With buyouts, it has to be considered that the buyout salary isn't the only cost associated with a buyout. If a roster player (Smith, Ryan, etc) are being bought out, you have to factor in the cost of replacing them as a body on the 23 (or with the Sens 22) player roster. That usually costs about 800k per season that they would have been under contract. This makes a lot of buyouts pointless in terms of saving money.
MIKE CONDON
Condon is the only player where a buyout makes sense money wise because he isn't projected to be on our NHL roster, there's not any room for him in the system, so therefore it isn't a situation where we have to account for the cost of a replacement body. Buying him out legitimately saves this team 1 million dollars over the course of the contract.
BUYOUTS AND THE 2021 FYOUS
Buying out Ryan or Smith makes no sense, mostly because of the supposed plan for us to spend to (near) the salary cap starting in 2021. Therefore, cap space in the future is more valuable than cap space right now. By buying out those players, all we are doing is sacrificing future cap space to earn current cap space. That doesn't make any strategic sense since we have an abundance of cap space the next two seasons. We might as well ride out those contracts and use our current cap space to get rid of them.
ZACK SMITH
We also know there WAS a market for Smith. It was contingent on us taking back money in some form. Meaning, unless the market that was there for Smith at the start of the season (according to Bob McKenzie and others) is now gone, it would make more sense to trade him with retained salary (or taking back a similar term contract). We'd get an asset like a pick or a prospect, and we also wouldn't be spreading Smith's cap hit over twice the length of his contract and eating up cap space in 2021 and beyond when we are supposed to be competing. (Yeah, I don't believe it either, but we still should talk strategy as if it is legit...)
BOBBY RYAN
I could see Ryan being bought out because while it does not save any real money because he's got those 2M in bonuses that cannot be bought out, it spreads out the team's biggest financial obligation over twice the length of the contract. Although, our roster is so depleted that he's one of our best forwards, which might dissuade the team from buying him out.
Here's what a Ryan buyout looks like....
Cap Hit Calculations
SEASON | BASE SALARY | INITIAL CAP HIT | ACTUAL COST | SAVINGS | FINAL CAP HIT |
2019-20 | $5,500,000 | $7,250,000 | $3,833,333 | $3,666,667 | $3,583,333 |
2020-21 | $5,500,000 | $7,250,000 | $3,833,333 | $3,666,667 | $3,583,333 |
2021-22 | $5,500,000 | $7,250,000 | $3,833,333 | $3,666,667 | $3,583,333 |
2022-23 | $0 | $0 | $1,833,333 | -$1,833,333 | $1,833,333 |
2023-24 | $0 | $0 | $1,833,333 | -$1,833,333 | $1,833,333 |
2024-25 | $0 | $0 | $1,833,333 | -$1,833,333 | $1,833,333 |
TOTAL | $16,500,000 | $21,750,000 | $17,000,000 | $5,500,000 | $16,250,000 |
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I've added his signing bonus to the first three years of the (Actual Cost) tab since Capfriendly does not do that, and they do not get bought out. Keep in mind, we'll have to pay someone at least 650k to play those three seasons that Ryan would have been on our roster. Meaning, of the 22.5 million owed to Ryan, the Senators likely only save in the 3-5 million range if they buy him out.
The main benefit for Eugene Melnyk is that if he buys out Bobby Ryan, while he saves very little over the lifetime of the contract, the payments to Ryan get structured in a way that acts as a form of a payment plan. Melnyk saves around 3 million a season for the next three years at the expense of paying an extra 1.833,333 million for three years after the contract would have been finished.
One last factor that might lead to the Senators not buying out Bobby Ryan, the possibility of an NHL lockout during the lifetime of the contract. A full season NHL lockout means Eugene Melnyk is spared from having to pay Ryan his 5.5 million base salary. Meaning, Melnyk will only owe Ryan 17 of his 22.5 million. That prospect might discourage Melnyk from a buyout anytime before the lockout, as it saves him more money to keep Ryan's contract on the books and not have to pay him.
Ultimately, I Mike Condon is the only player I'd consider buying out. If we see the Senators rush to bring him back and give him some games to close out the season, it won't be because they are invested in rehabbing his career, it'll be because they will want a legitimate argument that he is healthy and recovered. They cannot buy him out if he is considered to be injured. This is something I'd watch for as the season closes out.