With the Rangers cap situation, a lot of talk has been tossed around about buying out troubled defenseman Wade Redden. His cap hit is currently $6.5 million, and is a real road block for trying to re-tool this team. As part of building the ‘Understand the Cap’ page, I calculated what it would cost to buyout Wade Redden:
As of the end of the 2008-2009 season, Wade has 5 years and $31 million remaining on his contract. The buyout amount is ($31 million * 2/3 = $20.67 million). Twice the remaining years on his contract is (5 years * 2 = 10 years). Now, spread the buyout amount evenly over the years ($20.67/10 = $2.067 million).
So there you have it, if the Rangers were to buyout Wade Redden, they would have a cap hit of $2.067 million over the next 10 seasons.
Overall, it saves the Rangers $4.5 million for the next five years, and then costs the Rangers $2.067 million for the next five. Well worth it I think.
Note that the buyout amount is the remaining dollar amount on the contract, not the cap hit.