Exactly this. People in LTIR creates cap space land would have you think that Clarkson's $5.2 million gave the Leafs an extra $5.2 million in cap space. It doesn't. It doesn't create cap space at all that wasn't there excluding the player in question.
If you excluded Horton and Clarkson, the Leafs would be in exactly the same position with respect to cap space available; the issue the Leafs have right now is that during the offseason, LTIR doesn't exist. So, both guys count at full value against the cap. What the Leafs are trying to do is wedge themselves as close to the cap as possible including Clarkson and Horton so that by invoking LTIR on them, they can "open up" as much cap space as possible with the LTIR designation. [IMO, this should probably be separate transactions - meaning that they would exhaust cap space, declare LTIR on one guy, then exhaust that cap space before invoking LTIR on the other - but that's a theoretical discussion for another day.]
If the Leafs are sitting at about $75.3 million in contracts excluding Horton and Clarkson [but including Nick Shore and Kevin Gravel, who have 1-way deals for this upcoming season, along with Zach Hyman and Travis Dermott even if both are hurt], then they have $6.2 million in cap space. Invoking LTIR on either or both doesn't give them $10+ million in additional cap space. If they want more, they have to jettison guys who are on 1-way contracts to create it [that's what they did by moving Sparks to Vegas] or wait until the season starts and count injured players as needed to get sufficiently close to be able to invoke LTIR.
I’m not sure if you’ve followed the updates in the past couple years, we have a lot more info now on LTIR, two of the key recently learned elements:
- Summer LTIR is available, it works the same as regular season LTIR in calculating relief against the 110% summer cap. The transition to regular season cap rules including end of training camp LTIR option are still the same.
- If a team has a player on LTIR then exercising a second LTIR gives 100% cap relief—they don’t recalculate the relief based on the cap situation at the time of the second LTIR.
Before the Clarkson trade the Leafs were in an awkward situation:
They had approximately $11m in summer cap space available, and $5.3-$8.4m in potential LTIR space depending on whether a summer LTIR of Dermott and Hyman would be allowed. So there was no advantage to using LTIR. $11m should have been good to sign Marner or defend against an Offer Sheet. But the Leafs had several players they were delaying signing who would have cut into the summer cap space, potentially leaving the Leafs with only the $8.4m or less in LTIR space to match an Offer Sheet or sign Marner. Notably the Leafs signed all these players immediately after the Clarkson trade.
By trading for Clarkson and dropping Sparks, the Leafs dropped their summer cap space from $11m to about $6.6m (before signing those players) and increased the potential LTIR to $10.5m-$13.6m, again depending on Dermott/Hyman. Even at the minimum $10.5m summer LTIR they’re protected better against a possible Marner Offer Sheet then they would have been with signing those additional players and then having something in the $8-9m in summer space, whether via normal cap space or LTIR.
Having the $10.5m-$13.6m in LTIR available also increases the Leafs ability to sign Marner or defend against an Offer Sheet in the regular season then where they would have been with only Horton. Hyman and Dermott are expected to return of course, so any LTIR usage on them shouldn’t be in the long term plan.
There is now the additional wrinkle with Marner that payroll space pro-rates whereas LTIR relief space doesn’t. So if Marner isn’t signed by day 1, and the Leafs are planning to fit his cap hit in via LTIR then the amount of cap space the Leafs have for Marner effectively decreases every day of the regular season he goes unsigned. With Nylander last season the late signing inflated cap hit didn’t matter because the Leafs had pro-rated payroll space to fit him in. Would be different with Marner.
If Marner is unsigned after day 1 we could see some interesting cap stuff. Not to mention the inflated year 1 cap hit appears to only apply to the Leafs, not a potential team signing him to an Offer Sheet.