Speculation: Compliance Buyouts - Who should the Leafs use one on?

[ULF_55]

whatever they want it to be. Bill Daly has come out and said they aren’t tied to the revenue of this year

I don't doubt that.

However I don't believe they're going to be generous.

I could see them leave it where it is, 81.5 million.

 

[7even]

Assuming it follows like the last compliance buyouts, the player is prohibited from rejoining the team that bought him out for one year. Trading a player and then signing them after their new team uses a compliance buyout would also automatically be circumvention (this can be allowed, pending the League looking into it and approving it as not pre-arranged with normal buyouts, a la Brooks Orpik)

Is the buyout limited to players signed by the organization? If not I would trade it rather than use it on anything we have.

 

[Menzinger]

I don't doubt that.

However I don't believe they're going to be generous.

I could see them leave it where it is, 81.5 million.

I think it will get bumped up like 1 million - but obviously just a guess

 

[ULF_55]

Is the buyout limited to players signed by the organization? If not I would trade it rather than use it on anything we have.

Do you mean can you trade a compliance buyout option to another team?

I would be you can't trade them.

Compliance buyout - Wikipedia
Compliance buyouts (sometimes referred to as amnesty buyouts) allow National Hockey League (NHL) teams to buy-out a player's contract by paying him two-thirds of the remaining value of a contract over twice the remaining length of the contract. If the player is under 26 years old, then the team may pay the player just one-third of the remaining contract value.[1] In ordinary-course buyouts, the team's NHL salary cap hit for the player is stretched over a period of twice the remaining length of the contract. Compliance buyouts follow the same formula as ordinary-course buyouts but do not count against the cap.
Due to the 2012–13 NHL lockout, the salary cap was not to increase to the projected $70.2 million, so each team was therefore granted two compliance buyouts to be exercised after the 2012–13 season and/or after the 2013–14 season that would not count against the salary cap in any further year in order to better comply with a lower than expected cap value, regardless of the player's age. After using a compliance buyout on a player, that player is prohibited from rejoining the team that bought him out for one year; the NHL deemed that the re-signing of a player following a trade and a subsequent compliance buyout would be ruled as cap circumvention.[2]
Following the 2012–13 NHL lockout each team was granted one accelerated compliance buyout in order for teams to meet the lowered salary cap. This could be used on a player with a salary cap hit of US$3 million or more before the regular season began. If an accelerated compliance buyout is used, that team will only have one more compliance buyout left, and they must use it after the completion of the 2012–13 season (and before the start of 2013–14 season). The player's cap hit is applied in full to the team's salary cap for the 2012–13 season, but for no season after, regardless of contract length.
Available during the off-season in 2013 and 2014, amnesty buyouts begin 48 hours after the conclusion of the Stanley Cup Finals.
In 2013, it began 48 hours after the conclusion of the Stanley Cup, and ended on July 4, 2013. The second NHL compliance buyout period opened on June 16, 2014, and ran through June 30, 2014, with 26 teams having one or more compliance buyout available to be used.[3]

 

[ULF_55]

I think it will get bumped up like 1 million - but obviously just a guess

I think they should treat it as a loan against future years, and have a repay period.

So let a team go over the actual cap (HRR calculation) but make them pay it back over the next # of years.

 

[leburn98]

I don't see why this would be required. The CBA and the cap being tied to revenue was not written with a pandemic in mind. I don't see any logical reason why the cap should drop. At worst it should stay the same as this year.

Also, if games can be played this year (talking playoff games here), the playoff money could make up some of that gap given that the demand will be much higher, particularly if the rumored 24 team playoff structure is being considered. Having teams like Montreal, NY Rangers and Chicago play a playoff game (or games) when no playoffs were expected could have huge demand.

 

[7even]

Do you mean can you trade a compliance buyout option to another team?

I would be you can't trade them.

