Offseason salary cap woes, Flyers currently sit over $64.3 million limit

On this week’s CBA Explained I didn’t want to just explain how the salary cap functions in the offseason, I wanted to illustrate the current state of the Flyers. It’s no secret that the Flyers have salary cap problems, but I wanted to see just how limited they would be this offseason.

The salary cap is calculated slightly differently during the offseason than it is during the regular season. For one, teams are temporarily allowed to exceed the upper-limit by 10% during the offseason for the sake of maneuverability. (The new CBA Summary of Terms does not indicate any change in this stipulation from the old CBA.) With the salary cap set to $64.3 million for 2013-2014, that means the temporary threshold for this offseason would be $70.73 million.

So what counts towards this $70.73 million?

From section 50.5(d)(i)(A) of the old CBA (again, the summary of terms does not indicate any change in these calculations):

“From July 1 until and including the last day of TrainingCamp of each League Year, “Averaged Club Salary” foreach Club for that League Year shall be calculated as the sum of the Player Salary and Bonuses for that League Year for each and every Player, from the following categories:”

It then specifies the following categories (I’m summarizing to save you some reading):

  1. each player under a one-way contract
  2. all deferred salary and bonuses
  3. all ordinary course buyout amounts
  4. any amount offered in a Qualifying Offer for Restricted Free Agents (proportionate to time spent in NHL)
  5. each player under a two-way contract (proportionate to time spent in NHL)

Note: there are actually two other categories, but they don’t apply so I chose to omit them to keep things simple.

It’s important to note that it says “for each and every player”. That means players that don’t figure to be on the active roster can and will still count against the salary cap in the offseason.

A later paragraph then denotes that after training camp, only the players on the active roster (or injured players) would count.

“(B) From the day following the last day of Training Camp until and including June 30 of each League Year, “Averaged Club Salary” for each Club shall be calculated as the sum of the following amounts:

(1) The Averaged Amount of the Player Salary and Bonuses for that League Year for each Player on the Club’s Active Roster, Injured Reserve, Injured Non Roster and Non Roster; plus”

 

For those of you who don’t like CBA jargon, or would rather not read the detailed explanations…you can skip ahead to the asterisks *****.

 

Firstly, let’s quickly tackle #2 above. I am not aware of any deferred salary or bonuses that the Flyers are responsible for. It is possible that the Flyers could incur a bonus overage, however with the number of injured players the Flyers incurred this year, I would think they would have had enough LTIR space to accommodate that. So we will proceed as if there are no deferred salary or bonuses.

 

As for #1, one-way contracts are straight forward and the following players’ cap hit will be included:

  • Briere
  • Voracek
  • Hartnell
  • Giroux
  • Talbot
  • Simmonds
  • Read
  • Rosehill
  • Rinaldo
  • Timonen
  • Pronger
  • Coburn
  • Meszaros
  • L. Schenn
  • Grossmann
  • Gervais
  • Bourdon
  • Bryzgalov
  • Mason

 

Many people may forget, related to #3 above, that the Flyers bought out Oskars Bartulis last year. It’s worth noting that this was an “ordinary course buyout”, not the compliance buyout that many believe should be used on Briere or Bryzgalov. An ordinary course buyout hits the cap, a compliance buyout does not. Long story short, the Flyers have a cap hit of $100k for Bartulis.

 

Things start to get a little tricky with #4 and #5. I’ll explain #5 first, players under two-way contracts, as it has one less layer of complication.

From 50.5(d)(i)(A)(5) of the old CBA:

“For any Player under a Two-Way SPC, the NHL portion of the SPC will be counted at a rate reflective of the Player’s time on an NHL Roster (including days on Injured Reserve, Injured Non Roster and Non Roster status) the prior League Year”

I will use Tye McGinn to illustrate this. McGinn is signed for the 2013-2014 season on a two-way contract. His cap hit is $775k, however, he did not spend the entire season with the Flyers. Therefore, when calculating his impact towards the 2013-2014 cap in the offseason, we only account for the time he did spend in the NHL. McGinn spent 71 days of 99 in the NHL. Therefore, we take his $775k cap hit and multiply it by (71/99) to get ~$555k. That is the number that is factored into the offseason salary cap.

