Common Misconception About Buried Contracts

As July is well underway and August is peaking around the corner, contract signatures are just slowly trickling in. Or so it seems after a busy first day, first week of free agents, both restricted and unrestricted, putting pen to paper with NHL teams. And as teams sign contracts, their salary cap hit, their payroll is climbing. For teams who can spend to the the upper limit, it has been set to $81.5 million for next season while no teams can have a combined cap hit below the $60.2 million mark.

Fans and media alike love to keep track of their favourite team’s cap situation and thankfully for them, there’s an amazing website which allows them to have this information at their fingertips. And that is only one of the tools CapFriendly.com provides professional journalists, bloggers and fans a solution to this ever complex beast: the calculations and details of everyone’s contract as well as the impact on their respective teams and other players in the league.

Because of its complexity, mistakes or misconceptions are rather frequent. One that we’ve been reading and hearing a lot lately is how much cap space teams still have available and how they can address their issues. It seems like more than a few people think that by sending a player down to the AHL, his salary disappears from his team’s cap hit. Not so fast… But before we get into that, here are a few different important terms to understand.

One-way contracts

Means that the player will be making the same salary if he plays either in the NHL or in the AHL.

Two-way contracts

Means that the player will be making a certain amount in the NHL and a lesser amount if he’s sent down.

No-Movement Clause

Player protection as the team cannot trade them or send them to the AHL (or placed on waivers) without their consent. While the player’s contract is not protected against a buy-out, teams must protect them for the expansion Draft.

No-Trade Clause

Self-explanatory, teams can’t trade him but they can send him down, put him on waivers. Teams can, but don’t have to protect those players for the expansion Draft.

Limited No-Trade Clause

Like a NTC, but has it’s limitations already negotiated and agreed to. Example, a player can have, for limitation, that he has to submit a list of a pre-agreed number of teams he cannot be traded to. He can be traded to the other teams.

Buried Contract

Sending a player down to save cap space has been, in the past, a way for teams to fix their contractual mistakes. It’s called burying a contract and in order when richer teams were “burying” their unproductive big salaries in the AHL to clear cap space. The New York Rangers did it with Wade Redden and the Montreal Canadiens did it with Scott Gomez. Many teams simply cannot afford to bury contracts so it was an unfair practice.

Karl Alzner?

But wait. Teams can no longer do it as the NHL changed the rules. Teams no longer receive full cap relief when a player on a one-way NHL contract is sent to the AHL or loaned to a team in another professional league. The cap hit relief is equal to the minimum salary for that particular season plus $375,000. So here’s the breakdown per season:

  • 2019-20: $700,000 + $375,000 = $1,075,000
  • 2020-21: $700,000 + $375,000 = $1,075,000
  • 2021-22: $750,000 + $375,000 = $1,125,000

This is what it would look like for two often mentioned Canadiens’ players:

2019-20 Cap HitSavingsHabs’ Cap Hit
Dale Weise$2.35M$1.o75M=$1.275M
Karl Alzner$4.625M$1.075M=$3.55M
TOTAL:$6.975M$2.15M=$4.825M

If both are sent down, the Habs would only save $2.15 million of the $6.975 million combined cap hit between the two. This means that the Canadiens would still have $4.825 million counting against their cap even when they’re in the AHL. The Canadiens’ cap situation counts 24 players with just over $4.8 million available. Have fun. Send players down all you want but if you’re doing it for cap reasons, don’t forget the buried contract rule.

So folks, when you try counting the savings when deciding who to send down, take that into consideration. The most a team will save in 2019-20 will be $1.075 million per player. Go Habs Go!

Recent Trades: The Proof is in The Pudding

As a NHL General Manager, sometimes you complete trades that work out for your team, sometimes they don’t. In all cases, the price paid to acquired those new acquisitions is key to determine if it was a good trade or if it wasn’t, how much you’ve lost in the deal. No, that doesn’t apply only to Marc Bergevin and the Montreal Canadiens as every team in the league goes through those assessments and every GM has good deals and not so good ones.

We’ve discussed how disappointing it was to see Bergevin fail to address the team’s biggest needs so let’s not rehash on that. But it’s not like he didn’t complete any deals. He did revamp his bottom-six and added a depth defenseman and those deals seem to be paying off… for the time being.

Here are the trades completed by the Canadiens’ GM leading up to the February 25th trade deadline:

As you can see, Bergevin traded three players who had been sent to the Laval Rockets in the AHL and has added four players to his NHL roster. For the sake of this exercise, we won’t get into what the players shipped out are doing with their new team as that’s not the purpose. The goal is to see if Bergevin has improved his team with the players used by head coach Claude Julien over the players he decided to sit in the pressbox. So here’s the breakdown:

NAMEGPGAPts+/-2019-2020 CONTRACT
Jordan Weal11246+2UFA
Nate Thompson210660UFA
Dale Weise9000-21 year – $2.35M
Christian Folin14044+11UFA
Matthew Peca383710-131 year – $1.3M
Charles Hudon32325-9RFA
Nicolas Deslauriers45213-101 year – $950,000
Mike Reilly573811+16RFA

As we can see, it looks like the trades have panned out so far. Further, Weal (56.4%) and Thompson (55.5%) have helped take some pressure off Phillip Danault (54.7%) in the faceoffs’ circles, particularly in the defensive zone. All things considered, it wouldn’t be surprising to see Bergevin offer contracts to both Weal and Thompson for sure, perhaps even Folin by season’s end.

In order to do that, the team will have to unload some of the NHL contracts for next season, unless Geoff Molson want to have the biggest payroll in the AHL, which already includes Karl Alzner. And Bergevin hasn’t addressed the team’s biggest needs for a left-handed Top-4 defenseman and some help for the powerplay. It will be a busy summer for Canadiens’ GM but then again… when hasn’t he been busy since taking over? Go Habs Go!