Cap'n Crunch: Why I'm not worried about the Leafs cap situation

There was a lot of speculation as arbitration drew to a close that the Leafs would or should take advantage of the second buyout window and shed a contract or two since they have very little cap space right now. They did not do that, and I'm glad.

To determine if there is a problem that needs a solution as drastic as a buyout, you need to look at the interconnected nature of roster need, waiver rules, salaries, development goals, and asset management. Then you have to balance all that against the pros and cons of skating close to the salary cap.

The top priority has to remain putting the roster on the ice the coach wants and who can win as many games as possible. Asset management should never be driving the train.

I am starting with a roster that is somewhat what I would like to see, but mostly what I think Mike Babcock wants, and what Lou Lamoriello wants to provide.

I have costed out this potential lineup:

That is beautiful! I am going to draw a double line under that with a pencil and ruler and go home early. Clearly, we are done here.

That is a very good team and a budget team. They might even be an excellent team after a few months of climbing the learning curve for the rookies.

Don't sweat the details of lines so much, as I was mainly making sure my choices were plausible by position. Maybe Josh Leivo is in and Soshnikov is out. Maybe someone else I expect to be on the Marlies makes a big impression in camp. Maybe someone starts the season on IR. Maybe Mitch Marner has a regular spot in the lineup right away, and not later, as I think more likely.

All those maybes are why the Leafs should not be making firm roster decisions now, and I don't think they are. They are likely looking at a multitude of scenarios. I am going to look at just one and rely on your imagination to see all the other similar options.

Now for the list of players I just magically waved away to create that beautiful budget roster:

Now we have bloated the salary over the cap and the roster is too big. This always happens in training camp. Every team makes cuts, and they do that with an eye to all the competing needs: the cap, the roster limit, waivers, etc. etc. But the first need is still the roster. So I am not going to start throwing Brown and Hyman in the AHL just because that's often the traditional response to a problem like this.

I am going to make tougher choices than that.

That is one potential recipe to keep close to the roster we want, give the developing players good amounts of ice time, and keep the assets we want to trade most on the NHL ice where they can be seen.

There are many others. For example, the Leafs could bury Lupul's salary if he is not a player they want on the ice and he is not a genuine IR or LTIR candidate. They could keep their eight-man defensive rotation going and not expose anyone to waiver claims very easily that way.

But what if they don't win the Cowen buyout?

There are options. First and foremost the cap hit of a team is a fluctuating number that changes every day as players are injured, loaned to the AHL, called up, or traded.

If that approximately $3 million in savings is not there, one option is to shrug like Ken Holland of the Red Wings did recently and admit to a plan to simply rely on LTIR to solve his problems. The Leafs absolutely can do that. They can make some space as well if they need to.

But what about bonus overages?

There are a lot of roster players with bonuses in their contracts.

Leaving aside that we cannot calculate even a likely number to be paid out in bonuses, only a series of serious or less serious guesses, my serious answer is: so?

It is true that the bonuses that are earned cannot be absorbed by LTIR space, and if the Leafs go over the cap with bonuses paid, that becomes next year's dead money. Why is that a worry? A glance back up at that inexpensive, rookie-heavy roster I started with will reveal that there is near to $9 million in salary on there that will be gone next year. And Cowen will be gone too so that is another $2 million plus, Michalek's contract runs out, etc. etc.. A little dead space is not going to stop the team from functioning in 2017. If fact, that might be the easiest year to absorb it for many to come.

But what about exceeding the bonus cushion?

This needs to be watched as you add rookies to the lineup, since some of them have more bonus potential in their contracts than others. The really short version of the bonus cushion calculation is that on any given day of the season the total possible bonuses you might have to pay on your active roster players cannot go over your cap space plus a cushion of $5,475,000. LTIR space cannot be used here. If that happens you're over the cap, and you have to do something to get in compliance.

My rookie-heavy lineup has approximately $6 million in possible bonuses on day one of the season which is a bit over the bonus cushion. Sources offer conflicting information on some bonuses.

If the Leafs have no non-LTIR cap room, meaning they've lost the Cowen buyout, this would make that roster non-compliant, so creating space by trading a player or burying another salary would become necessary.

Once bonuses become impossible to earn, you don't have to account for them against the cushion, and you can stop worrying about them. Most often this happens at the 42-game mark, so calling up bonus heavy rookies is easy in the second half of the season. Another example is players who may have a bonus for going to the All-Star game included in their Schedule A bonuses. Once that date is past and they didn't go, those amounts do not get counted against the cushion.

There is no inherent value in non-LTIR cap space now. But it is awfully useful. I'm not really comfortable sailing along without any room, as that bonus cushion problem shows. You want the freedom to grab a hot waiver claim or make a trade when the other team can't take back a player if it is a good opportunity. You want flexibility.

Making flexibility.

One way the Leafs could get that flexibility is by fixing their cap space at the trade deadline. They could replace the space the Cowen buyout provides by trading players whose pro-rated salaries coming off the cap add up to $3 million. This is not a simple task; you get a bit over $1 million in cap savings for every $5 million you move at the deadline.

The benefit to waiting until the deadline is the value of your assets is highest and you likely know how much, if any, bonus overage you need to worry about. Or not worry about, as the case may be.

The Leafs could deal with this proactively in training camp, but you don't want to be in the position where you must make a trade like Steve Yzerman seems to be right now. The price you get goes down. The Leafs would not be trading from a position of great strength on any of their "old dogs", since all of them need to show proof of ability to have value. They might be able to move someone like Greening or Holland.

Making a trade while at a disadvantage to sign Nikita Kucherov is one thing; doing it so you make space for bonus overages is another thing altogether. The Leafs should not trade someone just to make cap space any more than they should have bought someone out for that single purpose.

There is a chance the Leafs could legitimately place Robidas or Lupul on LTIR. We don't know if that is likely, and perhaps the Leafs don't either. If they can do that, then the roster shuffling becomes easier, waiver exposure less likely, and all they are risking is some dead money next year.

And if they had bought someone out, they would have it for sure.

I am not fond of blind faith in authority, but I do think it is safe to assume the Leafs front office can do arithmetic. There are a lot of ways they can navigate the seas ahead, and few of them have icebergs in the way. So I am not worried about a cap crunch taking out the ship.