With the waiving of Matt Walker yesterday, the Flyers look to rid themselves of his $1.7 million yearly cap hit as of about 12:01 pm today. There are reports out there that this move would allow the Flyers to acquire someone with a $3.6 million yearly cap hit in the coming days.
This quite possibly could be correct. The Flyers reported this number, and CapGeek uses the same thinking, so they will almost certainly reach the same number listed under "Acquisition Space".
The problem is, I'm not so sure that is the case. Let's run down some numbers first:
- The Flyers are $65,138 over the yearly cap right now. This is allowed due to LTIR, and it is going down every day.
- It's going down because the Flyers are $4,262 under the daily cap and have been since Michael Leighton was sent to the Phantoms.
- They will be under the daily cap by $13,402 on the first day Matt Walker is no longer on the team.
- Do some simple calculations ($65,138 divided by $13,402) and you see that it will take 5 days for the Flyers to be under the yearly salary cap - for the first time since Mike Rathje was a healthy player for the Flyers in 2007.
- There are 72 days remaining in the season, so in 5 days the Flyers will have ($13,402 daily underage * 67 days) $897,934 available to spend for the remainder if the season. Add in the $1,872 "remainder" from when they pay off their yearly debt, and you get $899,806.
- If you want to know what that yearly cap hit is, you take ($899,806 divided by 67) and multiply by 186 (days in the season) to come up with $2,497,968.90.
This is how people get the number that the Flyers will be able to acquire a player earning just slightly less than a $2.5 million cap hit. Where does the $3.6 million come from you ask? Add Ian Laperriere's ~$1.1 million hit, and there you go.
So we're all on the same page now. Jump to see why I don't think you can take $2.5 million and add the LTIR allowance.
Article 50.5(e)(v) is titled "Acquiring SPCs After the Commencement of a Season, Via Trade or Waivers." It states:
"In order for a Club to acquire a one-year SPC after the commencement of a season (i.e., that is expiring at the conclusion of the then-current League Year), the Club must have Payroll Room equal to or in excess of the remaining Player Salary and Bonuses to be earned by the Player under the SPC."
The problem here is that the Flyers do not have "Payroll Room equal to or in excess of" $3.6 million. They have Payroll room equal to $899,806, which is a yearly cap hit of $2,497,968.90.
Need a definition of "Payroll Room"? Article 50.5(e)(i):
"A Club's Payroll Room is the amount by which the Upper Limit exceeds the Club's Averaged Club Salary. Notwithstanding anything to the contrary herein contained, no Club may enter into or assume an SPC, enter into an Offer Sheet, extend a Qualifying Offer, or engage in any other Player transaction that commits the Club to Player Salary and Bonuses for which the Club does not have Payroll Room (A) except as permitted by Section 50.5(h) below with respect to the "Performance Bonus Cushion" and Section 50.10(d) below with respect to the Bona Fide Long-Term Injury/Illness Exception; and (B) subject to the provisions set forth in Sections 50.5(e)(iv), (e)(v) and (f)(iii) below."
So Payroll Room is as we explained above: The Flyers will have $13,402 per day in payroll room, or $899,806.
But, you say, it allows for an exception due to LTIR right there! 50.10(d)!
The problem is that 50.10(d) allows for the Club to exceed the Upper Limit. LTIR does not move the Flyers' Upper Limit, thus creating more space between the Upper Limit and the Averaged Club Salary, but rather allows the Averaged Club Salary to go over the Upper Limit. In plain language, this is the "LTIR does not take the cap hit off the cap, it allows you to go over" part.
As such, when calculating Payroll Room to determine if a Club may acquire a player via trade, LTIR does not get added to the actual Payroll Room. In formula form:
[(Upper Limit - Averaged Club Salary) > Remaining Player Salary and Bonuses]
LTIR does not come into that formula, except to say that [Averaged Club Salary < (Upper Limit + LTIR)]
Until someone explains how LTIR allowance equals Payroll Room, the Flyers may only trade for someone who is owed $899,806 for the remainder of the season or less. This does not include Erik Cole.