Retention in the Middle: How Broker Trades Broke the Cap

One of the most underutilized assets in the NHL is unused cap space. Although no team currently has maxed out its three allotted salary retention slots, that may soon change in light of the updated Long-Term Injured Reserve (“LTIR”) rules outlined in the 2025 Memorandum of Understanding (“2025 MOU”). With less flexibility to manipulate the cap through LTIR, General Managers (“GMs”) may increasingly rely on salary retention to create midseason trade opportunities. While the NHL remains the only league with a salary cap among the Big Four to allow salary retention1, it’s surprising how infrequently it's used—especially by rebuilding teams that could leverage it to acquire additional assets.

Key Mechanics

A salary retention agreement is a trade mechanism that came into effect under the 2013 Collective Bargaining Agreement (“2013 CBA”) that allows a team to retain a portion of a player’s salary and cap hit to facilitate a transaction with another club. Turning back to the basics to understand the foundation of salary retention, the 2013 CBA established several key rules2: (i) a team may retain up to 50% of the salary and cap hit (AAV) of a player’s contract, (ii) a team may have no more than three contracts with retained salary on its books at any one time, (iii) the total amount of retained cap hit across all such contracts cannot exceed 15% of the “Upper Limit”3 of the salary cap, and (iv) the percentage of salary cap and cap hit retained must remain consistent throughout the duration of the contract.

Notably, retention obligations remain in force even if the player is subsequently traded, bought out or retires. The original retention continues to count against the retaining team’s salary cap. In practice, rebuilding teams are typically the ones that are most willing to retain salary, as they often have available cap space and can leverage it to acquire future draft picks and prospects. Stanley Cup contenders, on the other hand, are typically the buyers – that are constrained by the cap – and will find themselves acquiring players at a reduced price via a salary retention agreement.

The Middleman Between the Hidden Art

There’s a certain art to navigating salary retention deals. A GM must weight several strategic considerations: a player’s cap hit to the acquiring team (a lower cap hit often boosts trade value in the form of better picks or prospects), the remaining term of the contract (since retention applies throughout) and whether a buyout might offer better cap efficiency. These dynamics often come into play when dealing with seasoned veterans – playing with significant AAVs nearing the end of their careers (and contracts) and playing for non-contending teams – who make ideal candidates for retained salary transactions.

One creative strategy that teams have used in the past was the “double retention deal.” In this setup, a third-party team acted as a broker to facilitate the acquisition of a high-salary player by a contending club. For example, if Team C wanted to acquire a star player from Team A but couldn’t fit the full cap hit, Team A could first trade the player to Team B while retaining 50% of the salary. Then, Team B would retain 50% of the remaining salary and flip the player to Team C. In the end, Team C would acquire the star player at just 25% of the original cap hit—effectively converting cap space into a tradeable asset for Teams A and B, typically in exchange for a mid-round pick or a prospect.

Consider the case of Ryan O’Reilly in 2023. He was part of a three-team trade in which St. Louis first retained 50% of his $7.5 million AAV and sent him to Minnesota. Minnesota then retained 50% of the remaining amount ($1.875 million) and flipped him to Toronto. As a result, the Maple Leafs acquired a proven, top-six center for just 25% of his original cap hit—approximately $1.875 million. This type of cap gymnastics is often used by contenders gearing up for deep playoff runs. Toronto, however, made it as far as the second round – so, you know, deep by local standards. The trade remains a textbook example of how teams once used broker clubs to stretch their cap space even further – a strategy now restricted by the 2025 MOU.

Cap-ital Gains or Cap-ital Offense?

We have seen teams convert unused cap space into trade currency to accelerate their rebuilding process through brokered deals when they may not otherwise have a seasoned playoff veteran available for sale. Even though the argument could be made that increased liquidity in the trade market – especially under a hard and flat cap – should reward a disciplined GM with its cap management that can think of creative ways to rent out its unused cap space, there was a clear market inefficiency that needed regulation.

Then came the mechanism through the 2025 MOU that effectively shut down the double retention deal discussed earlier. Under the new rules, teams are now required to have a 75-day waiting period before a retained salary contract can be moved again with further retention. As a result, GMs can no longer stack retentions in rapid succession, significantly curbing the flexibility once exploited in these three-team broker deals.

The End (of Double Retention)

Retention, which was once a cap relief valve, is now a memory of playoff-bound opportunism. For years, teams exploited the double retention loophole to trim millions off the books, paving the way for contenders to land star talent while everyone walked away satisfied. But, the 2025 MOU rewrote the playbook. With new restrictions in place, GMs may need to get more creative to navigate around the rules. GMs must ensure that trades do not constitute – or appear to constitute – circumvention of the 2013 CBA, as such transactions are subject to review by the league and potential rejection.4 Whether this signals a philosophical shift towards the NBA and NFL model – where contracts typically move cleanly from one team to another and “dead money” penalties replace retention tactics like the triple backflip handspring stunts that we’ve seen in the past (like with Ryan O’Reilly) remains to be seen. What’s certain is that as the NHL’s cap landscape grows more complex, it might be time to bring in some true cap specialists to help steer the ship.

1 While the MLB does permit salary retention in trades, it operates without a salary cap. As such, teams aren’t using salary retention as a cap maneuver, but rather as a means of subsidizing a player’s contract – essentially offering a cash discount to the acquiring club.

2 See 2013 CBA, Art. 50.5(e)(iii) (Feb. 15, 2013).

3 The Upper Limit of the salary cap is the maximum a team is permitted to spend on the combined average annual values (AAVs) of all player contracts on its roster in a given league year. For the 2025-2026 season, the Upper Limit of the Salary Cap is $95.5M.

4 See 2013 CBA, Art. 26.

Corey Spector is a licensed attorney in NY and ON (Canada). He can be found on LinkedIn.