According to TSN the Boston Bruins have signed Marc Savard to a seven-year deal worth 4.2M per season. When the Bruins traded Chuck Kobasew to the Minnesota Wild I remarked that the deal was a win for the Bruins if they were then able to sign Savard to an affordable contract extension and this one fits the bill. I was estimating he'd get about 5.5M per season but I was expecting something closer to a three-year deal. And there's the rub. Savard is going to be getting paid for his 33 through 39 year-old seasons and the number of players who can be $4M+ contributors on the wrong end of 35 is pretty small. Before this contract is over it seems very likely that Savard will have already started his decline. Of course, by the time Savard starts his decline, who knows if contracts will be guaranteed, what the buy-out procedures will be or where the salary cap might stand. I don't think NHL general managers do. As such , I think it's best to evaluate this kind of deal over the short-to-medium term and in that light this is a great deal. 4.2M against the cap for a center who has put up over a point per game in each of the last four seasons is just fantastic. When it comes to the medium-to-long term NHL general managers are largely flying blind but even if the contract rules stay pretty similar in the next CBA and the salary cap doesn't experience large inflation over the course of the deal - and I imagine that the salary cap will rise significantly and that it will become easier to get out of contracts after the next CBA negotiations - this deal has several outs (it's not a 35+ contract, it's likely front-loaded making Savard a good candidate for trade, buy-out or retirement) that will help to make it work if Savard's play falls off.
Showing posts with label CBA. Show all posts
Showing posts with label CBA. Show all posts
Tuesday, December 1, 2009
Sunday, October 11, 2009
Lou Lamoriello Saves the Oilers?
So apparently Lou Lamoriello may have just helped the Oilers find a loop-hole in case Nikolai Khabibulin is more Maginot Line (origin: Quain and Benjamin Massey) than Bulin Wall in two or three years time. The contract of Brendan Shanahan has now been terminated. When asked for his opinion, this is what old Lou had to say:
"It's within the rules. That's all I'll say."
Transparent as usual! I'm going to guess that Shanahan's 1 million dollar salary is not going to count against the cap although the article does not explicitly state this. So what does it mean to terminate a player? Here are the relevant sections of the CBA:
Article 13.21a: "When a Club desires to terminate a Player's SPC for any reason, such action may not be taken until Unconditional Waivers have been requested and cleared in conformity with this Article."
Article 1 - Definitions: "'Unconditional Waivers' means the process by which the rights to a Player are offered to all other Clubs, without a right of recall at a Waiver price of onehundred and twenty-five dollars ($125) prior to a Club exercising its right to terminate a Player's SPC pursuant to Article 13 of this Agreement and Paragraph 13(a) of the SPC."
Now, normally the CBA talks about a player being terminated and bought out but this isn't the case here. Right now capgeek.com is listing Shanahan as a non-roster player and not as a player who was bought out which means his salary does not count against the cap. It's as though he were on long-term injured reserve. This is what the CBA has to say about non-roster players:
Article 16.12: "Upon approval of the Commissioner, a Player who is unavailable to play due to reasons other than injury, illness or disability (e.g., birth of a child, attending a funeral) will be designated a Non-Roster Player, and during such period of his designation as such he will not count against the Club's Active Roster limit and his Club may replace such Player, provided, however, that the Non-Roster Player's Player Salary and Bonuses and his replacement's Player Salary and Bonuses are each included in calculating a Club's Actual Club Salary and Averaged Club Salary, and the Players' Share, for purposes of Article 50"
So why on earth would Shanahan be considered a non-roster player? I have no idea. My guess is that he was terminated under section 14 of Exhibit 1 and that this somehow qualifies him as non-roster. I'll quote that section of the CBA here:
"The Club may also terminate this SPC upon written notice to the Player (but only after obtaining Waivers from all other Clubs) if the Player shall at anytime:
(a) fail, refuse, or neglect to obey the Club's rules governing training and conduct of Players, if such failure, refusal or neglect should constitute a material breach of this SPC.
(b) fail, refuse or neglect to render his services hereunder or in any other manner materially breach this SPC.
In the event of termination under subsection (a) or (b) the Player shall only be entitled to compensation due to him to the earlier of the date such notice is delivered to him or the date of the mailing of such notice to his address as set out below his signature hereto."
I'm not sure if this is the real reason or not but I do think it is going to be very necessary for teams like the Oilers who have significant money tied into players who are over 35 to find out. How has Lamoriello made this deal?
"It's within the rules. That's all I'll say."
