Salary Cap/Transactions FAQs: Waivers, Retention, Buyouts, More

This is the second edition of PHR’s Salary Cap/Transactions FAQ. If you’re not seeing your question answered here, check to see if we got to it in our first edition.

Today’s topics include some waiver insight, salary retention, buyout specifics, and more. Some questions have been edited for style and clarity.

cpd26: We see cap-strapped teams send young, waiver-exempt players down to AHL on paper transactions often to bank up cap space daily. Why don’t we see the same with overpaid, underperforming veterans who would clear waivers? Thinking Justin Holl, Ville Husso, Nate Schmidt (pre-last year’s buyout), Marc-Edouard Vlasic (if Sharks needed space), and Conor Sheary would be candidates… Obviously, this doesn’t work with NMCs, but none of them have one. Why do vets only get sent down for the longer term, like Jack Campbell and Calvin Petersen?

That’s a great point. The short answer is that the waiver process takes longer, and it’s easier for teams to accrue cap space by sending waiver-exempt players down to the AHL on off days, as the Stars did with Logan Stankoven. It’s a zero-risk move, especially since the player is informed it’s a paper transaction.

There are a few cons to waiving veterans, as you propose. There’s obviously little doubt they’d clear waivers, as you laid out, but you are losing a day of accumulating cap space by waiting for the waiver process to finish up. It also doesn’t give you complete cap relief, only up to $1.15MM, as that’s the maximum buriable threshold at the moment. Of course, after initially clearing waivers, there’s a grace period in which those veterans can be shuttled between leagues at will until they’ve spent 30 days on the NHL roster or played 10 NHL games, whichever comes first.

But because they’re giving you $1.15MM in relief, they also cost $1.15MM to call up again, which a lot of those cap-strapped teams can’t stomach for short-term, game-day moves. It’s more complicated to plan out long-term, and you risk damaging your relationship with the veteran and, with it, any hope that they may rebound to being worth their cap hit. That last point is probably less of a stressor/worry for front offices, but it still comes to mind.

fafardjoel: When a team retains money in a transaction, for example, 50% for a $6MM player for two years in exchange for a third-round pick, do they actually pay this money to the player? Who pays what?

Correct. The team trading the player away is on the hook, in that case, for exactly half of the player’s base salary and signing bonuses after the trade. The acquiring team pays the player the other 50% of the deal’s life.

frozenaquatic: I’m always seeing news that players opt for lower AAV contracts for a shorter term but hold out for higher AAV for longer. Wouldn’t it make sense to be guaranteed $4MM a year for eight years rather than $2MM annually for two years? What if you are terrible in those two years and can’t command $4MM? Is it worth that much of a gamble that you’ll get $6MM AAV on your next contract, which you would have to catch up money on your lower AAV short term contract?

It’s mostly about aging curves. Players don’t want to take a low-AAV, long-term deal in their early to mid-20s because it robs them of their maximum earning potential as potential UFAs in their prime in their late 20s. Yes, they run the risk of regressing and losing their value. But every contract negotiation is a gamble from one side, essentially—either the player or team. It’s quite reasonable for a player on the right side of the aging curve to bet on themselves.

Now, for a more established veteran, you’re exactly right. Recent examples of those players (Taylor Hall, John Klingberg, Vladimir Tarasenko, etc.) have almost all gotten burned by taking one or two-year deals when the market wasn’t what they wanted for long-term offers. That trend seems to have died out already this summer. But for RFA-eligible players, lower-cost bridge deals make a good amount of sense. Just ask Elias Pettersson, who bet on himself and won with his three-year, $7.35MM AAV deal that turned into an eight-year, $11.6MM AAV extension.

goosehiatt: In a buyout situation, does the player get the full balance of the contract or does he only get the portion that the team is penalized?

The player only gets two-thirds or one-third of the base salary they were originally owed, spread out over twice the remaining length of the contract at the time it was bought out. It depends on their age. Most players (26 or older) will receive two-thirds. For all players, buyouts don’t affect their signing bonuses. Those are guaranteed/paid in full after the deal is bought out.

It’s that messy calculation that determines the cap penalties for the team executing the buyout and why long-term signing bonus-heavy deals are so desirable for superstars. It’s not all about having the money paid up front, it’s also about having it protected in the event of a buyout.

MixtureBill: For waiver order, is it always based on reverse standings order, or are teams moved to the “end of the line” after making a claim? Would the last place team have priority on all waiver claims until the order is changed at the given date during the season, or once making a claim do they no longer have top priority?

Nope. If a team remains in 32nd place for eternity, they have first dibs on players on waivers for eternity.

That given date you mention is Nov. 1, by the way. So, for any players who get placed on waivers between now and November, the Sharks will still have priority, then the Blackhawks, then the Ducks, and so on.

Gmm8811: Does the AHL and ECHL operate under the NHL CBA, or do they have their own CBA?

Not only do they not share a CBA, they don’t share a players’ association. AHL and ECHL players aren’t part of the NHLPA. They’re members of the Professional Hockey Players’ Association (PHPA), which then negotiates CBAs with the AHL and ECHL on behalf of the players.