Leafs Salary Cap: Mo Money, No Problem

Ever since the Toronto Maple Leafs signed John Tavares to a 7-year $77 million contract on July 1st, every hockey fan has said the same thing: “Leafs are going to be in cap hell next summer”. Thankfully for the Leafs, this is simply not true. Although Tavares’ new deal does bring an extra $11 million cap hit on their books for the next 7 years, it should not hamper Leafs GM Kyle Dubas from re-signing key Restricted Free-Agents (RFA) William Nylander right now and Auston Matthews, Mitch Marner, Kasperi Kapanen and Andreas Johnsson next summer.

Here’s a few reasons why the Leafs could make their cap structure work next year and beyond:

Continued Increase in Salary Cap:

Since the Salary Cap was rolled back down to $60 million during the shortened  2012-2013 season, it has done nothing but increase over time. Over the last 5 seasons (2013-2018) the Cap has gone up 19.5 million and there appears to be sharper increases coming on the horizon. The reason behind the rapid rise of the Salary Cap is due to the increased revenues from the new Las Vegas franchise (prior to the start of the season). Due to Vegas going far in the playoffs and the increased cash follow from the 2017-2018 playoff revenue, expect the salary cap to increase another $3-5 million again next year.

Over the last 6 years the Cap has gone up an average of $3.25 million, with the last two years being either equal or above the average. With the profits of the 2017-2018 season and playoffs currently being factored into the NHL’s profit margin, expect another increase of at least $3 million. Furthermore, with the imminent expansion of a team in Seattle, expect the Cap to continue to rise quickly, as the NHL continues to increase it’s profit margin prior to the re-negotiation of their TV rights, which is due for a serious increase in worth after very strong audience numbers this last season and spring. In short, the Leafs have the Cap on their side.

No More Performance Bonuses for Leafs (for 2018-2019)

The Leafs had six players on Entry Level Contracts (ELCs) during the 2017-2018 seasons. Those contracts, especially for players drafted in the 1st round, have many performance bonuses. A player like Mitch Marner or Auston Matthews has performances that can reach as high as $2.8 million, on top of their max rookie salary of $0.925 million, for a total cap hit of $3.7 million. That’s a serious Cap hit for a young player.

However, not all young players are guaranteed to reach the conditions needed to get their bonuses. In the event that they do, teams can choose to absorb the added bonuses on their current season’s Salary Cap or allow it to count against the Cap the following season.  For example, the Leafs’ players accumulated a total of $2.55 million in bonuses last year (2017-2018), but Lamoriello thought  it best to let it carry over into this upcoming season (2018-2019).

When people are looking at the Leafs’ cap situation on CapFriendly or other, you have to take these bonuses into account. This 2018-2019 season could see the Leafs’ young players on ELCs earn up to $4.5 million on the cap. With many of these young players set for big-time contract renewals, expect the $4.5 million (if they all reach their maximum bonuses) to not be carried over. This will give the Leafs significantly more breathing room next season.

The Nathan Horton Contract On LTIR

Ah yes, the famous Nathan Horton contract. The Leafs acquired the contract of the injured forward on February 26th, 2015, in exchange for David Clarkson. Horton was permanently injured (back), while Clarkson was simply just a bad player with a huge contract. The Leafs agreed to take on the contract of an unofficially retired player in exchange for riding themselves of one of the worst contracts in the Salary Cap Era. Although both players have virtually the same cap hit (Horton’s $5.3 million vs Clarkson’s $5.25 million), Horton could be put on Long Term Injury Reserve (LTIR) should the Leafs come close to the Cap.

What do I mean put Horton on LTIR? According to the rules, a team that has a player that is injured long-term can put said player, and his cap hit, on the LTIR list in order to recuperate the cap space to properly replace said player. Think of it as Cap space substitution. The Blackhawks did it last year with Marian Hossa, putting him on LTIR knowing he wouldn’t play the season so they could spend more money on other players. If you go and check Cap Friendly or other Salary Cap focused websites, you’ll see that the  Leafs’ projected salary cap totals include Horton’s Cap hit within their projected Salary Cap structure.

The Leafs have actually never put Horton on LTIR since his acquisition. Funny thing is the Leafs haven’t come close to needing the extra cap space from putting Horton on LTIR because most of their roster was very young and on their ELCs. Only in the last two seasons have they begun signing players long-term and at higher salaries (Rielly, Kadri, Zaitsev, Andersen, etc). With the signing of Tavares and the eventual re-signing of Matthews, Marner and co, Horton could easily be placed on LTIR during the 2019-2020 season (the last year of his contract), in order to give the Leafs an extra $5.3 million in cap space should they need it.

