Topics in this edition of the PHR Mailbag include a discussion on deferred contracts, Anaheim’s interest in moving out a pair of long-time veterans, and much more. If your question doesn’t appear here, watch for it in next weekend’s mailbag.
User 1773920983: With Johnny Gaudreau passing away, what will happen to CBJ’s salary cap? They will fall below if it is removed.
vh33: I don’t want to be disrespectful, but I was wondering: due to the death of Johnny Gaudreau, what happens with the cap hit for the Blue Jackets and the salary? Will the cap hit be reduced? Or in the books for the remainder of his contract? And will the heirs receive his remaining salary? What are the rules for these tragic occasions?
Gaudreau’s contract comes off the books in full for Columbus which does indeed put them under the Lower Limit of $65MM for the upcoming season. Per PuckPedia, they’re around $62.3MM with a 22-player roster at the moment so they do have a bit of work to do on that front.
It’s possible that they ask for some sort of waiver from the league to start the season below that amount given the circumstances but I think the NHLPA would need to sign off as well. Their preference would obviously be that Columbus goes and signs a couple of free agents to make up the difference which is an option. I expect the Blue Jackets will go the trade route and take on a player or two from teams needing or wanting to clear salary, picking up some draft picks in consideration for doing so. Given that they’re a team that’s likely to sell at the trade deadline, I could see $67MM being a soft target, giving them a path to stay above the Lower Limit even if they move a player or two during the year.
As for what is and isn’t paid out, let’s start with the contract itself. To the best of my understanding, the family won’t receive any of the remaining payments. Assuming the $2MM signing bonus in his contract was already paid, that’s the last direct payment in the deal.
However, the family will receive some money. Article 23 of the CBA provides some information on the insurance of contracts which is relevant here. From my interpretation, there should be a $1MM life insurance policy as well as an accidental death policy valued at the base salary for that season which in this case is $7.75MM (it excludes the signing bonus). There’s also a six-month extension of benefits for the family (added in the 2020 CBA extension) with an option to elect (purchase) continuation of coverage beyond that.
aka.nda: Deferred payments in contracts… how many can be in place, and for how much and what duration? How do they count against the cap if they’re paid out the day the season ends vs. some other time?
There are no restrictions on deferred payments in terms of how many can be in place, for how much, or for how long.
As for the second question, the end of the season still falls within the League Year so the quickest way to answer it is to go right to the CBA – Sec. 50.2(ii)(A):
Player Salary denominated as “Deferred” but payable within the term of the SPC shall be counted in the League Year in which the Player Salary is paid and shall not be treated as Deferred Salary.
That covers the day after the season ends but let’s look at another time. More specifically, a deferral that is payable outside the term of the contract and payable outside the League Year (let’s say July 1st). At that point, the value of the deferral is discounted to the present value of that compensation in the year it was earned. Logically, the further out the payment of the deferred money, the lower the present value and therefore the lower the cap hit. That’s my attempt at a simple explanation for a concept that isn’t all that simple. PuckPedia has a nice breakdown with some more details of contract deferrals if you’re interested in reading up on it further.
I’m going to quickly comment on the idea of deferred salary in general having seen a lot of general speculation that the two deals Carolina did could lead to a spike in these types of agreements. I don’t think that will be the case. With escrow stabilizing, there’s going to be more effort into front-loading contracts as much as possible, especially for established top players. They then get more money sooner which is the key objective.
Deferred contracts are more or less the opposite as players have to wait longer to get paid. Presumably, they’re getting more in the end to make up for the deferral but they have to wait. That’s how Carolina got around the perceived internal ceiling of Seth Jarvis’ deal being the $7.75MM that Andrei Svechnikov has. The AAV based on total earnings is higher at $7.9MM but the cap hit is only $7.42MM based on the three deferred payments to the day after the contract officially expires. It’s a creative solution but while we might see a few more of these deals (to be fair, Carolina’s two weren’t the first of its kind; they’ve happened before albeit rarely), this isn’t going to be the start of a new trend.
Cla23: What does a Cole Perfetti and Lucas Raymond contract look like?
For Perfetti, I think the two sides are going to hone in on a bridge deal. He only has 75 career points under his belt so I have a hard time believing that the two sides can find a number that they’ll be happy with on a long-term agreement. Perfetti wouldn’t lock in close to a max term for less than $6MM as he undoubtedly feels he has another level to get to offensively while given his performance so far, I doubt the Jets would go that high. I expect a two-year term will be the target which should check in around $3MM per season, perhaps backloaded slightly to secure a higher qualifying offer. That also fits nicely within Winnipeg’s current cap situation, giving them a chance to bank some in-season cap space.
As for Raymond, it looks like a long-term agreement is the goal and GM Steve Yzerman made sure to leave enough cap space to afford one. His platform season was strong (31 goals, 41 assists) and there’s probably a belief that he can beat those numbers down the road. I could see Raymond’s camp looking to best Cole Caufield’s contract (eight years, $7.85MM AAV) as he has better numbers now than the Montreal winger did at the time while Detroit is probably hoping to get that into the high-six range which lines up more with the cap percentage on Dylan Larkin’s post-entry-level deal. I’ll go with seven years at $7.8MM or eight years at $8MM as the end result.
sha44ron! Due to the cap limits, the Rangers were unable to improve their bottom six so do you think that will hurt them this year?
I’ll start with this general thought. If the bottom six is the biggest issue that a team has heading into the regular season, that’s a pretty good spot to be in. And that’s where the Rangers are.
I’m not sure I agree that they haven’t been able to improve their bottom six. As long as Filip Chytil stays healthy (granted, that’s far from a given), that’s a big improvement right there as he’s not passing Mika Zibanejad or Vincent Trocheck on the center depth chart. If Reilly Smith’s addition pushes Kaapo Kakko onto the third line as well, now you have a third line that should be a capable secondary scoring trio.
I also think there’s room for internal improvement in the bottom six. Will Cuylle should take a step forward while if they get a chance, Brennan Othmann and Adam Edstrom could contribute.
With New York’s overall talent, they’re in good shape for the season so they can be patient with their bottom six. If the things I mentioned above happen and it’s a better group than expected, great. If not, they can try to address it at the trade deadline. If it’s still a problem going into the playoffs, then I’d be a bit more concerned but for now, I don’t think it will hurt them too much.