Checking in on the Philadelphia Flyers’ salary cap situation

Last Friday’s announcement that Shayne Gostisbehere was signed to a six-year, $27 million contract came as welcome news to most of the Flyers’ fanbase. Gostisbehere, one of the most exciting players on the Flyers, should be here in Philadelphia for most of his prime, and he’ll be here on a contract that has a solid chance to look like a bargain if he can keep things moving in the right direction despite a couple of bumps in the road this past season.

Gostisbehere’s contract was the biggest contract decision the Flyers figured to face as the offseason begins to really pick up, but there are a few other decisions the Flyers will have to make — in terms of free agency as well as their own players — over the next month or so.

And, of course, as Flyers fans, we exist in a perpetual state of “being concerned about the salary cap”, and Ghost’s new contract brings that state of mind back to the forefront.

With that, we’ve got a rumor via the New York Post’s Larry Brooks that could be bad news for the orange and black:

The expectation, affirmed in conversations within the past three days by essentially everyone on the NHL players’ side of the aisle, is that the union will decline to trigger the escalator for next season, thus creating a flat salary cap right around the current $73 million for 2017-18.

The potential of a flat salary cap is something we discussed here a couple of weeks ago when initial rumors of its existence started popping up. The idea here is that, essentially, if the NHLPA elects not to trigger the five percent cap escalator for next season, teams are probably not going to have much more money to spend on players than the $73 million they did this past season. That would be a problem for a number of hockey teams, including our hockey team, the Flyers.

However, TSN’s Bob McKenzie — quite possibly the most plugged-in NHL reporter on the planet — chimed in on this topic on Sunday evening and somewhat contradicted Brooks’ report with a series of tweets, some of which can be seen below:

A 2 percent increase would be pretty similar to the increase the NHL saw in the salary cap last offseason, when it increased from $71.4 million to $73.0 million. McKenzie’s assertion that there is “virtually no chance” that the cap remains totally flat makes some degree of sense, as the cap has increased to at least some extent in just about every non-lockout-preceded season.

McKenzie added that the league is hoping to have a firm number by the end of this week. That should bring additional clarity before long, and at the latest you’d have to think we’ll know by the time Vegas forms a team next week.

For now, though — because we know no other way — let’s see how things could potentially look under the worst-case scenario, one in which there’s no cap inflation and the team has $73 million to spend on its roster as it heads into the thick of the offseason.

Where things stand now

Ghost’s new contract puts the Flyers at a total 2017-18 cap hit of $64,346,667, courtesy of the excellent capfriendly.com’s tracker. That number includes the cap hits of 17 players, whose names and figures you can see below, as well as the $1.5 million buyout charge for R.J. Umberger.

With that all accounted for, the Flyers — against the $73 million cap that we’re assuming they’ll have to deal with — are staring at about $8.65 million to fill six spots on the roster, which should go towards the following:

• A goalie.
• Jordan Weal.
• Some other forward.
• Some other other forward*.
• A defenseman.
• Some other defenseman.

(* This could, in theory, be a defenseman if the team wanted to roll with 13 forwards and eight defensemen, but 14 forwards and 7 defensemen seems more likely at this point for a number of reasons.)

That’s going to be a tight fit.

But there’s good news! The last four spots on that list — the two extra forwards and defensemen — are very, very likely to be handled by in-house replacements that are all going to be on entry-level or otherwise inexpensive contracts. Those players could be guys like Samuel Morin, Travis Sanheim, or Robert Hagg on defense, and forwards such as Oskar Lindblom, Nico Hischier/Nolan Patrick, Scott Laughton, Nick Cousins, Taylor Leier, Mike Vecchione, etc. Either way, it’s unlikely any of those guys are going to count for much against the cap, so that should help matters here.

So let’s guess that Samuel Morin, Travis Sanheim, and Oskar Lindblom all make the team at their current cap hits (not accounting for bonuses, which we’ll get to later), and that Nolan Patrick is drafted by the Flyers, makes the team, and carries an initial cap hit of $925,000. (Note: please do not take the above scenario as a guess as to what will actually happen; we’re just filling in names that help us paint a picture of where things currently stand.) That’d put the Flyers at just barely under $68 million in cap hits — meaning that they’d have around $5 million to re-sign Jordan Weal and find a goalie in free agency.

