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NHL Free Agency And The Salary Cap Effect

Lightning GM Steve Yzerman is already being praised for his ability to sign big-name cornerstone players while keeping the cap space moderately big (Kim Klement-USA TODAY Sports)

Free agency is here! And so is the salary cap

The NHL draft has been completed, meaning that free agency has quickly followed—it began July 1st. Free agency is a time when fans tune in and hope to acquire a player or two that can make a difference for their team. It can cause a team’s general manager frustration and can cause anxiety for the fanbase. 

There are many factors that affect a decision of whether to pursue a free agent or trade players away. One of the main factors, and perhaps the most important, involves the salary cap. The cap forces teams to stay under a certain amount of money (ceiling) and above a certain amount of money (floor). No matter how good a team is or how much money the team has, the NHL is a business that manufactures competitiveness. To prevent teams with more money from monopolizing all of the talent in the league, these salary caps were implemented to foster competitiveness throughout all 30 teams. 

It sounds fairly simple to stay above $54 million and under $73 million, but this apparent simplicity reveals itself to be tricky with a 40-man roster. More so if a team has superstar talent like the Tampa Bay Lightning, Pittsburgh Penguins, and Chicago Blackhawks. Making the issue even more complicated are future contracts and the expansion draft, both of which must be considered when making a deal this offseason. It takes foresight to make the correct decisions. 

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(After the playoff series loss against the Blues, many of the mid-season gambles the Blackhawks made will have to be dealt with in free agency - Jasen Vinlove-USA TODAY Sports) 

This offseason alone, there has already been multiple trades and deals that have people scratching their heads. The deals that belong to this group this offseason include moving Andrew Shaw, Brian Elliott, Pavel Datsyuk, Troy Brouwer, Keith Yandle, Frederik Andersen, and Teuvo Teravainen. There are also impending free agents or “trade targets” that include the likes of Kevin Shattenkirk, Ben Bishop, Marc-Andre Fleury, Cam Fowler, and many more that will likely be affected by the salary cap during the free agency frenzy. 

These are quintessential players in the league. Most have been to the postseason, while a few have made it all the way to the final. But they will now be circulated to other teams to ensure that every team stays within the salary cap range. These players are nothing to sniff at. Just as an example, the Goals Saved Above Average (GSAA) between Elliott and Anderson is 21.22, and the four traded skaters (excluding Datsyuk) had 155 points last season and an overall plus-minus rating of +7. 

Before free agency began, eight of the thirty teams were either above the cap ceiling or below the cap floor. Many more were (and still are) one or two signings or extensions away from exceeding the ceiling or getting above the floor. 

The Penguins were the only team above the ceiling before free agency. They were nearly $1.5 million over the cap and need to shave it off before the season begins to avoid punishments that can range from heavy fines (at least $1 million) to suspensions and cap-space alterations for the following year. The Bruins, Jets, Avalanche, Flames, Coyotes, Hurricanes, and Devils were all under the cap floor before free agency began. 

After July 1st, however, a few things changed. The Penguins were (briefly) joined by the Kings. Meanwhile the Devils and Hurricanes are the only teams still under the cap floor. The other teams made moves on the first day of free agency that pushed them above the floor. 

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(Penguins General Manager Jim Rutherford will have a small time to celebrate before he needs to make some tough choices for the salary-cap-strained team - Joshua Dahl-USA TODAY Sports)

Taking some of the players mentioned before as an example, we can see how the salary cap affects every team in the league regardless of their market size or level of talent. 

The Penguins are over the salary cap. Marc-Andre Fleury is now part of a goaltending tandem, despite being the Penguins’ starter for a decade. Instead of keeping both of their star goaltenders, Penguins GM Jim Rutherford must now likely decide which one to go with: rising-star Matt Murray, or the aging veteran, Fleury. And because of their recent Stanley Cup victory, as with every champion, they must consider the salary inflation of their other players like Chris Kunitz, Brian Dumoulin, Trevor Daley, and Nick Bonino

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(After being the Penguins’ starter for about a decade, Fleury may be one of the many victims of the salary cap - Don Wright-USA TODAY Sports)

Murray’s contract expires after the end of the 2016-17 season, and that is when he will command a significant raise in his extension. But as of now, Murray is being paid only $620,000 per season, which is pretty cheap for a Stanley-Cup-winning goaltender. In comparison Fleury is earning $5.75 million per season or about 9.5 times more than what Murray is making. If they traded Fleury alone, they would mover under the ceiling by $2,673,867. 

