A Shrinking Salary Cap Could Force Rangers’ Hand

Alain Vigneault (NYR)

There are a lot of things that go into a trade, especially at this point in the season as the trade deadline approaches. “Is my team a buyer or a seller?” “How much should I charge to part ways with an asset, or how much should I pay to rent that one?” “Am I a trade or two away from Stalney Cup contention?” It goes on and on. But there’s another important aspect to these deals that I would like to examine in particular: future salary cap consideration.

You see, there are a couple of factors currently in play:

1) The Canadian dollar is very weak, which means so is the economic backbone of the National Hockey League.

and

2) There exists a legitimate chance that not a single Canadian team will make the postseason. Such would be a huge loss of revenue this season, which wouldn’t help the incoming salary cap.

Both of these realities should rightfully scare NHL front offices as to an unflappable possibility: the $71.4 million salary cap ceiling may decrease for next season. And while some of the lower-payroll clubs would welcome that, as it would reduce the payroll floor which a few teams struggle to reach; it could mean sudden, impactful changes for those more accustomed to fly mere inches below the ceiling.

You know, teams like the New York Rangers.

So as potential trade rumors circulate, know that organizations are very aware of this potential downsizing, and it may lend logic to the exportation of assets in February for reasons beyond any ambitions of June.

Specifically:

– Can the Rangers afford to keep Keith Yandle?

– Can the Rangers afford to re-sign all of their Restricted Free Agents, whom are all certainly due payraises?

– Would the Rangers be forced to buyout or trade a large contract they otherwise wouldn’t want to remove?

– What low-cost prospects could we see in the Rangers lineup next season, accommodating a penny-pinch influx?

These are questions that will help navigate, and eventually explain, any and all moves at the trade deadline. If the team trades Chris Kreider or Kevin Hayes, for example, it might very will be they weren’t especially keen on parting ways with the youngster, but felt extending a contract simply wasn’t a financially possible option. Or, come June, it could mean buying out one of Dan Girardi or Marc Staal, even though the franchise has indicated nothing to the effect of identifying either defenseman as problematic nor undesirable. And for a team that certainly doesn’t use Yandle as a primary pointman in the first place, a shrinking cap for next season may merely be icing on the cake as for reasoning to sell him as a rental next month.

Let’s start somewhere with all these scattered thoughts, shall we?

What kind of payroll are the Rangers looking at moving forward into the future?

The team is going to have to make a tough decision as to its position in the deadline trade market, aside from the gloomy long-term scenarios of a shrinking cap… Is this team a few upgrades from being a Cup contender? It’s bulldoze or band-aid; either the team admits that a few rentals will not help them transform into a serious Cup threat, and they begin preparing to improve the team for 2016-17 (probably by selling assets for cap room)… or they believe an add-on or two will help them break back into the contention tier.

Which is the better course of action?

Is it worth trading a premium draft pick to rent an offensive forward like Radem Vrbata or Kris Versteeg, but then lose both the rental forward AND Yandle to free agency in July? Or would it be more optimal to keep that premium draft pick, forgo importing a rental, and additionally acquire one or two assets by renting OUT Yandle to another club?

Let’s take a look at the team’s current contract situation for when July 1st comes around:

So, as is, that’s 13 contracts remaining on the books past July 1st. All else equal, there will be nine or ten slots which the team must fill, doubtlessly on the mind’s of Broadway as early as this February. What kind of cap space is there to maneuver through the next batch of contracts five months from now?

Take a look:

If the team can procure top-tier prospect forward Pavel Buchnevich from Russia this summer, it would be as exciting and promising as it would economical. As per the Collective Bargaining Agreement, an entry-level contract’s cap hit is limited to a maximum of $925,000 per season. A bang-for-buck opportunity like Buchnevich would be a treat for any team, but especially so for a team under potential budgetary duress.

Otherwise, the next step is predicting the cost of free agents the team may wish to re-sign if at all possible. Let’s go down the list:

Keith Yandle

Looking over Yandle’s PSAM [Player Salary Analysis Module], a wonderful application developed by Josh Khalfin; we see he makes a good case for receiving $5.75 to $6 million per year on the open market. While he may not get the minutes that Dustin Byfuglien, Matt Niskanen, or Brent Seabrook get, he’s been providing the offensive production & puck possession to warrant their type of contract. So let’s say it will cost an even $6 million per year on a long-term deal to retain Yandle’s services in a Rangers jersey going forward.

J.T. Miller

The biggest leap forward of the Rangers’ impending restricted free agents, Miller has taken a tremendous advancement in his development, now playing consistent & wholly efficient minutes in the top-two lines. In fact, in the month of January 2016 he’s played more 16+ minute games than the rest of his career combined! It will be Miller’s first year of restricted free agency where the lad has the right to salary arbitration, thus giving him significantly more leverage than last summer’s one-year, $874,000 deal.

Let’s look over some comparables over the last five years whom were in the same spot with similar seasons. All these players were forwards, drafted in the 1st round, whom signed one or two year deals after filing for salary arbitration:

Looking at the data, it would seem a one-year deal for Miller would look to be about 3.23% of the salary cap. For relativity, that would be $2,306,220 should next year’s salary cap remain the same to this season’s $71.4 million ceiling. Or, for the 3.23% figure to match up to the nominal $2,165,625, the cap would have to drop to about $67 million, which isn’t exactly unlikely. In any event, we’ll say Miller’s one-year value is an even $2.25 million, an essential crossroad between the two figures.

