When a team has to decide what to do with a player with a longer term (that is, at least out of action for a week) injury, there are two options, and there are two main things to consider; how long the player can be expected to be out for, and the team’s salary cap situation.
First let’s address the length of injury time. If a player is going to be out of action for at least one week, the team can put that player on their Injured Reserve (IR). A player must be on IR for a minimum of seven days before they can be reactivated to play, but while they are on IR, the team can use that roster spot to recall a replacement. One consideration is that the team doesn’t get any relief from that player’s AAV while they are on the IR; they just get to use that player’s spot on the 23-man roster while they are injured.
When an injury is going to keep that player out for a much more extended period of time, the league gives teams a second option; put the player on the Long-Term Injured Reserve (LTIR). With LTIR, the minimum requirement is longer; the player has to miss a minimum of ten games and twenty-four days while unavailable due to their injury.
With the longer period of inactivity, teams often need more than a temporary solution (as we saw this past season when both Tyler Bozak and Dave Bolland were out of the Leafs lineup for an extended period of time). So, when a player is placed on LTIR, they also are able to use that player’s spot on the active roster, but they also get an exemption against the salary cap to help them find a replacement.
The thing is, not every team actually needs such an exemption. Not every team spends up to the salary cap, and while most teams have found loopholes in the salary cap they can exploit to actually pay more than the cap but stay compliant, other teams have found loopholes that work the other way, so they can actually pay less than the salary cap floor but manage to stay within the bounds set by the NHL. In such an instance, LTIR actually works against the interests of those floor teams. They now have to spend more money that they don’t want to in order to get to the floor. Instead, they can just keep a long-term injury on IR; they still get a roster spot to call up a replacement, but the injured player’s cap hit still counts against the salary cap.
Since the Maple Leafs are always going to be a team closer to the salary cap than the salary floor, no matter how atrocious a team they put out, we won’t focus any more on the example I illustrated above. We’ll focus on what a team near the cap can do with an LTIR exemption.
Sidenote: I didn’t want to let this pass either. Yes, if you’re like me and you read all of the above information, you’d come away with an idea that the LTIR is kind of horribly skewed towards being an advantage for big-market teams, since it lets them effectively circumvent the cap and there’s an incentive for small-market teams to never make use of it. To that, I would wholeheartedly agree, and also point out that the two teams that have most made use of the LTIR exemption are owned by Jeremy Jacobs and Ed Snyder, so we can all pretty well tell who might have pushed for such a rule that clearly favours the big-market teams. But I digress.
So. Let’s say you’ve signed a veteran player to a 3-year contract, only that player is 37 years old and has a history of missing time with various injuries (most notably breaking his leg on two separate occasions last year). As your team’s new capologist, you’re worried about how you can absorb the loss of this player (let’s call him Stephane R… no, too obvious. How about S. Robidas) and you want to know how much money you have available to try and acquire a replacement.
Let’s back up one step for a second, and talk about the salary cap itself. Otherwise, this could get confusing in a hurry. Everybody I think understands how the league arrives at each individual player’s Average Annual Value (AAV, or their caphit) and that the cumulative AAV of their roster has to be less than the upper limit of the salary cap. What’s important to remember, however, is that the salary cap is calculated as a daily figure; the $69 million upper limit means that at the start of the season, every team has to field a roster that is compliant with that figure over the entire season (usually 187 days), so a daily figure of $368,984 per day for their 23-man roster.
(I’ll wait a moment while you do quick math on what that means for a player’s average per day pay and compare it to your own, then vomit out of rage.)
Spending exactly $368,984 per day on salary is pretty much impossible, in most cases there is a small amount of wiggle room between that maximum figure and the actual daily calculation. That creates additional available cap room. Remember, the $368,984 is based on spending the maximum available salary each and every day of the season. As soon as you spend even a dollar less, that creates additional cap space which then would get split across the remaining days left of the season. This is how at the trade deadline, you get teams that are able to add $20 million worth of capspace, even though the team has been hovering just a few million under the cap all season. They’ve banked enough cap space through the season to date that they can spend that much more in the final two months of the season.