Players like Brayden Schenn or Sean Couturier spent the entire season in the NHL and therefore their entire cap hit would hit the offseason cap.

It’s important to note that a typical league year is 184 days. This shortened season was only 99 days. I’m making the assumption that the calculation will remain the same, but simply using the 99 days in place of 184 days.

Other players who are on two-way contracts and spent time in the NHL are:

  • B. Schenn
  • Couturier
  • Laughton
  • Akeson
  • McGinn
  • Konan
  • Heeter

Each of those players will count towards the cap in some capacity.

 

The last category is #4, Qualifying Offers(QO) for Restricted free agents. The Flyers have seven restricted free agents this offseason. Of those seven, I believe three will be retained: Gustafsson, Manning, and Lauridsen. I think that Wellwood (sadly), Kessel, Wahl, and Harper are let go.

In order to retain the rights of their restricted free agents the Flyers must make a QO to the player. The amount of that QO can vary (these numbers are based upon the old CBA, so they could potentially change).

From section 10.2(a)(ii):

“(A) if the Player’s prior year’s Paragraph 1 NHL Salary is less than or equal to $660,000 for that League Year, 110% of the prior year’s Paragraph 1 NHL Salary.

(B) if the Player’s prior year’s Paragraph 1 NHL Salary is greater than $660,000, but less than $1,000,000 for that League Year, 105% of his prior year’s Paragraph 1 NHL Salary, but in no event to exceed $1,000,000.

(C) if the Player’s prior year’s Paragraph 1 NHL Salary is equal to or greater than $1,000,000 for that League year, 100% of the prior year’s Paragraph 1 NHL Salary.”

Based on those stipulations, Gustafsson and Manning would get offers at 105% of last year’s money, and Lauridsen would get 110%. 

Much like with the two-way contracts, these QO also only hit the cap at a rate proportionate to their time spent in the NHL.

Section 50.5(d)(i)(A)(4)

“Any amount offered in that League Year by the Club in a Qualifying Offer or in an Offer Sheet to a Restricted Free Agent from the date of such offer until the earliest of the following: (A) the Restricted Free Agent signs an SPC with the Club; (B) the Restricted Free Agent signs an SPC with another Club; or (C) the Qualifying Offer expires pursuant to Article 10.2 (for purposes of Two-Way Qualifying Offers, the NHL portion of the Qualifying Offer will be counted at a rate reflective of the Player’s time on an NHL Roster (including days on Injured Reserve, Injured Non Roster and Non Roster status) the prior League Year”

If we use Gustafsson as an example, he had a cap hit of $900k last year. He qualifies for a QO of 105% which equates to $945k. Gustafsson spent 56 days on the Flyers roster, so $945k * (56/99) = ~$534k which counts towards the Flyers’ offseason cap.

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All told each of the categories hit the offseason cap for a total of $66.3 million.

  1. $60 million — each player under a one-way contract
  2. $0 assumed — all deferred salary and bonuses
  3. $100k — all ordinary course buyout amounts
  4. $865k — any amount offered in a Qualifying Offer for Restricted Free Agents (proportionate to time spent in NHL)
  5. $5.33 million — each player under a two-way contract (proportionate to time spent in NHL)

So as the Flyers currently stand, if I haven’t made a mistake (which it wouldn’t surprise me if I did) they are over the $64.3 million upper limit by about $4.4 million, and they are only under the expanded offseason upper limit of $70.73 million by ~$1.9 million.

It’s going to be a very tight offseason for the Flyers, and in my opinion, it is almost a certainty that at least Danny Briere gets bought out (or traded if he will waive his NMC). They desperately need the cap flexibility.

Please don’t confuse these numbers with their actual cap situation as we head into next season. These numbers strictly apply to the offseason and account for 30 players. The Flyers active roster will probably consist of 22 players as they enter the season so the number will come down a considerable amount; although the Flyers will still have their cap issues (which I will get into in a future post).