Transparent as usual! I'm going to guess that Shanahan's 1 million dollar salary is not going to count against the cap although the article does not explicitly state this. So what does it mean to terminate a player? Here are the relevant sections of the CBA:
Article 13.21a: "When a Club desires to terminate a Player's SPC for any reason, such action may not be taken until Unconditional Waivers have been requested and cleared in conformity with this Article."
Article 1 - Definitions: "'Unconditional Waivers' means the process by which the rights to a Player are offered to all other Clubs, without a right of recall at a Waiver price of onehundred and twenty-five dollars ($125) prior to a Club exercising its right to terminate a Player's SPC pursuant to Article 13 of this Agreement and Paragraph 13(a) of the SPC."
Now, normally the CBA talks about a player being terminated and bought out but this isn't the case here. Right now capgeek.com is listing Shanahan as a non-roster player and not as a player who was bought out which means his salary does not count against the cap. It's as though he were on long-term injured reserve. This is what the CBA has to say about non-roster players:
Article 16.12: "Upon approval of the Commissioner, a Player who is unavailable to play due to reasons other than injury, illness or disability (e.g., birth of a child, attending a funeral) will be designated a Non-Roster Player, and during such period of his designation as such he will not count against the Club's Active Roster limit and his Club may replace such Player, provided, however, that the Non-Roster Player's Player Salary and Bonuses and his replacement's Player Salary and Bonuses are each included in calculating a Club's Actual Club Salary and Averaged Club Salary, and the Players' Share, for purposes of Article 50"
So why on earth would Shanahan be considered a non-roster player? I have no idea. My guess is that he was terminated under section 14 of Exhibit 1 and that this somehow qualifies him as non-roster. I'll quote that section of the CBA here:
"The Club may also terminate this SPC upon written notice to the Player (but only after obtaining Waivers from all other Clubs) if the Player shall at anytime:
(a) fail, refuse, or neglect to obey the Club's rules governing training and conduct of Players, if such failure, refusal or neglect should constitute a material breach of this SPC.
(b) fail, refuse or neglect to render his services hereunder or in any other manner materially breach this SPC.
In the event of termination under subsection (a) or (b) the Player shall only be entitled to compensation due to him to the earlier of the date such notice is delivered to him or the date of the mailing of such notice to his address as set out below his signature hereto."
I'm not sure if this is the real reason or not but I do think it is going to be very necessary for teams like the Oilers who have significant money tied into players who are over 35 to find out. How has Lamoriello made this deal?
Sunday, July 19, 2009
Creating Cap Space for 2010-2011
When I looked at the Oilers salary situation earlier this month I came to the conclusion that the Oilers should probably move a player out that's making some significant salary among the team's middle 6 forwards. If the Oilers could move a player like O'Sullivan, Moreau or Nilsson they would be in much better (cap) shape going forward. Now, the easiest way to get rid of cap space is to bury a player in the minors. This is an attractive suggestion for fans since we're not the ones spending the money. Now, it may be that Darryl Katz is prepared to bury some players in the minor leagues. If so, then there really isn't any problem, but we have no real reason to believe that this is a strategy that Katz is comfortable with. Another solution is trading players. Sometimes a team can get away with trading away salary without taking much in return (like New York with Gomez, Colorado with Smyth and Calgary with Vandermeer) but most times, I'm lead to believe that this is difficult to do. This leads me to today's topic: buy-outs.
As we all know, the Collective Bargaining Agreement can sometimes be a bit of a strange beast. The way buy-outs are calculated is no exception which brings me to one Robert Nilsson. Because Nilsson is under 26 years of age he would be due to receive one third of the salary remaining on his contract. Nilsson's current cap hit is 2M per season, but because his deal was backloaded he still has 4.5M in salary left to be paid, one third of which is 1.5M. This amount (1.5M) is then paid out to Nilsson over twice the remaining years on his contract. With two years left on his contract, Nilsson would receive 1.5M divided equally into four years which comes to $375,000 per year (page 224 of the CBA). For cap purposes, the actual dollar savings are subtracted from the old cap hit to come up with a new cap number (page 205). In the years after the original contract expires, the amount paid to the player becomes the new cap hit. So if Nilsson were bought out today...
