Lack of buyouts only hurts the product
July 1st is coming up, the day where NHL GM’s spend their team’s money and cap space like it’s going out of style. The week before, buyouts are open to erase mistakes.
So far across the league only one buyout has been made. in this cycle, Chicago moved to cut veteran defender TJ Brodie loose. Many teams won’t utilize buyouts, the Pittsburgh Penguins being in the vast majority. It’s not because they don’t have contracts that they would rather vanish, it’s because of the terms of how the NHL works buyouts.
In this realm, hockey drifts far from the NFL. In football, players can be cut at the drop of the hat. Fringe roster players might be late for a practice or fall asleep in a team meeting and find themselves dropped from a team just like that. An injured player or aging veteran gets chopped away once their performance isn’t up to the standards or expectations a team has for them.
Too bad for them they’re not in hockey. The NHLPA boasts guaranteed contracts within their collective bargaining agreement. The only way for teams to clean out under-performing, over-paid players is this brief buyout period, even though almost none of the teams end up opting to go that direction.
That’s due to the buyout penalty cap hits that are incurred. If a NHL team wants to buyout a player then multiply the remaining base salary (excluding signing bonuses) by the buyout ratio (2/3 if the player is over 26-years old) and divide by double the contract remaining.
If all that is too much to understand, which it reasonably is, in a nutshell means signing bonuses or weighing contracts can virtually make a contract buyout proof for players. There’s just no benefit for teams to do it.
Take Ryan Graves, the poster boy for regret from a July 1st signing. That deal has become a mistake that will haunt the Penguins for years to come. His buyout summary from PuckPedia shows just how the Pens have fenced themselves in to receive no benefit from the buyout route.
On one hand, the obvious statement is this is a problem completely of the Pens’ own making. No one forced them to give out a big-money contract to Graves — and then structure it on top of that in the least favorable fashion for the team. Managers who make bad decisions receive the stupid prize from their stupid game, and that is a fitting result. Bad decisions deserve to have bad consequences, especially needless, avoidable ones like free agency signings.
The problem is, though, that the pain is too much. It does no one any good to see Graves stay in Pittsburgh for the next few seasons, aside from Graves’s bank account. If this were the NFL and a team made a bad read to bring on a player that didn’t fit, they would quickly address it, cut the player, typically take a modest cap fee and become free to move on without saddling the team with a massive burden or forcing them to keep an unwanted, lower-end performer for years to come.
Not so in the NHL. Instead of using a buyout, if Pittsburgh was really intent on dropping Graves from their roster they would be better off waiving and burying him in the AHL to gain $1.15 million in cap relief. That’s more money than they would get in three out of the first four years of the buyout. Better yet, they wouldn’t have to deal with four extra years of scarring on their salary cap as they would with a buyout.
The situation for Tristan Jarry is much the same as a July 1 signing and a contract tailored perfectly to prevent a buyout. Now Jarry is in the awkward spot of being tied to a club that otherwise wouldn’t really want him, but unless they can find a trade partner will be all but forced to keep a player on their NHL or AHL team that has played his way out of the plans.
The NHL and NHLPA are believed to be deep into negotiations to extend their CBA. It has been a healthy and strong relationship between labor and management in recent years, with the main tenet of the whole system being that the owners have to pay the players 50% of the revenue that is collected, no more and no less. This is the main reason why buyouts can’t easily be wiped away from the team’s ledger while still upholding the guaranteed nature of the player’s contracts. If the owners are paying for buyouts, it needs to come out of the 50% total that they will pay players. It’s not in their interests to pay extra and a non-starter to think otherwise.
That bottleneck creates the problem, which hurts the product to have players like Graves and Jarry tied to their clubs due to contracts. The union, understandably, isn’t going to want to bend on losing their guaranteed contracts — lest they become as disposable and vulnerable like the majority of football players. The NHL, understandably, isn’t going to offer a bigger share of the pie to erase the managerial mistakes of mis-allocating how their managers decide to divvy up the money.
There’s no perfect solution because of those two main pillars of the business of the NHL/NHLPA, but there are places to start. Limiting signing bonuses or term limits would help for how skewed a buyout could become. On the latter, it’s believed that contract length might be reduced from the current maximum of eight years (for a team’s own players) and seven years (for a player changing teams) down to seven and six years, respectively. That’s not much, but it’s a start.
Of course, the best way to solution would be from the beginning for GMs to show restraint on days like July 1 and make better decisions, but that’s never going to happen in an area where teams have to structure the contract in player favorable terms if they want to add the player. Bad contracts are a lasting reminder and serve as a punishment to the organization, and unless they can flip players in trades usually stick around.
That’s become a feature of NHL salary cap management, but it’s become too prominent across the league for under-performing drags hurting teams. Eventually, it trickles up to the NHL product as a whole when across the league it’s easy to find two or three players on just about every team that are stuck on onerous contracts. Given how the current setup is, bad contracts might not be one going away any time soon but it’s a shame that hockey teams don’t have better mechanisms to clean up their mistakes and find better outlets to shake away the problematic contracts that they make. That’s a way of the world but an inefficient area that the league ought to dedicate some brain power towards improving for their own sake.