You're both wrong.
Match payments count towards current years cap based on number of games played LAST season.
So for Luke O'Donnell, we could sign him to $65k + match payments (ie, 2nd tier player) - however because he played 20 games it wouldn't be worth it (match payments counting against cap = $x x 20)
We could pay him bonuses (which was Kingston's scenario) where whatever games he plays THIS year are counted towards his cap value NEXT year (ie, $5k bonus per game x 20 games = $100k NEXT year, but nil this year).
The drama with the KK deal was that he only played 3 games the year before he signed with us - but the morons in charge gave him a bonuses deal instead of match payments. It's entirely the fault of the CEO and coach.