This situation is mirrored elsewhere in the league, with many other contenders attempting to find a solution to their cap crisis. The Chicago Blackhawks had to ship Teuvo Teravainen to the Carolina Hurricanes in a package with Bryan Bickell just to dump Bickell’s cap hit of $4 million. Teravainen also would have required a raise from $894,000 per season to somewhere in the millions had they retained him. That would have put a lot of strain on an already-stressed cap ceiling of a team with two massive contracts (Patrick Kane and Jonathan Toews) to work around. 

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(The cruel world of the salary cap world involves dumping player salaries, even if it comes at a cost like Bickell’s did - Charles LeClaire-USA TODAY Sports)

In addition, they also were forced to send Andrew Shaw to the Montreal Canadiens to relieve his $2 million cap hit and avoid his $5.5 million per season asking price ($3.9 million cap hit). The combined cap hit of Bickell, Teravainen, and Shaw equals out to more than $8.5 million, meaning that, without them, the Blackhawks went from $2 million over the cap ceiling to $5 million under it. 

The Lightning and Blues have the same issues as the Penguins and Blackhawks. Steven Stamkos was going to be the biggest free agent on the market. It was believed the Lightning couldn’t afford his contract and take his cap hit like other teams could, or at least not without sacrificing some important pieces on the roster. But the Bolts shocked everyone when they announced Stamkos’ new eight-year, $68 million extension with an $8.5 million cap hit. 

With GM Steve Yzerman needing to extend Nikita Kucherov, Alex Killorn, Vladislav Namestnikov, and Nikita Nesterov this offseason, Stamkos’ contract should have an effect on the remaining free agents. Next year he will have to extend Ondrej Palat, Tyler Johnson, and Jonathan Drouin too. Victor Hedman, Andrei Vasilevskiy, Cedric Paquette, and J.T Brown have already been extended. Brown and Paquette affect this season’s cap hit (About $2 million), while Hedman and Vasilevskiy will count for future cap space ($11.38 million) along with Stamkos’ new contract. All of the remaining players are expected to get a raise, especially Kucherov, Palat, Johnson, and Drouin. 

This is why Ben Bishop is considered a huge trade target this offseason. Now that Stamkos, Paquette, and Brown have all re-signed, and Matt Carle has been bought out, the Bolts nearly have $13 million in cap space left to play with. Bishop earns $5.95 million per season, or approximately 45.8% of the Bolts’ remaining cap space, and that’s not including the raise he would understandably get. Of course the expansion draft next year factors into the decision as well, but it’s mostly due to the cap space and his potential cap hit. Thus far, the Bolts have not needed to discard any core roster players and have managed to keep well under the cap ceiling. That will likely change soon as some players will not be able to fit into the sliver of cap space they will have left after a predictably pricey Kucherov signing.

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(Many observers predicted the Lightning succumbing to their salary cap woes and parting ways with both Stamkos and Bishop, but Yzerman has already proved one of those predictions false as he extended Stamkos’ contract just before free agency- Kim Klement-USA TODAY Sports)

The Blues face a similar situation, but have already parted ways with David Backes, Troy Brouwer, and Brian Elliott. They are also considering trading Shattenkirk. The Blues are now more than $10 million under the cap ceiling after trading those three players. 

Backes, Elliott, and Brouwer had a combined cap hit of $13 million. Before the Blues made these trades, they were about $3 million over the cap ceiling. And with Alexander Steen, Jaden Schwartz, and Patrik Berglund set for free agency in the next few seasons, they need to prepare themselves to re-sign them and fit them into the salary cap. These bold moves have given them a chance to keep Shattenkirk on the team and absorb his $4.25 million cap hit that will inevitably increase after next season.   

