You're scrolling through Twitter—or X, or whatever we’re calling it today—and you see that your team just signed a superstar to a massive eight-year deal. The headline screams $100 million. Your brain immediately does the math: "Okay, he’s making $12.5 million this year."
Wrong.
Well, kinda wrong. He might actually be taking home $15 million in cash this season, but for the team’s accounting books, he costs $12.5 million. This magic number is what we call AAV in hockey. It is the heartbeat of the NHL salary cap, and if you don't understand it, the trade deadline will make absolutely zero sense to you.
What is AAV in hockey and how does the math work?
Basically, AAV stands for Average Annual Value. It’s the total value of a contract (base salary plus signing bonuses) divided by the number of years. It’s a smoothing mechanism. The NHL uses it to prevent teams from cheating the system by paying a guy $20 million in year one and $1 million in year eight just to lower the cap hit.
Let's look at a real-world example from the 2025-26 season. Leon Draisaitl signed an extension with the Edmonton Oilers that carries a whopping $14 million AAV.
Does he get a check for exactly $14 million every single season? Probably not. The actual cash—the "salary"—usually fluctuates. But for the NHL’s "Upper Limit" (the salary cap), he is a $14 million charge every single year of that deal.
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The simple formula
$$AAV = \frac{\text{Total Salary} + \text{Total Signing Bonuses}}{\text{Length of Contract in Years}}$$
Notice what's missing? Performance bonuses.
Those are a whole different beast. For most players, performance bonuses don't even exist. They are generally reserved for young players on Entry-Level Contracts (ELCs) or veterans over age 35 on one-year deals. When a kid like Macklin Celebrini hits a goal target and triggers a bonus, it doesn't change his AAV. Instead, if the team is already at the cap limit, that extra money rolls over as a "bonus overage" penalty for the following season.
It's messy. It’s frustrating. It’s why GMs lose sleep.
Why AAV and "Salary" are totally different things
Honestly, people use these terms interchangeably, but they shouldn't. "Salary" is the actual cash a player pockets in a specific 12-month window. "AAV" is the paperwork number.
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Back in the day, teams used to sign "back-loaded" or "front-loaded" deals to manipulate things. The famous Shea Weber contract (which finally ends in 2026, by the way) was a 14-year monster. In some years, he was paid $14 million. In the final years, he was only making $1 million in actual cash. But his AAV? That stayed locked at **$7.85 million** the entire time.
The league eventually got annoyed with this and implemented the "Variance Rule." Now, the salary in one year can't be more than 20% different from the first year, and no year can be less than 71% of the highest-paid year. They basically forced teams to play fair.
The 2026 CBA changes you need to know
We are entering a new era. The current Collective Bargaining Agreement (CBA) is evolving, and the rules starting in the 2026-27 season are tightening the screws even more.
One of the biggest shifts involves deferred compensation. Remember how the Carolina Hurricanes signed Seth Jarvis to a deal that deferred a bunch of money to lower the cap hit? The league saw that and said, "Nope." Under the new rules effective in late 2025 and 2026, teams can no longer defer salary on new contracts to game the AAV.
Also, the "Double Retention" trade—where two different teams would eat a player's salary to make his AAV tiny for a third team—has been heavily restricted.
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Key differences in the new landscape:
- The Playoff Cap: For years, fans complained that teams like Tampa Bay or Vegas would "stow" players on Long-Term Injured Reserve (LTIR) only to bring them back for the playoffs when the cap didn't exist. Starting in 2026, there is a playoff salary cap. You can't just suit up a $120 million roster in May anymore.
- Minimum Wage Hikes: The league minimum is climbing toward $1 million. This actually pushes the AAV of the "bottom" of the roster higher, making it harder for teams to stack superstars.
- The "Buried" Threshold: If a team sends a veteran with a high AAV to the minors (the AHL), they only get a certain amount of relief. In 2026, that "buried" savings is roughly $1.225 million. If a guy has a $5 million AAV, the team is still stuck with nearly $3.8 million on their books even if he's playing in Des Moines.
Common misconceptions about AAV
"He’s overpaid." We hear it every day. But usually, when a fan says a player is overpaid, they are looking at the AAV in year seven of an eight-year deal.
What people forget is that the Salary Cap is rising.
For the 2025-26 season, the cap is projected around $92 million. By 2027, it could hit $100 million. A $10 million AAV might look like a massive chunk of the pie today, but as the pie gets bigger, that slice feels a lot smaller. This is why GMs "overpay" now—they are betting on the future.
Another weird one? State taxes. A player signing a $9 million AAV deal in Florida (no state income tax) actually takes home way more money than a player signing a $10 million AAV deal in Toronto or Montreal. The AAV is the same for everyone, but the actual lifestyle is very different. This is a massive "off-ice" advantage for teams in Vegas, Dallas, and Tampa that the AAV simply doesn't reflect.
Practical steps for the savvy hockey fan
If you want to track your team like a pro, stop looking at the total contract value. It's a vanity metric. Focus on these three things instead:
- Percentage of Cap: Instead of saying "he makes $11 million," ask "what percentage of the $92 million cap is he taking?" If it's over 12-13%, he needs to be an elite, game-breaking talent.
- The "Signing Bonus" Cushion: Check if the AAV is mostly comprised of signing bonuses. These are usually paid out on July 1st. If a player is mostly paid in bonuses, his contract is "buyout-proof" because you can't save much money by cutting him.
- Expiry Dates: A high AAV is fine for a 24-year-old. It's a death sentence for a 34-year-old. Always look at how old the player will be when the AAV finally comes off the books.
To stay updated, keep an eye on the official NHL CBA Memorandum of Understanding. The rules for 2026 are already being implemented in front-offices across the league. Understanding AAV isn't just about math; it's about knowing which teams are building a dynasty and which ones are just one bad injury away from a decade of "rebuilding."
Check your team's current cap space on sites like PuckPedia or the latest internal team trackers. If they have less than $2 million in "Deadline Space," don't expect them to trade for a big name, no matter what the rumors say.