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Friday, January 30, 2015

Looking Forward at the Salary Cap by @BrianK_PI

The NHL had announced at the December 8th Board of Governor's meeting that the salary cap would likely be $73 million for the upcoming 2015-16 season, though the falling Canadian dollar could push that projection lower. Reportedly the salary cap wouldn't drop below $71 million for next season, though much remains to be seen before that number is finalized. Though next season's cap ceiling won't be set until the offseason, it's never too early to take a look down the road at the cap situation. After the break I'll take a look at how the Penguins project for the next couple seasons, assuming a $3 million cap increase each year to $72 million in 2015-16 and $75 million in 2016-17.

Under Contract for the Next Two Years+:

Of players currently on the roster, the top six looks to be in good shape for the next two seasons, as Sidney Crosby, Evgeni Malkin, Patric Hornqvist, and Chris Kunitz are all signed for at least the next two seasons. Assuming Dupuis recovers from his blood clot at 100% and decides to continue playing hockey, he could force his way into this conversation as well, though it's likely he'll be better suited to a third line role at his age and coming off this long stretch on the injured reserve. The rest of the current forwards will have hit free agency,  whether restricted or unrestricted, before the start of the 2016-17 season.

Only two Penguins defenders currently have a contract for 2016-17: Kris Letang and Rob Scuderi. However, this situation is far better than it looks as the younger players will be reaching restricted free agency and see the club retain control of their rights. In a perfect world, Scuderi would no longer be a member of the organization at this time, whether through buyout or trade, though it remains to be seen if that's the direction this front office will choose to go. Marc-Andre Fleury is the only goaltender currently under contract for two years from now.

Current NHL players under contract for 2016-17: 8 ($46.425 million cap hit)

Under Contract for Next Year:

In addition to the players listed above, the Penguins also have David Perron, Brandon Sutter, and Nick Spaling under contract for next season. Given how quickly he's acclimated to playing with Sidney Crosby and the talent he's shown so far, Jim Rutherford would be wise to try signing Perron to an extension as soon as he's able to on July 1st. However, he should allow Sutter and Spaling to play out the final season of their deals and reassess as the year progresses; both players currently have a cap hit higher than their actual values and GMJR should be in no rush to re-up for those numbers.

Olli Maatta and Simon Despres will both finish up the last year on their entry level contracts in 2016, and it should be a priority for Rutherford to get both players re-signed. Despres could be a situation very similar to when Kris Letang was coming out of his ELC. Shero re-signed Letang for 4 years, $3.5 million AAV and that price was a steal by the time the contract was half over. Despres has manged to be a positive possession player even while spending the vast majority of his ice time paired with Rob Scuderi. A contract in the neighborhood of Letang's deal, something like three to four years, $3.0 million AAV would allow Despres to get paid after next season while likely also giving the Pens some cap savings as he surpasses his bridge contract.

Maatta is going to be a a different situation when he's eligible to sign an extension. His shoulder injury almost certainly will create some tension, as the team could want to see how he recovers from a second major surgery, while the rumored bungling by the team's medical staff on his shoulder might not leave Maatta particularly willing to take any type of discount. He's an established player already when healthy, and with the shoulder issue I cannot see him taking any type of bridge contract. He is a restricted free agent, and he'll likely draw interest from teams wanting to sign him to an offer sheet if given the chance. It'll be interesting to see how the situation plays out, but if I have to guess the team waits until the start of next season to assess Maatta's shoulder before signing him to a long term contract in the $4.5-$5.0 million range.

Current NHL players under contract for 2015-16: 13 ($57.531 million cap hit)

Pending Restricted Free Agents:

The Penguins will have three restricted free agents heading into next offseason, though deals for Mark Arcobello and Robert Bortuzzo will likely be fairly straightforward. The team should re-sign both players as they'll provide cheap depth without being major liabilities. Even with all the younger players on defense looking to break in with the team, Bortuzzo would be a competent 6th/7th defenseman who would still be easy to move if need be.

The big question will be how Beau Bennett's situation plays out. He's flashed talent and has meshed well with Evgeni Malkin while on the ice, but he's had a difficult time staying healthy and in the lineup. His raw scoring numbers also haven't been overly impressive, which further hurts his leverage and ability to get a better deal through arbitration. The most likely scenario is that he signs a one year deal this offseason for a small raise, possibly around $1.5 million or so. This gives Bennett the ability to make more money with a good showing next year while also giving the Penguins the ability to re-evaluate where Bennett falls in the organization's plans the next offseason.

