48 hours after the Stanley Cup Finals ends the first major part of the NHL’s offseason begins with the opening of a buyout window that lasts until June 30th. Teams can dump the contracts of players they don’t want anymore, but at a cost financially and to their salary cap.
the buyout is spread out over a period of twice the remaining length of the contract. The team still takes a caphit, and the caphit by year is calculated as follows:
1. Multiply the remaining salary (excluding signing bonuses) by the buyout amount (as determined by age) to obtain the total buyout cost
2. Spread the total buyout cost evenly over twice the remaining contract years
3. Determine the savings by subtracting the annual buyout cost from Step 2. by the players salary (excluding signing bonuses)
4. Determine the remaining caphit by subtracting the savings from Step 3. by the players Annual Average Salary (AAV) (including signing bonuses)
The Pittsburgh Penguins are one of a few teams in the 14 year history of the NHL salary cap to never have bought out a player. This is a good thing as it means no “dead” money for their future, but also a sign of good management. The Pens really haven’t had that many truly bad contracts, their managers over the years have done well enough to create a playoff team every season without burdensome deals.
That’s obviously changed a year ago with the five year, $16.25 million contract signed by bad defenseman Jack Johnson that all non donkey-brained observers knew was a bad idea before it even happened. Then it happened and predictably Johnson was the worst defenseman on the team and one of the worst in the league in terms of failing to suppress shots and seeing the goals go in his net, just as he has been for many years.
This is a player the team simply must get rid of, and luckily they have acknowledged that. Johnson was involved in part of the negotiations to send Phil Kessel to Minnesota, with the cost of struggling forward Victor Rask (three years at a $4.0 million hit back) coming back to the Pens.
Basically in a trade the Pens’ choices look like: take back an equally bad player or contract as the price to shed Johnson, or tie him to a valuable asset in order to drop him. Either way, not ideal.
Thus, where the buyout come into play. Thanks to a capfriendly calculator here’s what it would look like:
Your first reaction is probably “ouch, no way”. Mine was too earlier this off-season thinking it not feasible or wise to add eight whopping years of dead space for the future.
But, think more on it and there’s a perspective that makes sense.
Buying Johnson out is a $1.02 million penalty for the 2023-24 season to 2026-27. This is effectively after the Pens’ competitive window in the Sidney Crosby / Evgeni Malkin era as we know it will be closed. And a $1 million handicap on a salary cap that’s already climbed to $83 million (and has increased every year) will diminish as well. It’s a pest, to be sure, but hardly a huge competitive disadvantage for a team that will be rebuilding anyways.
Put another way- would it be worth it to pay a $1 million fee four years from now to take Johnson (and his $3.25 million hit) off the roster and leave only a $270k penalty for 2019-20? Even if they could trade the player, they’re either retaining more salary than that for the short-term or likely adding a less-than-ideal and comparably burdensome contract in return. Which, again, hurts the immediate goal of trying to build the best team for next year. And make no mistake, next year is the best remaining year to win with this current core, so decisions should be made with short-term in mind.
Frame it like that for an instant addition of $3 million of cap space next year, borrowed against the future years, and it’s not so bad of an option. This, of course, is strictly speaking in a clinical vacuum.
But managing hockey isn’t clinical, and it surely wouldn’t by fun — and possibly untenable to explain to ownership why the team needs to do something they have never done before. It’s the ultimate form of admitting a mistake so shortly after a big signing. And a hit to the finances to actually have to shell out $8+ million to make a player go away. That would not be a pleasant conversation to have and opens up reflections on why these decisions were even made in the first place, which is no doubt a reason why a decision like this isn’t to be made lightly.
In that light, you can see why a GM might want to fix this through a trade, and spin zone or hope that giving a player like Victor Rask (or....Trevor Daley a few years ago) a change of scenery would help out. That sure beats lighting money on fire AND admitting the grand idea of last year’s big free agent signing being a total bust.
But, pride aside, the Penguins need to improve. They’re not going to benefit by doubling down on mistakes and hoping it corrects itself. Ridding themselves of a bad player and bad contract in Jack Johnson by any means necessary should be the first item of business, set in bold and underlined for good measure. .
A buyout isn’t ideal, since it will leave a lasting scar and memory of failure for years to come. But at this stage of the franchise’s life-cycle it seems like the best play available to “kick the can down the road” financially speaking and burden the team from 2023-27 with a chance to be better and use that space in 2019.
The alternative of trading a bad contract for another probably bad contract and/or bad player isn’t likely to help in 2019-20. Freeing up $3m for next year though with one swift move, sure would for a short-term perspective.
Managerial and business forces may make a buyout unlikely in the real world operations, but if the Pens want to make the best of the situation they’re in, it’s a tough but correct short-term call. We’ll see if they have the guts to to it (or are able to pull a rabbit out of a hat in a trade) but for a cap-strapped team looking to improve and compete right now, it’s a hard decision that definitely should be considered.