2009-10: 2M old cap hit - (2M salary - 0.375M paid to Nilsson = 1.625M in savings) = 0.375M new cap hit
2010-11: 2m old cap hit - (2.5M salary - 0.375M paid to Nilsson = 2.125 in savings) = 0.125M cap credit
2011-12: 0.375M paid to Nilsson = 0.375M cap hit
2012-13: 0.375M paid to Nilsson = 0.375M cap hit
For this coming season, Nilsson's contribution could probably be adequately replaced with the remaining 1.625M. The Oilers could even use that money to bring in one or two veteran hands that are currently unemployed on one-year deals to help shore up the forwards. In 2010-11 the Oilers have actually gotten a credit for buying out Nilsson. While the credit isn't much, it is $125,000 other teams won't be able to spend. After the 2010-11 season there a number of things to consider but the most important is the expiration of the CBA in September of 2011. By deferring problems to a new CBA the Oilers could well be putting themselves in a more advantageous position. Maybe there will be amnesty buy-outs available, maybe there won't be guaranteed contracts, maybe there won't even be a season (ugh). It's important not to completely throw away those years cap-wise but I don't think that a cap debit of $375,000 is much to fret over.
There are, however, some significant snags to this process. Firstly, before the buy-out is completed, the player must first be offered waivers (page 251). In other words, in order for the Oilers to receive the cap credit they would to hope that Nilsson clears waivers. This is really a win-win situation for Edmonton. If he does get claimed then the Oilers get out from under his contract. If Nilsson doesn't get claimed they can get the credit in 2010-11. This, of course, assumes that Nilsson is less valuable than the cap space he would create. Your mileage may vary on that.
Now, according to section 11.18 each team is only allowed 3 buy-outs outside of the regular buy-out period. This period is June 15th to June 30th as well as the 48 hours after the club receives its final arbitration award (page 251 of the CBA). In other words, this really shouldn't be a problem for the Oilers since they can buy Nilsson out after they come to a settlement with Denis Grebeshkov and not be penalized. Further, to my knowledge, they haven't used any of their 3 "extra" buy-outs so even if they don't come to a decision until later, they could decide to buy Nilsson out regardless. Should the Oilers keep Nilsson for this season but see the cap decline significantly next summer they could still buy him out and receive a cap credit of $83,333 for the 2010-11 season (and a debit of $416,667 for 2011-12).
The other intriguing option this scenario provides is the Oilers setting themselves up for extra cap space in 2010-11 by signing an awkwardly structured contract now to a completely undeserving player. Let's say that Edmonton decides that Ryan Potulny is going to take Nilsson's place as a scoring winger on this team for a year. The Oilers could give Potulny a two-year deal worth 1.95M per season. The maximum discrepancy the Oilers could create would be to offer 1.3M in the first year and 2.6M in the second year. If Potulny plays well, great, keep him. If he's just not very good, then, assuming he clears waivers, you can buy him out which would work as follows:
2010-11: 1.95M old cap hit - (2.6M salary - (2.6M*(1/3)/2 years = 0.433M paid to the player) = 2.167M in savings) = 0.217M cap credit
2011-12: 0.433M cap hit
Now, it doesn't need to Potulny necessarily, just someone that the Oilers have access to (their own RFA or a UFA) who won't be 26 years old until next summer. I think this is a good strategy to use, particularly for the Oilers. Moreau, O'Sullivan, Staios and Stortini are all scheduled to come off the books after the 2010-11 season. Gaining some extra room in 2010-11 at the expense of 2011-12 would probably serve them well. Further, it's a pretty low risk bet if you actually like the RFA that's getting the audition. If Potulny does well, you've found a useful NHL player that you'll keep the rights to. If Potulny does poorly he can be bought out as part of the cap solution for the following season. I think it's basically a win-win.
As we all know, the Collective Bargaining Agreement can sometimes be a bit of a strange beast. The way buy-outs are calculated is no exception which brings me to one Robert Nilsson. Because Nilsson is under 26 years of age he would be due to receive one third of the salary remaining on his contract. Nilsson's current cap hit is 2M per season, but because his deal was backloaded he still has 4.5M in salary left to be paid, one third of which is 1.5M. This amount (1.5M) is then paid out to Nilsson over twice the remaining years on his contract. With two years left on his contract, Nilsson would receive 1.5M divided equally into four years which comes to $375,000 per year (page 224 of the CBA). For cap purposes, the actual dollar savings are subtracted from the old cap hit to come up with a new cap number (page 205). In the years after the original contract expires, the amount paid to the player becomes the new cap hit. So if Nilsson were bought out today...
