.
5) All-Rookie Team, and NHL All Star Game. Players selected to the All-Rookie Team, All-Star Game, or those being named the All-Star Game MVP will earn bonuses.

Each Schedule A bonus may not exceed $212,500 per individual bonus, and has a maximum of $850,000 in aggregate.

Furthermore, Schedule B bonuses (which are comprised of end of the year awards) also have effects on bonus payout to players. A common example of this in practice was Jonathan Toews of the Chicago Blackhawks. At the culmination of the 2010 playoffs he was awarded the Conn Smythe Trophy for playoff MVP, resulting in a $250,000 performance bonus since he was on an Entry Level Contract.

Schedule B

1) Hart, Norris, Selke, Rocket Richard, and Vezina. From first to fifth place, this award will pay out $250,000, $200,000, $150,000, $100,000, and $50,000 respectively.
2) Lady Byng. From first to third place, this award will pay out $150,000, $100,000, and $50,000 respectively.
3) Jennings. Winning this award will earn a $50,000 bonus.
4) Calder. From first to third place, this award will pay out $212,500, $150,000, and $100,000 respectively.
5) Conn Smythe. The winner of this award will receive a bonus of $250,000.

Logan Couture's performance during the 2010-2011 season has him in the running for the Calder Trophy, making it likely he will receive enough votes to earn a Schedule B bonus (Rookie of The Year)-- if Couture continues to play as he has, there is no doubt he will crack the top three at year's end if not win the Award outright. Schedule B bonuses are paid by the League, so even if Couture has maxed out his entry-level perks within his contract with the Sharks, he will still receive that money even though it would not count against the team's cap.

San Jose currently has $1,007,406 in cap space as of this posting, meaning the organization is well-equipped to handle the bonuses Couture and his teammates may hit provided the roster stays static. According to CapGeek, the maximum amount each player may earn in bonuses this year that will count against the year end salary cap vary. Logan Couture has the highest potential cap hit due to bonuses at $425,000-- Jamie McGinn clocks in at $290,000, Justin Braun at $262,500, and Benn Ferriero at $215,000. This is the maximum amount they can receive in bonuses that will count against the Sharks salary cap.

Couture will likely hit that $425,000 mark in some form or another-- he's knocking on the door for many of his Schedule A bonuses already, and coupled with his Schedule B Calder hopes, there's very few scenarios one can envision that would lead him to falling short of achieving this goal. Justin Braun has the potential to hit a few Schedule A's if he continues to impress offensively, specifically in the points and points per game department. Benn Ferriero could hit the plus/minus mark if he continues to play on a line with Clowe and Couture, while Jamie McGinn is unlikely to receive any bonuses barring a massive turnaround.

A top three defenseman has been on Fear The Fin's wish list for two holiday seasons now, and San Jose's current cap space of roughly $1.0 MM allows Doug Wilson a little room to play with when attempting to make a move. It will likely require a roster player to be moved from a quid pro quo and cap standpoint, and while the $327,500 reduction we mentioned at the top of the article restricts Wilson's ability to cap crunch by a marginal amount, there is much more room to play with this season compared to 2009-2010.

Where things get interesting in respect to these bonuses is in the trade department we outlined above. A net loss in cap space due to a trade (more salary coming in than going out) pushes the Sharks closer to the upper limit, meaning that Couture's bonus payout could result in a fine similar to the one we saw this offseason. Every dollar counts in the new NHL, and the potential for the Sharks to incur another cap reduction in 2011-2012 is likely if they bring in a big ticket defenseman via trade.

However, recent reports have stated the NHL salary cap will increase by at least $2.0 MM next season, with some saying it could even reach the $3.0 MM mark. Coupled with the relatively low risk of all of the applicable Sharks entry-level players hitting their bonuses outside of Couture, a trade that pushes San Jose to the cap won't be nearly as disastrous as the one we saw Chicago get into this offseason.

A small amount of cap reduction, if any, is what we will be looking at next year. And that is good news for the future of the organization.