Now that we’ve laid that groundwork, there are three basic rules regarding LTIR exemptions that we need to address;
First, the cap space afforded by LTIR cannot be banked.
Second, the cap space afforded by LTIR can only be used while the player is on LTIR.
Third, the cap space afforded by LTIR is limited to the amount by which the team exceeds the upper limit of the salary cap.
Let’s go through these one by one. First, the reason that this cap space cannot be banked is because it’s meant to be a temporary relief from the hardship of losing a roster player for an extended period of time. If you were able to inflate your cap through LTIR and then defer that cap space until later in the season, when you had the room to acquire tons of high-priced contracts, teams never would have gone through the exercise of burying guys like Wade Redden in the minors. They would have just beaten them with a tire iron after every practice until they were eligible for LTIR.
The second point is kind of tied into the first; since this is meant to be an exemption because the player is out of action for an extended period of time, the exemption goes away once the player returns from injury. So if you’ve got a guy who will be out for a month on LTIR, and you acquire a big-money replacement, when he comes off LTIR you need to be able to fit everybody back under the cap again. This is probably the easiest concept to understand.
The final point is by far the most convoluted. When your player is placed on LTIR, and you are near the cap ceiling, your team gets an exemption up to a certain amount above the cap. That number depends on what the team’s current salary commitments are, and there are ways to manipulate this to get an even higher exemption.
At this point, I’m going to refer you to Capgeek’s FAQ on the matter, which walks through an explanation of how they can maximize the LTIR exemption.
http://capgeek.com/faq/how-does-long-term-injured-reserve-LTIR-work
The general idea is this; in the example we are talking about with Robidas and his $3 million cap hit, the LTIR exemption would allow the Leafs to increase their maximum salary cap by $3 million. So their cap would become the current total AAV of their roster (including Robidas) plus Robidas’ cap hit of $3 million. If this number is greater than the upper limit of $69 million, that becomes the new upper limit of the cap while the player is on LTIR.
BUT, if you have the cap room and the roster space, and you can recall a player or two and add them (and their AAV) to your roster the day you place Robidas on LTIR, you can actually increase your LTIR exemption, and create a greater upper limit to the cap while that player is on LTIR. Then, the next day you send those players back to the AHL, but you keep the higher LTIR figure, and you can acquire a much larger cap hit to replace the player you lost to LTIR. All for the cost of a couple of thousand dollars of cap space, for carrying those players that were called up for one day.
I’ll conclude this article by making a point that we covered numerous times last season, when the Leafs were in a perilous position under the salary cap; every dollar matters under the cap. There are a lot of ways that smart teams can shield themselves from unnecessary spending of their salary cap, but not all of them are often practical. In theory, you could send all of your healthy scratches down to the minors every single time you have a day off, but they can’t practice with you so are you really benefitting?
And overpaying for one guy in particular on a very small contract isn’t ideal, but if the player can be waived then the impact isn’t going to make or break the season.
It’s easy to lose the forest for the trees, when trying to figure out all the ways in which a team manages to have to rely on a roster that can’t carry a full complement of 23 players because of suspensions, injuries and a lack of cap space from too big contracts and too much money sitting around.
But injuries happen, and teams (especially ones losing money) are always looking for a trade to either shore up a weakness, change the dynamics in the dressing room, or maybe just shed some salary. There are opportunities for a team, that has financial resources and available cap space, to make good transactions and improve the quality of their club, simply by being careful and treating their salary cap like an asset instead of a burden.
Dead space on the cap is just that; dead. It can’t be manipulated or maneuvered around to squeeze more out of what’s available. It’s just a benign tumour that can only be removed from your cap with the passage of time. For a team that’s never in danger of reaching the cap ceiling, or looking for the cap floor, that’s not such a bad thing. It can be a low cost way of doing so. But for a team that constantly flirts with the ceiling, that has to dress 20 players because they don’t have the cap space to call up a short-term injury replacement, that dead cap space can make a big difference.
