Maple Leafs, LTIR, David Clarkson and everything you need to understand this trade

As you know, the Toronto Maple Leafs made us all laugh uncontrollably in mid-July by trading for David Clarkson. They sent off Garret Sparks and got back a fourth round pick, which I think is more than Sparks is worth, but not a lot more. More on that later. First, the burning question:

Why, though?

Because that man — points up — Brandon Pridham is a very smart man.

The point of all of this is cap space, LTIR, and how the calculation of LTIR actually works. We’ve all gotten used to the shorthand way of talking about LTIR as if it is a dollar for dollar reduction of the cap hit of a team. If only. It’s much, much more complex than that, but effectively, it works out close enough to that for rough July calculations. Pedants will tell you you’re wrong, but just reply to them using an Oxford comma, and they’ll go away.

The reason the Maple Leafs traded for David Clarkson was that their cap hit was too low. Clarkson does the one thing he’s good at: raises the salary cap without providing any actual on-ice production. Yes, that’s mean. But he’s getting $3.25 million in actual salary this year, so he’ll have to cope with some meanness. His money is not paid by the Leafs, by the way. It’s an insured contract and paid by whoever the Leafs originally insured it with.

Let’s back up to earlier today when Clarkson wasn’t on the Leafs. Once Cody Ceci and Alexander Kerfoot had been signed to their deals, I said this about the cap situation:

The cap space now is $9.5 million without using LTIR. In the regular season LTIR would give room for one more player at approximately $10 million. You could increase that by running a short roster of 21 players. You could get to 23 players with a contract for Marner under $9.5 million, and the Leafs have a long list of minimum salary options, so the specific players on the above roster is not relevant.

Remember offseason cap space is bumped up by a cushion, that’s why the offseason space without LTIR and the in-season amount with Horton on LTIR were about the same. This was the quick and dirty way of estimating cap space. There was room for Marner to be signed now or on day one of the regular season, and all was rosy.

Well, almost all.

The Leafs Cap Hit was Too Low

The trouble with my rosy view of things on that day was that the Leafs weren’t going to get to use all of Nathan Horton’s cap hit. Imagine we’re on day one of the regular season, we need to get cap compliant and Mitch Marner still hasn’t found his pen. The Leafs would only be able to have 23 players on the roster, and the total of all their cap hits (and Horton’s) would come in under the salary cap ceiling of $81.5 million.

I did some rough calculations a few days ago, and discovered the scale of the problem. If, on the day the Leafs have to cut the Marlies players and get to 23, they waived all their cheapest players and kept their most expensive — so imagine they would waive Frederik Gauthier and keep up Pierre Engvall as paper transactions for one day — they could jiggle their total cap hits up to perhaps a couple of million below the cap ceiling, but getting all the way there looked impossible to me.

This all matters because LTIR is actually calculated is as follows:

Step one: Calculate the team’s Accruable Cap Space Limit (ACSL). This is all of the cap hits of their 23 roster players and anything else like retained salary or buyout amounts.

Step two: Replace the cap ceiling with the ACSL in all your future salary cap calculations.

Step three: Place your player on LTIR, creating an LTIR pool that is the amount of his cap hit.

Step four: add a player to your roster and the total amount of his cap hit over your ACSL drains that LTIR pool.

This is the important point. The LTIR pool is drained, for the rest of the season, by any cap hits that exceed the ACSL, not the cap ceiling. LTIR teams don’t get to use cap space up to the ceiling, only to their ACSL.

So the thing you want most of all is an ACSL that is as close to the cap ceiling as you can get, or you are effectively not using all of your LTIR player’s cap hit.

If you want to see all the various combinations and permutations of how LTIR works in training camp and throughout the season, CapFriendly has all the examples you can ever need.

Or maybe you just need to gaze at this?

By adding Clarkson to the roster, and letting his contract drive up the overall cap hit, the Leafs can now very easily be right at the cap ceiling when their ACSL is calculated and get maximum benefit from every drop of LTIR. Of course the Leafs are stuck with players on LTIR in the first place because Dave Nonis signed David Clarkson to a really stupid contract. Never forget!

People are saying this creates more cap space.

No, it doesn’t. It allows the Leafs to wring a few drops out of the LTIR pool they wouldn’t have had before, but it’s not a huge difference. You can’t magic up cap space. At best this is adding $2 million or so.

But what about an offer sheet?

There is room enough now using the off-season rules to not get caught out by any offer sheet Mitch Marner might sign. (If he wants a suggestion on where to put his autograph, I have one.) They can sign him right now, too. They can also sign him during training camp or after the season starts. It will all fit in any circumstance.

The Numbers

Offseason Cap Space as of July 24, 2019

This calculation has been updated to remove the three unofficial contracts for Kevin Gravel, Nick Shore and Kenny Agostino. Update: the seven players officially signed today have been added, and Michal Neuvirth is on a PTO, so he doesn’t figure in. Mitch Marner’s qualifying offer has now expired, so we don’t have to add that in either.

The offseason space without anyone on LTIR is just over $8 million ($5 million with the update), and they have over $10 million in potential LTIR to use, so there’s no worries right now about cap space.

The regular season projection uses a 23-player roster that includes both Horton and Clarkson. That puts the Leafs over the cap. They could choose to arrange their roster with the players they actually want on the NHL roster and then put both Horton and Clarkson on LTIR, and they would have an LTIR pool to use of $10.55 million.   So as quoted above, before today, that space was roughly $10 million using the quick and dirty method, or about $8 million or so, given the realities of how this all works.

There’s no cap space created here of any substantial amount. LTIR is just being used efficiently.

Now remember, the second you put those two guys on LTIR, you realize you only have 21 players on your roster, and Marner makes 22, so there might just barely be room to squeak in another minimum salary player.

Once that LTIR business is done, the three contracts we know the Leafs have pending can magically become official, the players can be moved to the minors (all but Nick Shore, is my bet) and the Leafs have their team ready to go.

What’s the Catch?

There really isn’t one. Barring Marner going unsigned or a major trade, the Leafs were using LTIR all season anyway. The major downside of being in LTIR space is that a team doesn’t accrue space to use at the deadline. The team also risks performance bonuses earned by players rolling over to next season. In addition, if a player you add to  your roster via the LTIR pool has performance bonuses in their contract, those bonuses drain the pool too.

Now, if I told you that no one the Leafs are likely to add, including Ilya Mikheyev, have any bonuses in their contracts would you be surprised? Teemu Kivihalme has a small one, so does Mason Marchment, but they aren’t meaningful amounts.

Dubas Got Done On This Trade!

While it is true the Patrick Marleau trade cost the Leafs a first-round pick and this deal returned only a fourth-rounder (most of which is payment for Sparks), that’s reasonable. The Marleau trade cost Carolina actual dollars, and the Leafs aren’t out any on this deal. The Marleau deal cost Carolina actual cap space — $6.25 million of it — and, in a sense, the Leafs gain cap space here.

This deal benefits the Leafs, and George McPhee and Kelly McCrimmon are not going to pay you to fix your own salary cap problems. Take the fourth round pick and enjoy the boos in Montreal next summer when Dubas uses it, and enjoy life.

So They Can Sign Jake Gardiner, Though

That is up to Mitch Marner. But right now, my answer is no, no they can’t. But I’m not putting anything past Dubas and his henchmen. If you’d told me this morning we’d have Clarkson back, I’d have said you were drunk. There was more talk about trading away Nathan Horton’s deal than acquiring another dead contract.

Who knows what they’ll do next?