Thursday, October 2nd, 2014

Salary Cap Silliness

14

The Canucks are over the salary cap by about $3 MM as they head toward the final cutdown day. (And I think it is fairly obvious what players have made the team. Sergei Shirokov has been the delight of the camp – he’s starting in Vancouver for sure. Hodgson will probably stick around for a while, but unless he gets a lot better in a big hurry he’s going back to Junior and Jannik Hanson wins the last forward job. Aaron Rome will be the seventh defenseman at least until Mathieu Schneider is ready to play. Andrew Raycroft will be the “backup goalie”.)

The Canucks don’t have to worry about being over the salary cap because both Mathieu Schneider and Pavol Demitra are going on long term injury reserve. Iain McIntyre explains:

…And general manager Mike Gillis said the Canucks want to nudge as close as possible to the $56.8-million salary-cap in order to maximize the allowance given teams for players who are injured long-term (LTI)…

Depending how much padding the Canucks require to reach the salary limit, the $525,000 free-agent deal Rome signed to come to Vancouver from Columbus could actually work against him. Extra defenceman Brad Lukowich’s cap number is $1.567 million. Of course, the Canucks could keep both, then shed Lukowich’s hefty salary later on…

You pretty much need the math club from Berkeley – the author didn’t quite make that group – to decipher the salary cap, but the injury benefit is essentially this: teams can exceed the cap by an amount equal to the salaries of players on LTI. But any space below the $56.8-million cap must be used before the injury allowance kicks in. In other words, if the Canucks’ payroll is at $54.8 million, then half of Demitra’s $4 million salary – if he missed the full season – would count towards the cap and Vancouver’s relief would be only $2 million.

In other words, if the Canucks spend right to the salary cap level, Demitra and Schneider don’t eat up any cap space at all until they are ready to play. If they are under the salary cap, Demitra and Schneider would chew up dollars the team can spend on players.

The result is perverse – the Canucks will probably keep both Hodgson and Lukowich. That the decision increases the escrow amount players will pay at the end of the year doesn’t bother the owners a bit. The players (Lukowich and Hodgson excepted) would prefer that the team did not have an incentive to spend money on players they did not need (or want, really) on the team. Aaron Rome is cheap and being cheap could cost him his chance to start in the NHL. Neither Gillis or McIntyre explains why spending money keeping extra players around is better than wasting the money on Demitra.

The other perverse element, of course, is the reference to the Berkely math club. How many fans would like to understand team personnel decisions? Lots. How many do? Very few. Sigh.

Update: A reader sorts this mystery out in the comments. Thanks, Kel.

Update II: MacIntyre takes another – better – stab at the issue.

On a more positive note, the Canucks wrapped up another very successful exhibition season. While it doesn’t mean that much, I do think it does signal that the Canucks have good depth. Teams have to trade off front line talent for depth under this CBA and my preference is for depth. (This is obviously not the way most teams operate when they run into cap problems. Almost invariably winning teams sacrifice depth when they have to cut talent. So far it hasn’t worked out well.)

The Canucks are definitely a good team and they might turn out to be very good. Canuck fans have to worry about injuries and the schedule, but right now they look like a lock for the playoffs.

I’m looking forward to a fun year.

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Comments

14 Responses to “Salary Cap Silliness”
  1. Kel says:

    Actually MacIntyre is (and I think Tom is too) wrong in his understanding. There is nothing to be gained for a team to keep a more expensive player when a team has to be go over the cap because of long term injuries. There is nothing to be gained by keeping a cheaper player, but there’s nothing to be lost either. Right now, with both Demitra and Schneider on long-term injury status, the Canucks are allowed to go over the cap by $6.75M (when everyone’s cap hit has been counted, including Demitra’s and Schneider’s). There is nothing to be gained by exceeding the cap by, say, $5M vs $1M. Either way the team is treated as right at the cap limit during the injuries, and the team saves nothing when it comes to, for example, trade deadline maneuverability. So the team should not be inclined to exceed the cap more than necessary. There’s nothing to be gained.