2009-10: 2M old cap hit - (2M salary - 0.375M paid to Nilsson = 1.625M in savings) = 0.375M new cap hit
2010-11: 2m old cap hit - (2.5M salary - 0.375M paid to Nilsson = 2.125 in savings) = 0.125M cap credit
2011-12: 0.375M paid to Nilsson = 0.375M cap hit
2012-13: 0.375M paid to Nilsson = 0.375M cap hit
For this coming season, Nilsson's contribution could probably be adequately replaced with the remaining 1.625M. The Oilers could even use that money to bring in one or two veteran hands that are currently unemployed on one-year deals to help shore up the forwards. In 2010-11 the Oilers have actually gotten a credit for buying out Nilsson. While the credit isn't much, it is $125,000 other teams won't be able to spend. After the 2010-11 season there a number of things to consider but the most important is the expiration of the CBA in September of 2011. By deferring problems to a new CBA the Oilers could well be putting themselves in a more advantageous position. Maybe there will be amnesty buy-outs available, maybe there won't be guaranteed contracts, maybe there won't even be a season (ugh). It's important not to completely throw away those years cap-wise but I don't think that a cap debit of $375,000 is much to fret over.
There are, however, some significant snags to this process. Firstly, before the buy-out is completed, the player must first be offered waivers (page 251). In other words, in order for the Oilers to receive the cap credit they would to hope that Nilsson clears waivers. This is really a win-win situation for Edmonton. If he does get claimed then the Oilers get out from under his contract. If Nilsson doesn't get claimed they can get the credit in 2010-11. This, of course, assumes that Nilsson is less valuable than the cap space he would create. Your mileage may vary on that.
Now, according to section 11.18 each team is only allowed 3 buy-outs outside of the regular buy-out period. This period is June 15th to June 30th as well as the 48 hours after the club receives its final arbitration award (page 251 of the CBA). In other words, this really shouldn't be a problem for the Oilers since they can buy Nilsson out after they come to a settlement with Denis Grebeshkov and not be penalized. Further, to my knowledge, they haven't used any of their 3 "extra" buy-outs so even if they don't come to a decision until later, they could decide to buy Nilsson out regardless. Should the Oilers keep Nilsson for this season but see the cap decline significantly next summer they could still buy him out and receive a cap credit of $83,333 for the 2010-11 season (and a debit of $416,667 for 2011-12).
The other intriguing option this scenario provides is the Oilers setting themselves up for extra cap space in 2010-11 by signing an awkwardly structured contract now to a completely undeserving player. Let's say that Edmonton decides that Ryan Potulny is going to take Nilsson's place as a scoring winger on this team for a year. The Oilers could give Potulny a two-year deal worth 1.95M per season. The maximum discrepancy the Oilers could create would be to offer 1.3M in the first year and 2.6M in the second year. If Potulny plays well, great, keep him. If he's just not very good, then, assuming he clears waivers, you can buy him out which would work as follows:
2010-11: 1.95M old cap hit - (2.6M salary - (2.6M*(1/3)/2 years = 0.433M paid to the player) = 2.167M in savings) = 0.217M cap credit
2011-12: 0.433M cap hit
Now, it doesn't need to Potulny necessarily, just someone that the Oilers have access to (their own RFA or a UFA) who won't be 26 years old until next summer. I think this is a good strategy to use, particularly for the Oilers. Moreau, O'Sullivan, Staios and Stortini are all scheduled to come off the books after the 2010-11 season. Gaining some extra room in 2010-11 at the expense of 2011-12 would probably serve them well. Further, it's a pretty low risk bet if you actually like the RFA that's getting the audition. If Potulny does well, you've found a useful NHL player that you'll keep the rights to. If Potulny does poorly he can be bought out as part of the cap solution for the following season. I think it's basically a win-win.
Sunday, July 5, 2009
Aaron Johnson Files For Arbitration
The deadline for player-elected salary arbitration has come and gone with twenty players electing arbitration with their teams (the deadline for team-elected salary arbitration is tomorrow). Of these twenty I thought that Aaron Johnson was the most interesting of the players who decided to file. As of now there is an on-going investigation as to whether or not Johnson is in fact a restricted free agent thanks to some very poor planning on the part of Chicago's management. Furthermore, it was Johnson's agent, Allan Walsh, that publicly commented on Chicago's improper tendering of qualifying offers. I don't know what effect Johnson's decision to file for arbitration might have on the investigation but it seems that he and his agent expect him to remain a restricted free agent. It will be interesting to see what happens if the situation with Chicago's free agents is not decided by the time Johnson has his arbitration hearing scheduled.
Saturday, July 4, 2009
Martin Havlat Believes in Karma
TSN is reporting that several restricted free agents that play for the Chicago Blackhawks:
Chicago tendered qualifying offers to several key players this week, including Kris Versteeg, Cam Barker, Ben Eager, Colin Fraser, Aaron Johnson and Troy Brouwer however the investigation underway is to determine whether the qualifying offers were filed correctly.
If not, there is the remote possibility the qualifying offers could be ruled invalid and the players listed above, conceivably, could be deemed unrestricted free agents because of the blunder.