Compliance buyout - Wikipedia
Compliance buyouts (sometimes referred to as amnesty buyouts) allow National Hockey League (NHL) teams to buy-out a player's contract by paying him two-thirds of the remaining value of a contract over twice the remaining length of the contract. If the player is under 26 years old, then the team may pay the player just one-third of the remaining contract value.[1] In ordinary-course buyouts, the team's NHL salary cap hit for the player is stretched over a period of twice the remaining length of the contract. Compliance buyouts follow the same formula as ordinary-course buyouts but do not count against the cap.
Due to the 2012–13 NHL lockout, the salary cap was not to increase to the projected $70.2 million, so each team was therefore granted two compliance buyouts to be exercised after the 2012–13 season and/or after the 2013–14 season that would not count against the salary cap in any further year in order to better comply with a lower than expected cap value, regardless of the player's age. After using a compliance buyout on a player, that player is prohibited from rejoining the team that bought him out for one year; the NHL deemed that the re-signing of a player following a trade and a subsequent compliance buyout would be ruled as cap circumvention.[2]
Following the 2012–13 NHL lockout each team was granted one accelerated compliance buyout in order for teams to meet the lowered salary cap. This could be used on a player with a salary cap hit of US$3 million or more before the regular season began. If an accelerated compliance buyout is used, that team will only have one more compliance buyout left, and they must use it after the completion of the 2012–13 season (and before the start of 2013–14 season). The player's cap hit is applied in full to the team's salary cap for the 2012–13 season, but for no season after, regardless of contract length.
Available during the off-season in 2013 and 2014, amnesty buyouts begin 48 hours after the conclusion of the Stanley Cup Finals.
In 2013, it began 48 hours after the conclusion of the Stanley Cup, and ended on July 4, 2013. The second NHL compliance buyout period opened on June 16, 2014, and ran through June 30, 2014, with 26 teams having one or more compliance buyout available to be used.[3]

Yes. I think it's unlikely as well.

Regardless, I don't think compliance buyouts even really make sense as a way to deal with the flat cap. This is quite clearly an exceptional circumstance. Just adjust the percentages for a year and call it a day.

 

[57 Years No Cup]

Tavares - with regret.

If it is based on HRR buying out a $4mm player isn't going to cut it.

This.

 

[57 Years No Cup]

For me, it would be John Tavares. Sidestep that looming drop off amidst uncertain economic times and live to spend another day.

Also, Tavares only has $45 left on his deal thanks to two years of intense bonus money payouts at about $32 million for 1.75 seasons of service, so we're hardly doing him dirty. He will likely be able tot make up the $45 million else where and we can restock the roster.

As much as I don't like Marner at the moment, he has his whole career ahead of him. Matthews is untouchable and the rest are not big enough cap dumps to make it worthwhile.

Yup.

 

[Stephen]

Yes, we have no idea what the Cap is going to be.

I think people are using the original projected Cap of 84 million.

Very basic but:

$84 / 82 game = 1.024 million per game - Projection

70 games * 1.024 = 72 million

I know extremely simplistic, but the point is we don't know if they're going to play another game this year.

If the League decides to have a one-time carry forward the Cap from the previous year, maybe let them play with last year's numbers, in which case Leafs don't need to buyout.

The best we could hope for is a status quo or an artificial $84 million cap hit. Owners give a little but aren’t wasting money on buyouts.

 

[Mess]

Yep.

The cap is 100% artificial, not a natural reocxuring thing. Neither teams nor players have any morivstion to lower it.

At worst it stays flat, at best theres a very mild increase

Players and owners are in a 50/50 partnership in this CBA.

For the cap to remain flat at $81.5 mil (last year's ceiling) that means the players would be paid in full of their current deals and the Owners would take a massive hit due to the loss of a potential Billion(s) in lost revenue due to lost season and playoffs.

So as long as the players Escrow goes from ~15% to about ~ 35-40% and the owners simply claw back major recoveries in players salary at end of season then cap can remain flat.

When the dust settles as long as Owners and Players salaries equally share the brunt of the loss in HRR @ 50% each then it will be business as usual.

