Saturday, February 28, 2015

Strange, But Brilliant Salary Cap Trades

The introduction of the hard salary cap in the 2005 NHL and NHLPA Collective Bargaining Agreement brought a big change to the league with guaranteed player contracts testing the shrewdness of NHL general managers. Team's could no longer just buyout player's contracts they did not like anymore without paying for their mistakes. Teams would be on the books for a a portion of a bought out player's salary and that money would count against their salary cap for twice the length remaining on the contract. This was a good thing for league parity as rich teams could no longer just dump their poor decisions simply because they had the money to do so.

The CBA also introduced a 35+ rule which made players who signed contracts over the age of 35 have their cap hit count towards the team salary cap even if that player was no longer on their active roster. The only exception to this 35+ rule was if a player was on long-term injured reserve and the rule kept teams from signing players in the twilight of their careers to big front-loaded contracts with the expectation that they would retire early to keep the average salary cap hit down while the player was active. These were great additions to the league and designed to maintain that everybody was held responsible to the contracts they were offering.

Well, team's have found holes in the CBA and been able to move some atrocious contracts in moves that are strange, but brilliant salary cap deals. Here are four examples of teams making trades that are essentially legal cap circumvention:
David Clarkson's "unmovable" contract with a hit of 5.25 million over the next five years was exchanged for paying the remaining five years of Nathan Horton's uninsured $5.3 million contract as he sits on the long term injured reserve with a degenerative back injury. Horton isn't expected to play in the NHL again and the Blue Jackets were feeling the pain financially as a budget team paying a player who can't play because they couldn't get insurance on his contract. The Leafs flexed their money muscles and stepped in to pay Horton while shedding Clarkson's brutal contract that many call the worst contract in the league. In the Leafs case, Horton's contract won't count against the salary cap if they've spent to the ceiling - something Columbus can't afford to do. Escaping that contract is a huge win for the Leafs cap-wise and the Blue Jackets win by receiving an actual body to play games with little change to their cap situation.
Remember when Tim Thomas took a year off hockey in the height of his playing career to reconnect with the 3 F's - Friends, Family, and Faith? It was an interesting move and the Bruins suspended him when he did not report to training camp in January 2013 following the NHL Lockout and that put them in quite a salary cap struggle. While the Bruins did not have to pay Thomas the $5 million he was to make that year, his $5 million did count against the cap because he signed his contract when he was over the age of 35. For a team that spends to the cap this was an issue, but for the Islanders who needed to reach the cap floor, it was not. By trading Thomas the Bruins got cap relief and the Isles were able to reach the salary cap lower limit without paying a cent. It was a win-win for each team's salary cap and only made Tim Thomas' career that much stranger.
If there was one trade that left a lot of people scratching their heads it was this one. Kolzig and Heward were both pending UFAs out for the remainder of the season with injuries and Tampa Bay was having some financial issues under the troubled ownership of Len Barrie and Oren Koules. The Petiot for Rogers trade was an AHL swap so the Leafs essentially received a 4th round pick in exchange for paying the remainder of Jamie Heward and Olaf Kolzig's contracts. Basically, Brian Burke bought a 4th round pick for about $500k and had Olaf Kolzig finish his career as a Toronto Maple Leaf. The best part about this trade was that it made the Maple Leafs goaltending depth chart as so: Vesa Toskala, Martin Gerber, Curtis Joseph, Justin Pogge, and Olaf Kozlig. 
Lou Lamoriello had a difficult task on his hands coming into the 2006-07 season having to get below the $44 million salary cap after an expensive offseason of re-signing Patrik Elias to a big deal, having Scott Gomez awarded $5 million by an arbitrator, and adding Jamie Langenbrunner. The Devils were also dealing with the contracts of an injured Alexander Mogilny and a team-suspended Vladimir Malakhov who had a $3.6 million cap hit. Malakhov had retired when told he would be sent to the minors, but then changed his mind and said he was taking a personal leave of absence. He was subsequently suspended by the Devils for abandoning the team, but because he had signed a contract when he was over the age of 35 his salary still counted against the cap. The Sharks had some space and traded a KHLer and a journeyman for Malakhov's contract and a first round pick which conditions are believed to have been if Malakhov did not play again. Essentially, the Sharks paid $3.6 million for a 1st round pick which they later traded in a deal to the St. Louis Blues for Bill Guerin as a rental at the trade deadline. Both teams would finish with 107-point regular seasons and bow out in the 2nd round of the playoffs. 

You have to tip your hat off to the general managers making these moves as in most cases they are win-win for all parties involved. Dumping bad contracts can be beneficial in multiple ways as shown above in the different situations general managers found themselves in. Removing cap space, gaining cap space, receiving draft picks, or just dumping an uninsured salary; these are all unique cases and it will be interesting to see if the NHL looks to prevent these types of deals in the future.

17 comments:

  1. I forgot about that Kolzig deal! I remember being so confused as to why the Leafs made that.

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  2. This is a good thing for league parity as rich teams could no longer just dump their poor decisions simply because they had the money to do so. Here are many examples of teams making trades that are essentially legal cap circumvention.

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