Pending Unrestricted Free Agents:

The Penguins will see eight players reach unrestricted free agency this offseason, and several of them are players Jim Rutherford picked up on one year deals last year. Players like Blake Comeau and Steve Downie have been great value while strengthening the middle part of the lineup, but it's fair to question how both players would fit in moving forward. Kasperi Kapanen was threatening to make the team in training camp this season and has done nothing since to suggest he won't find a spot in the lineup next season. Assuming Pascal Dupuis is cleared to play and continues his career, Crosby/Malkin/Sutter down the middle with Perron, Hornqvist, Kunitz, Dupuis, Bennett, and Kapanen will make for a crowded top 9. Comeau will likely receive considerable attention during free agency, and with the Penguins already spending $2.2 million on another fourth line winger it's unlikely they'll be able to afford to keep Comeau in the mix. Downie might be a little bit easier to bring back, though he'll need to cut down on the penalty minutes. While it remains to be seen how Maxim Lapierre fits in with the team after being acquired earlier in the week, the best move will likely be letting him walk at the end of the season, especially if he will come at a price tag of his current $1.1 million cap hit or higher.

The decision on Craig Adams and Zach Sill should be easy: change the locks to CEC, douse their lockers in bleach, bring in the guys in the hazmat suits, then take their lockers out to the parking lot and burn them to the ground. I've questioned Rutherford's ability to be an effective general manager since the moment he was hired, but I can't believe even he would bring either of those two back. If he does he deserves to be fired on the spot.

Both Paul Martin and Christian Ehrhoff are coming up on unrestricted free agency, and despite the amount of talent in the pipeline on the blueline I believe one of the two needs to be re-signed. If they both leave, Olli Maatta becomes the most experienced top-4 Dman outside of Kris Letang, and he'll be coming off shoulder surgery and a long layoff. All things being equal, Paul Martin would be the one to extend, though he'll also be the more expensive of the two and it'll remain to be seen how many years he wants, whether he'd be willing to stay in Pittsburgh instead of testing the open market, etc. Ideally you get one of the two signed before free agency and trade the other's rights, but conservative estimates might put Ehrhoff at $5 million AAV and Martin at $6 million AAV to bring back.

Thomas Greiss rounds out the Pens' UFAs, though I have a hard time seeing him back in Pittsburgh next season. He's been severely underused so far this season, and his 10 starts through the team's 48 games leave him on pace to start only 17 games this year. That would leave Marc-Andre Fleury with 65 starts on the season, two off his career most and certainly many more than he should be seeing with the most talented backup he's had by far outside of Tomas Vokoun. It's my belief that Greiss signed in Pittsburgh sensing a chance to play his way into the starter's role over a seemingly vulnerable starter in the final year of his contract, but his usage and Fleury's extension have effectively limited that possibility. Greiss has posted a higher save percentage this year both 5 on 5 (0.933 vs 0.921) and on the power play (0.955 vs 0.918) than Fleury despite the latter's career season, but the team unnecessarily rushed into a contract extension and have left their talented backup glued to the bench.

2015-16 Season Salary Cap Outlook:

Using the assumption of a $72 million cap ceiling, which may end up being too high between what the Canadian dollar does and bonus penalties the team might face, per Mike Colligan, the Penguins next year might be left filling in a number of roster spots internally. Let's say the team makes the following moves to reach a 23 man roster:

- Re-sign UFA Steve Downie for $1.7 million AAV
- Re-sign RFA Beau Bennett for $1.5 million AAV (1 year deal)
- Re-sign RFA Mark Arcobello for $700k AAV
- Re-sign RFA Bobby Farnham for $650k AAV
- Promote Kasperi Kapanen to the NHL team ($925k AAV)
- Promote Oskar Sundqvist to the NHL team ($925k AAV)
- Re-sign UFA Christian Ehrhoff for $5.25 million AAV
- Re-sign RFA Robert Bortuzzo for $800k AAV
- Promote Derrick Pouliot to the NHL team ($1.288 AAV)
- Promote Jeff Zatkoff to the NHL team ($600k AAV)