Signing Nylander, Marner and Matthews

The big three of the Leafs, prior to the Tavares acquisition, was Matthews, Marner and Nylander. All three need to be signed within the next 10 months, with Nylander needing a contract within the next month to start the season. Should Kyle Dubas sign William Nylander, the deal will either be a $4-$6 million 2-3-year bridge deal or a $6-$7 million 5-7-year long-term contract. With Nylander continuing to improve and having already put up two 60-point seasons, it would seem much more likely that the long-term deal would be the most valuable option for the Leafs.

Mitch Marner has established himself as one of the top young wingers in the game with his 69-point campaign last year. Should Marner continue to grow and improve on those numbers, likely in the 70-point range, he would command a significant raise. Many have estimated that, in the worst case scenario, he would receive an 8-year $8 million offer. Marner could always take less, similarly to Tavares, but he would be worth that contract almost immediately in our estimation.

The biggest contract to worry about for Dubas will be the Auston Matthews contract.  He will most likely seek a contract similar to Buffalo’s Jack Eichel and LA’s Anze Kopitar ($10 million X 8 years). Should he have similar success this upcoming season and put up a point-per-game, he could very well receive such a lucrative contract. In his first two seasons, he has scored at a 40-goal rate or more. The last player on their ELC to score at 40-goal pace or higher was Alexander Ovechkin, let that sink in a second. Now, with the signing of Tavares, Matthews will have the fire power to compete for the Stanley Cup and this might lower his demands. However, should he seek the big payday, a $10 million X 8 year deal could be what happens.

Other notable Restricted Free Agents that the Leafs need to sign in the next  10 months include Andreas Johnsson, Kasperi Kapanen, Connor Carrick and Garret Spraks. Each of these players should be signed to smaller bridge contracts, unless a player like Johnsson absolutely lights it up.

The Influx of More Youth

The Maples Leafs still have a very solid prospect pool! With the Toronto Marlies having just won the Calder Cup in the AHL, many of these players will be pushing for a roster spot as early as this year. All of these players will provide cheap and valuable contributions to the Leafs roster. Players like Johnsson, Grundstrom, Dermott, Liljegren, Bracco and many more will be knocking on the door, ready to fill the vacant spots left by high-priced free-agents. This will allow the Leafs some serious flexibility when it pertains to fitting their team under the Cap. The importance of drafting and development has always been on the mind of Kyle Dubas from his days in the OHL, and it should certainly follow suit here. Expect to see many young faces on the Leafs, besides the ones you already know, int he next two years.

Adding it all up:

The Leafs currently have approximately $30.861 million in cap space for next season, but this will change once the Leafs sign Nylander prior to the start of the 2018-2019 season. This number does not include the added $5.3 million of putting Horton on LTIR, nor does it include the potential rise of the Salary Cap by $3-5 million.  Let us assume a few things here:

 

  • Nylander signs a 6+ year deal at $7 million per year prior to October 2018.
  • Matthews signs an 8-year deal at $10 million per year before July 1st.
  • Marner signs a 7-year deal at $8 million per year before July 1st.
  • Kapanen signs a 2-3-year at $2 million per year before July 1st.
  • Johnson signs a 2-3 year deal at 3 million per year before July 1st.
  • Carrick signs a 2-4-year deal at $3 million per year.
  • Sparks signs a 2-year deal at $1.5 million per year.

 

TOTAL: $34.5 million

 

Having offered each player a rather generous offer, it comes out to an added $35.5 million on the Leafs’ Cap come the 2019-2020 season. Some salaries are high on purpose just to give fans an idea of the worst case scenario in negotiations. For all we know, there could be Cap-friendly deals that will be signed.

 If we factor in:

  • the $ 30.861 million in current cap space
  • Nathan Horton’s LTIR relief of $5.3 million
  • The increase of the Salary Cap by $3-5 million

The total available cap space, without any trades or moves, would be, at worst, $39.161 million and, at best, $41.161 million based on the increase in the Salary Cap. Here’s a updated look of the Leafs roster while being under the cap in 2019-2020:

Maples Leafs Salary Cap
Toronto Maple Leafs 2019-2020 Roster

 

The Kids Are Alright

The Cap going up from $79.5 million to either $82.5 million or $84.5 million would suffice, as the cumulative cap hit of this team would be $81.950 million. Should the Leafs need extra wiggle room, trading one of their RWs might be a possibility. Should Johnsson or Hyman take the next step in their development, Marleau could even become expendable prior to the 2019-2020 season as well.

Clearly the Leafs will be fine in the next year or so, and the continued rise in cap will allow them further breathing room. However, from this point onward, the Leafs’ drafting and development will become even more important, as they will need to fill their roster with good, cheap talent in order to remain a top team in the East. Kyle Dubas’ biggest challenge will be keeping this core together, but it is certainly one we feel he will overcome.

 

1 thought on “Leafs Salary Cap: Mo Money, No Problem”
  1. are you sure about that LTIR? it has some strange rules in it, I believe that if you want players performance bonuses to be paid this year you cant put player in LTIR, so if that is true we cant put Horton on LTIR.

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