It’s time to talk buyouts again. This year everything is just subtly different in terms of the calendar of events. The first buyout window usually opens based on the end of the Stanley Cup Final, but this year it’s been given a firm date in the transition rules: July 1.
Buyout Rules
The first window runs from July 1 to 5 p.m. on July 12.
Players have to clear unconditional waivers before they can be bought out, so players may begin to show up on waivers on June 30. If a player has a full No-Move Clause in their contract, they can elect to skip the waiver process and proceed directly to the buyout.
The rules for buying out 35+ contracts changed in the CBA extension that will possibly forever exist as the MOU. All 35+ contracts can be bought out. But only those that are not front loaded and have no signing bonus after year one provide relief against the salary cap.
Buyouts reduce the salary to 1⁄3 or 2⁄3 depending on the age of the player. Signing bonuses are paid in full, and there is no salary cap relief for those amounts.
A second buyout window can open for a team that has an arbitration case elected — it’s not necessary for that case to go to the arbitrator — this period is there to allow a team that gets a big arbitration award near the end of the offseason to buyout someone to become cap compliant. The player has to have a cap hit of at least $4 million to be eligible to be bought out in that window.
Examples
I refuse to calculate these things myself, so I just use the CapFriendly calculator.
I’m going to use Jake Gardiner as an example. A few weeks ago, the Hurricanes held their end of season media discussions and said that Gardiner has been medically cleared to return to hockey. This is good for him, but it’s also a possible indication that the team plans to buyout the last year of his contract. In order to go on waivers, a player has to be healthy, so in order to buy someone out, the player has to be healthy. Otherwise they go on LTIR.
Gardiner’s AAV is $4.05 million and his salary is $4.45 million, so a buyout takes his cap hit very close to 2⁄3 of his AAV.
That new cap hit is spread over two years, as is the remaining salary owing. For Carolina, that’s a significant savings as they have a lot of players to re-sign.
Sometimes the choice to buyout a player is obvious, and I think this one is likely. But other times it’s a tricky decision of cost, value, tradability and where the team is in their development. Sometimes teams buyout players they really should just let run out their deals, but we as fans at a remove never know if there’s some other issue making the team want to pay them to leave. Sometimes teams keep players they’ve overpaid just because they like them, or they don’t want to admit they made a mistake.
GMs who are honest with themselves and admit errors are better at their jobs, but they need an ownership that isn’t demanding perfection. All GMs will make mistakes, and the bloodlust of the fans to see someone fired for every bad outcome is something they should ignore. Easier to say than do.
Cap Friendly lists their popular buyouts on their frontpage at this time of the year, which gives you a look into how fans view the world. John Tavares is third, and all I can say is: are you people okay? Do you need a remedial math class? (This was true at time of writing, but the mood has swung to Oilers players fans are mad at now.)
Oh, but he’s not very good defens— who cares!!!
The first Leaf on the list is Petr Mrázek, and at least there’s a fluctuating and frustrating set of results to make that one understandable, so a serious look at that is in order. Let’s pretend you can totally know that Mrázek will be bad next year, and you want to get rid of him. How should you do it?
Buyout: Mrázek’s contract runs for two more years with salary $400,000 to $600,000 over his AAV. The four years of buyout cap hits are $1.033 million, $833,333, and two years at $1.433 million.
Trade with maximum retention: If you traded him with 50% salary retention, the cap hit for two years would be $1.9 million
Neither of those options are very appealing to a team that needs to run right at the salary cap limit and is enjoying the first year of (almost) no dead money counting against the cap. In our imaginary world where Mrázek is bad forevermore, a trade costs some kind of asset to make happen, but that’s likely better from a pure cap perspective than a buyout. If you want to pay to make him go away, that’s the way to do it.
Of course in the real world, we don’t have enough information to know if he’s healthy, will stay that way, and how he will play. The Leafs have some of that information, and the rest is guessing. What Kyle Dubas will do might well be based both on how good he is at his job and how much his ownership likes to sweep mistakes under the rug.
I think it’s as likely as anything else that Petr Mrázek starts the season on the Leafs. Buy high and sell low is a dumb way to acquire goalies, and I don’t think Dubas, who was somewhat forced into the buying high position by circumstance, wants to compound it by completing the cliché.
But he makes me so mad when he plays! Yeah, well Dubas is paid to suck that up, you aren’t. Yell about it if you like, but don’t expect Dubas to feel what you feel. At least not publicly.
If the Leafs are going to be in the buyout game, it will be signing someone cheap who was just bought out. Who that might be (not Jake) is hard to guess at, but one thing parity had given us is fewer teams willing to be garages for bad contracts. There’s also a lot of new GMs on teams that did very silly things in the past, so maybe this will be the year of many buyouts.
There were 10 last year, 10 in 2020, 11 in 2019, and 8 in 2018. Though much predicted, the increase in buyouts due to the cap failing to rise just doesn’t seem to ever happen.
There is one potential clever scheme of a buyout that might happen. Courtesy of Daily Faceoff, I learned of another Jared Cowen situation brewing, with a tie to the Leafs. Some players, like Cowen back in the day, have backloaded contracts, that when bought out — particularly if they’re young enough to qualify for the better buyout ratio — the result is a negative number in the first year.
Phillipe Myers, who finished this season on loan to the Marlies, is just such a player. He has one year remaining on his deal, and a buyout would create a cap credit of $616,666 for next year and a cap hit of $633,334 the following year. The total cost to the team who buys him out is $1.27 million in salary. The point of the deal is to move $600,000 in cap hit from next season to the following year when the salary cap will certainly be higher.
Cowen’s deal was similar, but rather than it being a success for the Leafs, who took him in trade from Ottawa, they blew it by being unable to ever trade him on. The theory then, when cap space was not an asset the Leafs needed to buy, was to trade Cowen to some cap-strapped team after the season was over so they could buy him out. Instead, they found no takers and bought him out themselves. The cap credit disappeared into insignificance on a team with massive amounts of dead contract LTIR one year out of the tank. This season, the need for cap space is real, and it might be in the Leafs’ interest to get Myers simply to buy him out.
One thing to consider: Now that the Leafs have a relationship with Myers, might they want to buy that cap credit by trading for him and buying him out — and then signing him right back to a sensible two-way NHL deal or even an AHL contract?
The cap credit would cover Timothy Liljegren’s bonus rollover and leave a little left over for some breathing room on next year’s cap. If the price is right, they should do it.