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(The salary cap also gives some GM’s a chance to choose a sole starter in the net, as Doug Armstrong did with the Elliott trade - John Hefti-USA TODAY Sports)

Surprisingly, it’s not just about teams choosing which players to cut and which to keep in order to trim their salary cap. The opposite end of the spectrum happens when teams actually need to get above the cap floor. The Panthers and Coyotes were two teams that needed to hike their salary cap dramatically to get above the cap floor and made appropriate moves in doing so. This is why some eyebrow-raising deals were made from both teams that wouldn’t have been done by any team who’s closer to the cap ceiling. 

The Panthers were more than $3 million under the cap floor before they traded for and signed Yandle to a confusing seven-year deal worth $44 million. Yandle is a decent defenseman, but he’s closing in on 30 and they signed him on for the long-term. They now have him until the age of 36, though his contract does reflect that expected decrease in productivity.  

They also decided to extend Aaron Ekblad with a long-term eight-year deal to lock him up in Sunrise. His deal won’t affect the 2016-17 cap space, but it does take a healthy chunk out of the salary cap during the next eight seasons. Another puzzling signing was giving James Reimer a five-year contract, despite already having a star goaltender in Roberto Luongo. Their most recent moves were signing Jason Demers to a five-year, $22.5 million contract with a $4.5 million cap hit and extending Vincent Trochek for six years with a $4.75 million cap hit. These signings added $19 million to their cap space, pushing them from $3 million under the floor to $15 million above the floor. 

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(Perhaps one of the more confusing moves occurred when the Panthers signed Reimer to a five-year deal despite having a solid goaltender in Luongo - Robert Mayer-USA TODAY Sports)

The Coyotes are another team who were (and still are) under the cap floor. To dramatically increase their salary cap, they decided to make a peculiar trade during the draft. They traded their #20 overall first-round pick and the #53 overall second-round pick to the Red Wings for Pavel Datsyuk and the #16 first-round pick. However, Datsyuk is heading back to Russia to play in the KHL. So how does this work? Basically, the Coyotes take on Datsyuk’s last contract year, and obtained a higher first-round pick in the draft. This means the Coyotes will be taking a $7.5 million cap hit for a player who isn’t even in the league anymore. 

At the time, it seemed crazy. But upon closer review, the Coyotes needed to dramatically increase their salary cap to get above the cap floor. They have a lot of short-term players mixed in with some rookies who are still on their entry contracts. The only other significant move they made was signing Alex Goligoski to a five-year, $27 million deal before free agency began. The only other big earners they have are Mike Smith ($5.6 million) and Oliver Ekman-Larsson ($5.5 million). They have no players who earn $6 million or more per season, and have many rookies on the roster who each earn a salary of under $1 million. 

This is why the Coyotes had large amount of cap space to eat up, and they did so by absorbing the Datsyuk contract. Ironically, Datsyuk currently makes the most on the team, which says a lot about where the Coyotes currently are in their cap space situation. It’s counter-intuitive, but making a trade like that actually helped the Coyotes gain ground on the cap floor. 

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(In a deal that almost made zero sense at the time, Datsyuk’s contract being eaten by the Coyotes was likely a deliberate move to fill up their huge cap space - Kim Klement-USA TODAY Sports)

With crazy deals and signings happening before and during free agency, it is obvious which teams were pressured by the salary cap and which ones weren’t. Teams that basically stayed put (Canucks, Flyers, Blue Jackets, Capitals) were satisfied and comfortable with their roster and cap space. Teams that scrambled to make trades (Blackhawks, Blues, Coyotes, Panthers) were squeezed by either the floor or ceiling.   

We are just a few days into free agency and every team, and their respective GMs, will likely be involved in trade talks or negotiations to relieve the salary cap or increase it. Sometimes a roster’s salary fits together like a big puzzle, but most of the time it’s up to the GM to not only abide by the salary cap, but to simultaneously improve their team as well. If anything, this proves that the salary cap works. Teams like the Blackhawks and Bruins are unable to monopolize talent, and teams like the Panthers and Coyotes have a chance to inherit their players.

Edited by John Ray.

What is the new 2016-17 NHL salary cap ceiling?
Created 7/3/16
  1. $68 million
  2. $70 million
  3. $73 million
  4. $75 million

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