Perron - Crosby - Kunitz
Bennett - Malkin - Hornqvist
Kapanen - Sutter - Dupuis
Spaling - Sundqvist - Downie
Farnham - Arcobello

Letang - Maatta
Ehrhoff - Pouliot


2015-16 Cap Hit: $71.769 million
2015-16 Cap Space: $231k

Without even signing another player outside the organization and promoting five players, these moves would bring the team's cap hit to $71.769 million for the 2015-16 season. That's why it's so important not to waste $2.2 million on a fourth line player, or rush out to extend an average goaltender to a $5.75 million contract. Or sign an AHL-caliber player to a $3.375 million albatross of a contract. And here's where things get tricky: Brian Dumoulin is likely to lose his waiver-exempt status next season. He'll need to be on the NHL roster next season or he will be claimed by another team. In a perfect world the Penguins move Rob Scuderi's contract, but it's not even a question of whether or not they're able to, it's also a question of whether this front office will want to. Unfortunately, what's more likely to happen is that the team trades Bortuzzo for a late round pick and loses a very cheap 6th/7th defenseman type player. Problem is that Dumoulin makes $900k and will be a restricted free agent with a minimum 10% raise. That's going to eat up the majority of the very limited cap space.

2016-17 Season Salary Cap Outlook:

With all the uncertainty of next season's salary cap, predicting what the ceiling will be for 2016-17 will be that much more difficult, though $75 million should be a reasonable ballpark. The team will be able to shed Spaling and Sutter's combined $5.5 million cap hit, if it chooses to do so, but even if they move on from those players those savings will need to go right back into locking up Perron, Despres, and Maatta. While the 2015-16 cap situation is likely to be tight, the 2016-17 cap will likely be ten times worse. Let's say the team decides to make the following moves:

- Re-sign UFA David Perron for $5 million AAV
- Sign 3C for $3.75 million AAV
- Re-sign RFA Beau Bennet for $2.3 million AAV (1 year deal)
- Re-sign RFA Bryan Rust for $990k AAV
- Re-sign RFA Simon Despres for $2.0 million AAV
- Re-sign RFA Olli Maatta for $2.75 million AAV
- Buyout Rob Scuderi for a $2.0 million cap savings
- Re-sign RFA Scott Harrington for $1.0 million AAV
- Sign Backup Goaltender for $900k AAV

Perron - Crosby - Kunitz
Kapanen - Malkin - Hornqvist
Bennett - 3C - Dupuis
Arcobello - Sundqvist - Downie
Rust - Farnham

Letang - Maatta
Ehrhoff - Pouliot
Despres - Dumoulin

Backup Goaltender

2016-17 Cap Hit: $75.553 million
2016-17 Cap Space: -$553k

There are so many variables that will need to play out before the 2016-17 season rolls around, but this goes to show how difficult the cap situation could get for the Penguins. In this scenario, the team is buying out Rob Scuderi's contract, they're re-signing Perron for a reasonable price, they're using their restricted free agency leverage on Despres, Maatta, and Bennett to keep costs down, even though I believe the contracts I had laid out earlier for Maatta and Despres would be the far superior route to go, and they're bringing in a third line center, whether Brandon Sutter or someone outside the organization, for a price that's realistic for a decent player at that spot in the lineup. Even with all that, the team would still be over the $75 million salary cap used for this scenario.

Now, many things are going to happen between now and the 2016 offseason. A rebounding Canadian dollar could push the salary cap higher than $75 million. The Penguins might be able to find a trade partner and shed Rob Scuderi's entire $3.375 million cap hit. But the point remains that signing bad deals is a big deal; it hamstrings the team's ability to then re-sign the players that truly matter, and to make moves to improve the organization. The team likely could've re-signed Thomas Greiss at a $3.5 million savings over Marc-Andre Fleury to serve as a bridge until top prospect Tristan Jarry is NHL-ready. They could have not wasted cap space on a 4th liner like Nick Spaling and potentially gotten Nashville to retain part of Patric Hornqvist's salary instead. And Ray Shero could have not doubled down on his mistake of letting Scuderi leave the first time by making a bigger mistake in bringing him back. The easy move as a general manager is to bring your players back, especially when they're being productive. The difficult move, and often the correct move, is to let them go when their value and their next contract don't align. The Penguins are likely to face some salary cap headaches over the next two seasons; the unfortunate part is that they could have been avoided.

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