(...)
Chicago general manager Dale Tallon says the qualifying offers were mailed to the players in time, on June 29th, but says because of the July 1 holiday, some of the players didn't receive them in time... Tallon says fax copies of the offers were sent to the league, so he doesn't anticipate any significant fall out.
The fact that there is any doubt about whether or not the qualifying offers were filed incorrectly should be reason enough for Tallon to be fired. This is not the kind of thing that is particularly difficult but, if done incorrectly, can cost the team dearly in terms of cash, cap space and talent. Frankly, the Hawks look to be up the creek as well. The CBA seems to be quite clear on this issue (the first paragraph is from 10.2(a) on page 28 and the second is from Exhibit 3 on page 256):
"In order to receive a Right of First Refusal or Draft Choice Compensation (at the prior club's option) with respect to a Restricted Free Agent, the prior club of the Restricted Free Agent must tender to the Player, no later than 5:00 p.m. New York time on the later of June 25 or the first Monday after the Entry Draft of the finaal year of the Player's SPC, a "Qualifying Offer," which shall be an offer of an SPC..."
"From the day after the conclusion of a Player's Playing Season until the commencement of the Player's subsequent Playing Season, notice(s) shall be sent via overnight delivery to the Player's off-season address which the Player provides to the Club... If no method of service is specified in this Agreement, service of the required notice shall be effectuated by either facsimilie transmission or overnight mail delivery by an established nation-wide delivery service."
There are quite a few problems, then, with what Mr. Tallon has done here. Firstly, Tallon sent the qualifying offers on the day that they needed to be received. The due date for qualifying offers this year was in fact June 29th. His excuse that the players did not receive them in time because of the July 1st holiday is therefore completely irrelevant. The fact that there is a holiday two days after the deadline has precisely no bearing on whether or not the qualifying offer has been received by the deadline. If I have a report due on June 29th I cannot claim that the July 1st holiday prevented me from finishing it on time.
Secondly, Tallon, apparently, used regular mail. This is in clear violation of the CBA which states that all correspondance must be sent to the player via overnight delivery. If Tallon had sent the qualifying offers on June 29th via overnight delivery there is no reason for them not to have been received by June 30th (which would still be late, but we've covered that one already). Thus, it seems that Tallon not only sent the offers late, but also by improper means.
Thirdly, Tallon's defense is that he sent faxed copies of the offers were sent to the league... which is completely irrelevant. The CBA requires that the player receives the qualifying offer by the first Monday after the entry draft. If the player does not receive the offer, the team loses their Right of First Refusal and their ability to collect draft pick compensation. The fact that the league received copies of the offers does not matter if the players didn't receive them.
The fact that Tallon is using this as his defense suggests that he is guilty of being in violation of the collective bargaining agreement. If this is so, he should be fired whether or not the players actually become unrestricted free agents. This is simply terrible management. However, the fact that the players did not declare themselves unrestricted free agents on July 1st is curious. It seems that Tallon may have called the players to let them know that offers were coming and the players decided to let it slide. So why is the story coming out now? To be honest I'm not sure. Apparently Allan Walsh tweeted about the qualifying offers not being sent shortly after the story appeared on TSN. If I had a guess, it would be that Allan Walsh is in fact TSN's source and that, at least his client, may want to test the UFA waters but isn't sure how to go about doing it. If the player agreed verbally that he considered himself to have received a qualifying offer he may not be sure of his status.
The situation is similar to one that occured in 2000 when Lou Lamoreillo forgot (dear me...) to send qualifying offers to John Madden and Brian Rafalski (and he resigned both of them). In that case both players became unrestricted free agents. Still, there are important differences. Firstly, there was a different CBA in place in 2000. Secondly, the players were not sent qualifying offers at all. Thirdly, the players knew that they were unrestricted free agents and didn't, as far as I know, give any verbal indication otherwise. I can see why this situation is a bit more nuanced. Offers were sent but they were late. Tallon, it seems, made contact with the players and the players, by virtue of the fact that they did not declare themselves unrestricted free agents, seemed to accept that they had in fact been qualified. It will be interesting to see if any of the players takes this decision to an arbitrator. Tom Benjamin has suggested that the agents will need to strongly defend the rights of their players here since both the NHL and NHLPA would probably rather the players remain restricted free agents. I don't think that's entirely true with respect to the NHLPA. Surely the union has an interest in making sure the clubs comply with the rules of the CBA. The last thing the players need is for teams to begin to get wishy-washy on whether or not they are restricted or unrestricted free agents on July 1st. As such, I would expect the union to strongly back the players right to be unrestricted free agents.
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