That’s still going to put them pretty close against the cap. It could be enough if the chips fall the right way. Maybe Jordan Weal takes a one-year prove-it deal for cheap as he tries to set himself up for a bigger contract next summer, and maybe the Flyers are patient with the free agent goalie market and end up getting a respectable tandem guy/starter for a bargain price (as we know, it can happen). If that all happens, the Flyers could cruise into the regular season with something like $1.5 to $2 million in space — still reasonably close to the ceiling, but with enough room to cover themselves in the event of injuries and/or achieved performance bonuses.

But let’s say they really like one of the goalies on the market now and are willing to spend whatever they need to in terms of cap hit if that means getting him on a short-term deal. Or that Jordan Weal’s contract costs just a little bit more than they were hoping it would, and from there they don’t have enough money to lock down a goalie that they really like. Then what?

Can they get any more cap space?

They could, though the ways they can do so are largely either undesirable or out of their control. Still, let’s run through those methods, in the order of their feasibility/practicality to the Flyers:

• Expansion draft: As we know by now, the Flyers will lose one player in the expansion draft next week in Las Vegas. Of all of the players who seem like they may be potential targets for Vegas that are under Flyers control, several of them either aren’t factored into the salary cap picture now (i.e. Weal, or RFAs such as Cousins, Laughton, or Anthony Stolarz) or don’t make a ton of money against the cap (Brandon Manning, Pierre-Edouard Bellemare). But there are a few guys who seem like they at least have a snowball’s chance of getting taken by Vegas that do have a bit heavier of a cap hit, such as Michael Raffl, Michal Neuvirth, Dale Weise, or Matt Read. (Or Andrew MacDonald if you’re really getting ambitious, but ... no.) If one of those guys is taken and is immediately replaced with a cheap forward or rookie defenseman, that’s at least another million dollars or so that comes off the books even after accounting for the replacement. That may be all the team needs. (Of course, if you lose one of those guys, you do have to go about actually replacing their production in the lineup, which could be a challenge depending on which guy it is. But let’s save that discussion for another time.)
• Trades: If the Flyers don’t find relief in the way of expansion, Ron Hextall’s next move is probably toward the phones to try and offload some salary via trade. However, like with the expansion draft, there are only a few guys that would make sense as trade pieces for salary dumps — your Reads and Weises of the world, for instance — and it wouldn’t be overly surprising if the Flyers can’t find a team willing and able to bail the Flyers out here, given that everyone’s looking for cap space.
• Buyouts: In case of emergency, the option is always there to buy a player out in the name of short-term savings and eat some money on his deal in the future. Among current roster players, the only one for whom a buyout would make much financial sense is Matt Read. He’s under contract for only one more year, he carries a pretty expensive cap hit given his role on the team, and while I’m of the opinion that he’s better than a lot of fans give him credit for even at his current age, you could probably replace him with one of the young guys and not lose that much in terms of on-ice impact. A Read buyout would save the Flyers around $2.33 million in cap space this year, while hitting them with a $1.17 million charge next year. That would probably give them enough wiggle room to get through this offseason without much trouble — the Flyers would just have to decide if it’s worth the slight hit next year to make that happen.
• Burying: If all else fails and the Flyers aren’t willing to take the long-term hit, they can just send a player down to Lehigh Valley come October and go from there. This won’t provide a ton of salary relief, as any cap hit greater than $1,025,000 will remain on the Flyers’ NHL cap. However, $1,025,000 is enough to make room for a player on an entry-level/immediately-post-entry-level contract, which is probably what the Flyers would replace any demoted player with.

Basically, there’s a chance the Flyers don’t even need to take any steps here, or that it gets sorted out on its own via expansion. But if that doesn’t happen, they’ll have the chance to clear some space, even if it may have some slightly less-than-desirable effects in either the long term or the short term.

Leaving an allowance

No matter how they do it or who they have to get rid of/keep around, the Flyers are going to take the ice in October with a roster that’s under the salary cap. We know that, if nothing else. But while teams with the financial capability to do so should, by all means, spend as close to the cap as they comfortably can, in most cases teams will want to give themselves a bit of space under the cap, for a whole bevy of potential reasons — covering for injuries, banking cap space for mid-season acquisitions, etc.

For this exercise, let’s focus on one potential after-the-fact cap obstacle: performance bonuses.

While players on entry-level contracts are limited in how much NHL salary they can receive (they can’t make more than $925,000 between salary and signing bonuses), they are eligible to have performance bonuses in their contract, bonuses that can be achieved if the player achieves certain objectives as outlined in their contract. These bonuses are not initially taken into account in cap calculations, but if a player achieves a bonus, those amounts are added to the player’s (and team’s) cap hit at the end of the year. If a player’s achieved bonuses put his team over the cap, they’re forced to carry those overages to the following season’s cap. (This happened to the Flyers a few years ago, and some teams, such as the Blackhawks, can see millions’ worth of extra charges added to their cap at the end of each season.)

