During our latest Bruins Live Q&A earlier this month, one of our BostonSportsJournal.com members raised a point that’s worth exploring.
Member gmtwoputt wanted to know more about buyouts and the intricate workings of the salary-cap maneuver that allows general managers to get out from under bad contracts. Of course, such a maneuver comes with a specified cost, which is what we’re about to get into.
We’ll cover the basics of the buyout and how it pertains to the Bruins. As always, a stick tap goes out to the good folks at Capfriendly.com, who maintain a great database of information and calculation tools regarding contracts and other various scenarios.
The basics
A buyout gives a team the opportunity to reduce the remaining cost of a player’s contract over twice the length that remains on the deal. In most cases, the buyout cost starts with 2/3rds of the player’s remaining base salary. If a player is younger than 26 when the buyout is executed, than just 1/3rd of the contract is what becomes the base for the buyout price.
It’s important to note that signing bonuses are not part of the buyout equation and can decrease the actual cap savings that would take place over the course of the remaining timeline. What’s worth keeping in mind is that star players have recently been signing bonus-heavy deals, which was another topic we covered in this space during the beginning of free agency.
When John Tavares signed his seven-year, $77-million contract with the Maple Leafs this summer, the contract structure was staggering. Tavares, who’s in the prime of his career and was considered the elite player available in free agency, is expected to be paid $70.89 million of his contract in bonuses. Essentially, the Tavares contract becomes “buyout proof,” though that’s a scenario the Maple Leafs hope they never have to come to anyhow.
Also worth noting that the initial buyout window opens 48 hours after the Stanley Cup and closes June 30, which allows teams to dump a contract before the start of free agency.
Consider a random example with Detroit Red Wings forward Justin Abdelkader. He has five years and $18.25 million in base salary remaining on the seven-year, $29.75-million contract he signed in 2015. If Detroit had decided to buy him out during the most recent window, they’d owe him $12,166,667, or 2/3rds of the remaining $18.25 million, over the next 10 years, a cost of $1,216,667 per year. The final cap hit savings, in this case, will vary as Abdelkader’s base salary varies in amount in the final five years.
The final cap hit each year as a result of the buyout would be $966,667 in 2018-19, $1,216,667 in 2019-20, $1,966,667 in 2020-21, $2,466,667 in 2021-23, and then $1,216,667 in the final five years. The buyout would offer big savings in the first year, but by the end of it, the Red Wings would have only saved $6.08 million.
How does this affect the Bruins?
David Krejci and David Backes are the two Bruins players whose contracts continually draw attention.
Krejci has been an integral part of the Bruins' success for more than a decade and has given the team a heavy punch behind center Patrice Bergeron. His production has teetered based on how healthy he is in a given season, and he hasn’t matched the sensational playoff production from the 2012-13 season. Now 32, and coming off a year in which he played 64 games, Krejci is on the books for a cap hit of $7.25 million in each of the next three years.
What would it look like if the Bruins opted to buyout Krejci next season? His actual remaining base contract is $14 million for two years, which means $9,333,333 would be paid out over four years, or $2,333,333 per year. There’d be a big cap savings of $4.6 million each year from 2019-21, but then the Bruins would still owe Krejci $2,333,333 for two more years after that.
It doesn’t seem wise to consider such a buyout, given the fact that the Bruins really only have two proven NHL centers in Bergeron and Krejci. Bruce Cassidy and the Bruins organization have shown a commitment to letting younger players compete for open roster spots, one of which is the third-line center position. The Bruins aren’t in a position to gamble the only center depth they have until they can get a true sense of what prospects can succeed at the NHL level.
Backes is a more unique situation based on his contract structure. He signed a five-year, $30 million deal in 2016 that will pay him $22 million in the first three years. His base salary – $5 million in the first two seasons and $3 million for the upcoming year – reduces to $1 million 2019-20 and $3 million in 2020-21.
The 34-year-old struggled toward the end of the season and the playoffs, which came to an abrupt end when he sustained a concussion against the Lightning. At times in the playoffs, Backes was demoted to the fourth-line, which makes his salary steep if he doesn’t improve on that type of input.
If the Bruins opted for a buyout next season, the savings would be marginal at $1.3 million over the following four years. Backes only has $4 million remaining in base salary spread over the final two years of the deal, meaning the Bruins would owe $2,666,667 over the next four years. Because his initial cap hit was structured at $6 million per season, the annual savings of $333,333 would still leave the Bruins with a $5.67 million cap hit in the first year of the buyout.
Both players have modified no-movement clauses, which means they’d also have to be presented the option to forego waivers and enter the buyout process. Players without such clauses must clear unconditional waivers first.
Past buyouts
Here’s a look at some interesting buyouts over the years:
Vincent Lecavalier, 2013: The Tampa Bay Lightning will be paying Lecavalier until 2026-27. That’s the type of deal that’d make Bobby Bonilla proud. The former Lightning captain signed a megadeal worth $85 million over 11 years in 2008. He was bought out with seven years and $45 million left on the deal. Tampa Bay had to pay $32 million in the buyout. One interesting note: The salary cap did not increase after the 2012-13 lockout, so teams were allowed two compliance buyouts that did not count against the salary cap. While the Lightning will pay Lecavalier until he’s 47, there’s no cap penalty.
Rick DiPietro, 2013: Another compliance buyout. The Islanders got out from under the goalie’s whopping 15-year, $67.5-million contract he signed in 2006. It was bought out after seven seasons, which meant New York owed him $24 million over the next 16 years. He will be on the payroll until 2028-29.
Alexander Semin, 2015: Semin signed a five-year, $35 million deal with the Hurricanes in 2013. Two years later he was bought out, which meant Carolina owed him $14 million over the next six years. Semin, whose point-production plummeted, signed a one-year deal with the Canadiens and then went to the KHL. The Hurricanes will pay him until 2020-21.
In 2018 there were eight buyouts: Troy Brouwer (Calgary), Steve Mason (Montreal), Tyler Ennis (Minnesota), Alexandre Burrows (Ottawa), Brooks Orpik (Colorado, after trade from Washington), Xavier Ouelett (Detroit), Paul Martin (San Jose), and Eric Gryba (Edmonton).
Other dangling thoughts while the start of training camp gets closer…
- Bruins announced they’ll hold captains’ practices next week Aug. 30 and 31, a good warmup for the players before they start camp Sept. 10. This is the homestretch of the summer where players start returning from wherever they were training and spin their focus toward the start of camp.
- Tickets for the Bruins Winter Classic game at Notre Dame Stadium will go on sale Aug. 28 at 11 a.m. The game against the Blackhawks is scheduled for Jan. 1.
- Another blow for the Flyers and Sean Couturier, who will be out another four weeks after sustaining a knee injury. The Flyers announced the news last Wednesday and said Couturier injured his knee in an exhibition game. It’s the second time in five months the center has injured his knee after a breakout season. He scored 31 goals and 45 assists and became the Flyers top center. The first knee injury occurred in the playoffs during practice.