So that means a player like Tavares who has a $11 mil cap hit as part of a $81.5 mil flat cap ceiling where a team remains cap compliant accordingly. However as far as actual salary goes with a ~30-35% Escrow that means $3.3-$3.85 mil is clawed back making his gross earnings now $7.15 mil - $7.7 mil adjusted. Ditto 30-35% salary reduction for every player similarly.

 

[Legion34]

Players and owners are in a 50/50 partnership in this CBA.

For the cap to remain flat at $81.5 mil (last year's ceiling) that means the players would be paid in full of their current deals and the Owners would take a massive hit due to the loss of a potential Billion(s) in lost revenue due to lost season and playoffs.

So as long as the players Escrow goes from ~15% to about ~ 35-40% and the owners simply claw back major recoveries in players salary at end of season then cap can remain flat.

When the dust settles as long as Owners and Players salaries equally share the brunt of the loss in HRR @ 50% each then it will be business as usual.

So that means a player like Tavares who has a $11 mil cap hit as part of a $81.5 mil flat cap ceiling where a team remains cap compliant accordingly. However as far as actual salary goes with a ~30-35% Escrow that means $3.3-$3.85 mil is clawed back making his gross earnings now $7.15 mil - $7.7 mil adjusted. Ditto 30-35% salary reduction for every player similarly.

Well the key will be insurance.

say there is 500 million in losses. that’s about 16 million per owner in losses. Say insurance covers 1 each.

that’s only about 700k a player. I’m sure they would have to make some sliding scale for salaries. But they could pay back over a couple of years.

They could also just increase the escrow for a year.

 

[Shanwhatplan]

Nylander for sure

I was not a fan of his after last year, but after the season he was having this year, there is no way I’d do it. He is the one I would try to package in order to improve our rhd problem.

 

[Shanwhatplan]

For me, it would be John Tavares. Sidestep that looming drop off amidst uncertain economic times and live to spend another day.

Also, Tavares only has $45 left on his deal thanks to two years of intense bonus money payouts at about $32 million for 1.75 seasons of service, so we're hardly doing him dirty. He will likely be able tot make up the $45 million else where and we can restock the roster.

As much as I don't like Marner at the moment, he has his whole career ahead of him. Matthews is untouchable and the rest are not big enough cap dumps to make it worthwhile.

This has been mentioned numerous times. If we did that, we would NEVER be able to sign another UFA.

 

[member 300185]

You can't sign a player (JT) and then buy him out and then resign him. You can certainly buy him out but you can't resign him. That is pure cap circumvention.

 

[-DeMo-]

the cap is based on projections of what revenue will be in the following year based on previous trends etc. now obviously no one knows what will happen to revenue moving forward so I would expect them to either project normal increase(84-88 million) or take a more reserve approach and keep the cap stagnate. in no way do I believe they will lower the cap for next year. unless the league re-starts and has very poor revenue for the rest of the season(assuming fans can attend games). so I expect to keep cap stagnate so that should Covid19 really does affect league revenue's the drop isn't nearly as drastic the following year should they increase. it's really about the 21-22 season where we might need to worry about the cap potentially going down. should the current situation impact league revenues.

 

[ottomaddox]

Mmm...maybe Grabovski? I dunno...

 

[TheProspector]

The people who want to buy our JT... omfg. I can only conclude that many of the people on this forum are not Leafs fans.

 

[FraumBallard]

There really isn't a bad contract on the team now. Everybody is movable for assets. We have to be careful with Mikheyev and Dermott but we don't really have the need for one right now.

Bad contracts.
Johnsson/Kerfoot/Kap/Engvall.
Marner.

 

[LeafsOHLRangers98]

Bad contracts.
Johnsson/Kerfoot/Kap/Engvall.
Marner.

You could say Marner is an overpay. But for a guy that's averaged a 94-95 point pace the last two years at the ages of 21 and 22 it's fine.

Are you telling me that you can't get value for any of Johnsson/Kerfoot/Kapanen/Engvall at their current contracts?

Kapanen: Name another 3rd line winger that's paced over 40 points each of the last two seasons and makes under $3.5M per season. That is a great value deal.