It’s tough to talk a lot about this, because we don’t have a copy of Ivan Provorov’s or Travis Konecny’s entry-level contract and as such we can’t say with confidence how likely they are to hit their bonuses. But we do know that a team that could have as many as six players on entry-level contracts next season may have to concern itself with the topic before long, so let’s at least speculate.

Courtesy of CapFriendly once again, below is a list of maximum potential performance bonuses for every player on the Flyers that could feasibly be on the team next year:

Nolan Patrick/Nico Hischier**: $2,650,000
Ivan Provorov: $850,000
Samuel Morin: $500,000
Travis Sanheim: $400,000
Travis Konecny: $212,500
Oskar Lindblom: $212,500

(** We do not yet know exactly how much in bonuses the No. 2 pick will have available. However, we do know that of the last five No. 2 overall picks, four of them had maximum bonus amounts between $2.6 million and $2.65 million, just under the maximum potential bonus amount of $2.85 million. So we’ll ballpark that as a guess for the incoming No. 2 pick.)

If every player on that list were to make the team and hit all of their potential bonuses, the Flyers could be looking at just under $5 million in additional cap overages, most of which would probably carry over to their 2018-19 cap sheet. That extra charge is, of course, something the Flyers would hope to avoid from a cap perspective. Now, here’s where we mention that a) it’s very unlikely that every one of the above players reaches every one of his bonuses, and b) if that does happen, the Flyers are probably going to be really damn good next year, to the point where maybe you’re OK with a little bit more money against the cap come 2018.

With that all said, a more likely scenario is that some guys hit certain bonuses, some miss certain bonuses, and some guys come up empty-handed, all leading to a total bonus hit somewhere in the $1 to $2 million range. And if Patrick/Hischier doesn’t make the team, that potential range drops even further.

Since only the Flyers know the details of all of their young players’ performance bonuses, and in turn how likely it is that those bonuses will be reached, they’re probably the ones who know best as to how much space they’re going to want to budget into their cap picture this year (or be prepared to eat for next year). So we’ll see how they handle this as the offseason slows down, and then again as we see who makes the team next fall.

(Ed. note: if you’re curious on where those amounts listed up above tend to come from, you can ask in the comments of this post and I’ll try to explain further. Or — if you’re really bored — you can read Exhibit 5 of the NHL CBA [found on page 326] for examples of the kinds of events that can trigger these bonuses. We won’t clog up the post with too much of that contract jargon, though.)

Some help would still be appreciated

To boil down what we know and what we think we know to a few bullet points, let’s review:

• The cap is likely not going to go up by much, though it’s probably going to go up at least a little bit.
• If the cap doesn’t go up, the Flyers — assuming they fill out their remaining roster gaps with young players on ELCs, as they are expected to do — will have around $5 million to find a new goaltender and re-sign Jordan Weal.
• However, the team will probably want to keep a little bit of cushion between its payroll and the salary cap, for several reasons but particularly in case any of its young players reach their performance bonuses. So that $5 million figure is the maximum, but in all likelihood the team should not plan on spending all of it.
• With that said, again, the cap is probably going to go up by a bit, and even a 2 percent increase (which would add ~$1.5 million to the cap ceiling) may be all the Flyers need based on how things look now.
• If that’s not enough, there are ways for them to come up with more cap space if necessary, though those are either largely out of their control or perhaps somewhat undesirable.

With what we know now, it seems like the Flyers are some patience and a break or two away from being more or less in the clear regarding the cap. That doesn’t mean they’re going to be steeped in cap space or anything, but even just a bit more help by way of some combination of a cap increase, expansion, and/or actively shedding a contract should give the Flyers enough room to assemble the team that Ron Hextall has in mind for next season.

But the Flyers should, once again, expect to spend much of the next year right on the edge of the cap ceiling. Perhaps next offseason — one in which the team currently doesn’t really have any big names due up for extensions as of yet, while it looks like it will drop the cap hits of Valtteri Filppula and Matt Read among others — is one in which the Flyers may have a bit of breathing room to maneuver. For now, though, if you were hoping if this is the year where the Flyers finally have some significant room to operate under the salary cap, you’re going to be waiting a bit longer.