  2. Kel says:

    To add, the only potential advantage of exceeding the cap more could be related to roster size. Without the injuries, it would be impossible for the Canucks to stay under the cap with 23 players. Now with the injuries and the cap relief, the Canucks are allowed to carry 23 players. It may help given their travel schedule.

  3. soupbones says:

    I’m trying to tread lightly since it’s become quite clear over the course of this summer that the salary cap portion of the CBA is extraordinarily complex and that there are many intricacies that I don’t have a firm grasp on.

    Regarding the article, I think it’s more of an issue of wanting to use up as much cap room as possible. The thinking possibly is that there really is no sense in letting Demitra and Schneider’s salary eat up what’s leftover of the salary cap. Why not use it if it’s given? The result, as Tom mentions, might lead to a more expensive player getting a spot over a cheaper player.

    My guess is that the benefit comes if and when Gillis makes a move. As an example, if Lukowich makes the team, and if somehow Gillis finds a way to trade him, then his “large” salary gets taken off the books. Gillis might then call up someone from Manitoba to play in that spot at a much cheaper salary, and in the meantime, “save” the cap room until closer to the trading deadline — perhaps for a rental player.

    • Kel says:

      It (your trade scenario) doesn’t work if the team tries to exceed the cap by the maximum amount. Lukowich’s “large” salary (around $1.6M I think) is still relatively small when compared with those injured. The GM was talking about trying to exceed the cap by the max, which is over $6M. If Lukowich were to be traded and replaced by a minimum salary player, the team would still be over the cap, maybe by $5M instead of $6M. There would still be no cap advantage. It would make it easier to make room when the injured player comes back, however. I’m not sure keeping Lukowich around helps his trade value. GMs around the league knows him well enough.

  4. Tom says:

    Actually MacIntyre is (and I think Tom is too) wrong in his understanding. There is nothing to be gained for a team to keep a more expensive player when a team has to be go over the cap because of long term injuries.

    I softened my original post for this reason, Kel. When I first wrote it I ripped the insanity of it. The problem is that it is Gillis who seems to be wrong in his understanding. I can’t see how keeping around guys who are not going to play benefits the Canucks. His explanation – use the space or lose it – seems wrong to me, too.

    I think the most likely explanation is that Gillis is dancing around the truth. There is no salary cap advantage to spending to the cap, but there is no disdavantage either, and so we end up looking at the actual money. There is a money advantage for the Canucks:

    1) It bumps up overall escrow, and the more escrow moneys that go to revenue sharing at the end of the year, the less the Canucks pay.

    2) The players on one way contracts who are demoted will be paid their full salaries when they get to Manitoba. Until Demitra gets back, they keep Baumgartner and Lukowich around in the press box where 20-25% of their salary is held back (and later partially refunded to the Canucks).

    • Magicpie says:

      I think the most likely explanation is that Gillis is dancing around the truth. There is no salary cap advantage to spending to the cap, but there is no disdavantage either, and so we end up looking at the actual money.There is a money advantage for the Canucks:

      1) It bumps up overall escrow, and the more escrow moneys that go to revenue sharing at the end of the year, the less the Canucks pay.

      Oh come on. Do you really think that in deciding between Rome and Lukowich the Gillis is going to care about the minuscule effect it’s going to have on the escrow/revenue sharing/whatever compared to the effect it’s going to have on the quality of their team?

  5. Tom says:

    Oh come on. Do you really think that in deciding between Rome and Lukowich the Gillis is going to care about the minuscule effect it’s going to have on the escrow/revenue sharing/whatever compared to the effect it’s going to have on the quality of their team?

    The Canucks don’t think it will have any impact on the quality of the team. I don’t think you understand the point. It is not a miniscule amount. Lukowich – if he is up all year – will forfeit at least $320,000 to escrow. The Canucks won’t get all of that back, but they would get most of it between the escrow that is directly kicked back to them and the reduced revenue sharing bill. If he spends the season in Manitoba, the $320,000 is gone. Baumgartner is another $100,000.