Engvall: Better than Gauthier, at worst you get a 6'5" LW/C that's good for 20-30 points. If he absolutely sucks you can bury him with next to no impact on the cap. He has value at just $1.25M the next two seasons.

Johnsson and Kerfoot have been disappointments this season but both are easily movable at the draft if you want too. For under $4M for both guys at decent term they definitely have value.

I wouldn't call them bad contracts by any means. Johnsson got injured coming off a 40 point season and Kerfoot had a down year coming off back to back 40 point years.

 

[Morbo]

We don't need them.

 

[SprDaVE]

Maybe there's a way to take on a bad contract with a pick/good asset to use that compliance buyout? Some teams have more than 1 bad contract.

At this time, I see no reason to buyout anyone. They all have value.

 

[ULF_55]

Players and owners are in a 50/50 partnership in this CBA.

For the cap to remain flat at $81.5 mil (last year's ceiling) that means the players would be paid in full of their current deals and the Owners would take a massive hit due to the loss of a potential Billion(s) in lost revenue due to lost season and playoffs.

So as long as the players Escrow goes from ~15% to about ~ 35-40% and the owners simply claw back major recoveries in players salary at end of season then cap can remain flat.

When the dust settles as long as Owners and Players salaries equally share the brunt of the loss in HRR @ 50% each then it will be business as usual.

So that means a player like Tavares who has a $11 mil cap hit as part of a $81.5 mil flat cap ceiling where a team remains cap compliant accordingly. However as far as actual salary goes with a ~30-35% Escrow that means $3.3-$3.85 mil is clawed back making his gross earnings now $7.15 mil - $7.7 mil adjusted. Ditto 30-35% salary reduction for every player similarly.

The risk again is shared by both player and league.

Owners are not expected to take all the risk, so the only fair way to approach it is to reduce actual salaries paid by the same percentage the HRR is.

So yes, players could lose a dramatically greater amount in escrow.

Then we might argue some are actually earning it?

 

[Mess]

The risk again is shared by both player and league.

Owners are not expected to take all the risk, so the only fair way to approach it is to reduce actual salaries paid by the same percentage the HRR is.

So yes, players could lose a dramatically greater amount in escrow.

Then we might argue some are actually earning it?

I seriously doubt that sports are going to be bailed out by Federal Govs for this shutdown, like many other business will be with these current legislation pumping billions into the economy with relief packages.

So barring that highly unlikely scenario, it will have to be a 50/50 equal split for owners and NHLPA across the board to absorb the loss to HRR going forward.

Only 3 options to accomplish that;

1) A 1 time global pay cut across the board for every player existing contract equal % to 1/2 the loss of HRR, while Owners eat the other half to reflect the new post Coronavirus World. So if the loss per side = 20% then a $10 mil player new adjusted contract is $8 mil going forward.
or
2) Keep the Salary Cap flat for the next few years as is $81.5 mil to reflect current existing contracts, but up player Escrow to 25-30% and allow Owners to claw back post season after final $$$ are calculated to equal a 50/50 share, until the market slowly recovers back up to that base amount in time.
or
3) As this thread suggests and 1 time Compliance Buyout(s) without cap penalties carried forward to say buyout ie $10 mil in current player contracts and then reset the Salary Cap lower to $71.5 mil down from $81.5 mil to better accurately reflect future HRR post startup. Here 1 or 2 players take the hit per team, while all other contracts remain as is currently legally binding as signed.

Option #3 above is the one the NHL has used in the past when the Salary Cap was first implemented and when there has been a work stoppage impacting HRR. That is how players like Alexei Yashin and Rick DiPietro etc contracts magically disappeared off the books in the past. A betting man would place their own money on door #3 option.

PS. Now of course not all teams would be impacted by option #3 as 1/2 the league who doesn't bang their heads against the leagues salary cap ceiling now, could easily adjust to the lowering of the Cap ceiling to reflect the new landscape and manage teams without the need for buyouts to become cap compliant at lower levels.

 

[The Podium]

Acquire a cap dump for assets. We have no bad contracts to use it on.