    If Rome and Lukowich are equally capable of being the seventh defenseman Rome would normally get the job because he is cheaper by $1 MM even though he is on a two way contract, paerticularly since he was better at traikning camp. Sending Rome down is going to save the Canucks real money – the $500,000 in Rome’s NHL salary and the pro-rated amount of the escrow collected from Lukowich and Baumgartner.

    Why do you think Gillis said he wanted to get the Canucks as close as possible to the cap? It obviously isn’t the reason he gave MacIntyre. Keeping Rome down (and Lukgartner up) for a couple of months might add $250,000 to the Canucks profit this season. That isn’t worth it?

    • Kel says:

      Tom, but I think Baumgartner has already been sent them and Lukowich has been put on waiver in preparation for being sent down. It seems like Gillis’ actions contradicted his own words, or MacIntyre misunderstood Gillis (as there was no a direct quote by Gillis in the article).

  6. Kel says:

    Also, I re-read the CBA and found something weird going on. From the examples on page 227-231, it looks like that the timing of invoking the injury relief matters a lot. If the team is below the cap before the injury, and they invoke the cap relief, they can only add new salary up to the amount of the injured player’s salary. The better thing for a team to do is to be right at the cap before invoking the cap relief, and then they can go over the cap by the amount of the injured player’s salary. For injury that happens before the season starts, the team is deemed to have replaced the injured player fully with the opening day roster. The team cannot say it’s over the cap only by $1M on opening day and therefore should be allowed to add more salary because the injured player’s salary is $2M. In that sense the Canucks is wise to maximize opening day cap hit.

  7. Tom says:

    I think this is it, Kel. If Demitra is out for the year, the Canuck salary cap effectively becomes what they have on the roster on opening day. They can send Lukowich down the day after and save the cap space on that roster. That’s what’s happening, I think. If you count the 23 most expensive players (excluding Demitra) the Canucks are just under the cap. So Demitra goes on LTI and everybody else – including M. Schneider – counts to slide just under. That effecively becomes the cap for the year. Then they save breathing cap space by demoting Lukowich.

    I have no idea what they can do if Demitra gets healthy. This is played like they know something about his shoulder that the rest of us don’t. It all makes sense if Demitra’s shoulder isn’t good enough and they plan to run the contract out with Pavol on the shelf.

    • Kel says:

      The CBA isn’t clear on it, even after re-reading the whole section on bona-fide long-term injury exception. It doesn’t say explicitly through any example/illustration that a club can create payroll room by first exceeding the cap to the maximum allowed amount and later scale back. But maybe the Canucks have clarified that point with the NHL, and therefore they are acting weird. There are reports that Demitra is not put on IR for cap purposes too, and it’s getting more confusing. Maybe Demitra is coming back sooner than later, now that Hansen is injured long term. I think I’ve done enough reading on this topic already, yet I’m not 100% clear on everything.

      • Kel says:

        not sure why I said the team is “acting weird”. What I meant is that they’re acting “accordingly”, assuming they can gain breathing room that way.

  8. Tom says:

    Oh, by the way, am I the only one suspicious of Mathieu Schneider?

    I don’t know anything for a fact, but doesn’t this scenario kind of make sense?

    Suppose his shoulder is a mess, but he can play with it as a mess. If he says it hurts, there isn’t a doctor in the world who would not disqualify him. Thus he can be moved on and off the injured list at will. He practices with the team, stays in shape, but he can’t play. His money can be spent elsewhere whenever Gillis wants to acquire a player.

    If the Canucks need him, he recovers. The Canucks don’t need him, the shoulder hurts again. In any case, he recovers late in the year so he qualifies for the playoffs. Would that be:

    a) cheating and Mathieu Schneider should be ashamed for cooperating to extend his career

    b) a clever way to manage to have a quality eighth defenseman on the roster without using a roster spot or the cap dollars he is paid

    c) an awful thing for me to say even though I qualify it by saying I don’t know anything.

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