Kevin Hayes

Hayes has endured the dreaded “sophomore slump” in his 2nd NHL season; his points-per-game has dropped nearly 20% from his rookie campaign, despite increased icetime. The hopes of him elevating his game to compensate for the departures of Carl Hagelin & Martin St. Louis have not panned out as planned, and leaves questions about his mainstay on the roster. Like Miller, Hayes will have the right to salary arbitration for the first time in his career. His total NHL career stats are actually very similar to those of Miller’s 2015-16 season, but again, he’s demonstrated some significant regression & inconsistency this season. So let’s put his one-year value at a little less than Miller’s, say, an even $2 million.

Chris Kreider

Perhaps the most interesting of the young restricted free agents, here’s what separates Kreider:

– He’s been given time in the top-two lines virtually all season, unlike that of Hayes or Miller.

– He’s older, has more NHL games in his career, and closer to unrestricted free agency.

– Despite his struggles this season, his points-per-game production has basically been the same as his previous two seasons.

– He’s performed very well in the playoffs. In fact, Kreider is the only NHL player to have registered a game-winning-goal in each of the last four postseasons.

If he goes to arbitration, it’s an interesting question as to what he would expect to receive. His minimum qualifying offer is $2.6 million, yet he’s essentially plateaued since he signed a two-year, $2.475 million/year in 2014. Would a one-year contract now be much more than $2.6 million? Tough to say. Again, looking at the chart above of comparables, it certainly wouldn’t be shocking for an arbitrator to award Kreider a one-year judgement closer to the Marcus Johansson or Mikkel Boedker figures of roughly 5% of the cap.

5% of the current cap would be a one-year, $3.57 million figure. Or if we predict the cap to reduce to the 2014-15 amount of $69 million, it would be a $3.45 million estimate. Or, if we really think the cap is destined to plummet, then 5% of $64.3 million (the 2013-14 cap ceiling) would be $3.215 million. Whatever the case may be, let’s give an estimate more optimistic to Kreider’s camp, and tally a one-year projection at $3.25 million.

So here’s the projected picture, if we assume our figures are realisitc, and the Rangers re-sign their restricted free agents to exclusively one-year extensions after delivering Yandle the big payday:

As we can see, this would yield a grand total cap hit of $72 million tied up in 22 players. Thus you’d need the cap hit to rise over $600,000 for next season. And even then, teams usually want enough space to call up a 23rd (or even 24th) roster player in cases of the injury bug. So, barring a sizable jump in the cap, it doesn’t seem like this is a realistic picture.

As is, it would seem the Rangers are in a situation where they pretty much HAVE TO trade somebody, or else risk losing them for nothing after a (less-than-certain) playoff run.

Under the Glen Sather administration, the trade deadline has been used as the team’s personal “sign-or-be-traded” deadline as well, as with the cases of Ryan Callahan, Dan Girardi, Marc Staal & Mats Zuccarello. Will Jeff Gorton, entering his first deadline frenzy as the team’s General Manager, follow the same doctrine? If so, the cards will be on the table for Yandle to re-up or leave town.

So let’s examine some trade candidates.

Keith Yandle

Probably the most likely, given he is the lone “big name” player headed for unrestricted free agency. He will command serious leverage on the open market, and likely be the most-sought defenseman in the game behind perhaps Dustin Byfuglien. The coaching staff’s bewildering under-deployment of him also irks the serious question: “what [non-financial] reasons would Yandle possibly want to re-sign with Alain Vigneault’s Rangers when his contract is up?” All of this makes him the likeliest candidate to be traded, which would cap off a puzzling chapter of Rangers history, as they gave up so much to get him, and yet used him so sparingly when acquired.

Kevin Hayes or Chris Kreider

Underwhelming seasons this year, both players have assuredly dropped in trade value from the 2014-15 season. However, both are young enough with remaining upside to still fetch a good return on the trade market. Kreider is 29 months, and Hayes 41 months, away from unrestricted free agency. This gives teams assuredness that, despite expiring contracts in July, either player would remain in a team’s realm for future seasons, allowing plenty of time for contract negotiations should the player elevate play and become a consistently-contributing top-six forward, as both were projected to be this season. However, moving one of these players only “frees up” a fraction of the theoretical future cap space that Yandle would require in a cap-motivated trade.

Rick Nash

This is where things get interesting. Trading Nash would suggest the team is keen on keeping all of Hayes, Kreider, Miller & Yandle… and is willing to clear out the cap space to do it by ejecting Nash’s $7.8 million cap hit. Here’s the problem: Nash remains the premier offensive driver of the Rangers, even though his goals-per-game has struggled mightily this season. To rid him for cap space would be banking on major offensive contributions from youngsters like Buchnevich, Hayes, Kreider, and Miller in 2016-17.

While Nash originally had No-Move & No-Trade clauses in his original contract, it would seem he’s forfeited them once he agreed to be traded to Broadway. So, unless he re-negotiated such clauses with Sather in 2012 (which seems highly unlikely), he’s fair game to be traded anywhere. However, another potential concern for other teams is his actual salary is, in aggregate, $600,000 greater than his cap hit, suggesting the poorer teams in the league would be that much more disinterested in the aging star forward.

Tanner Glass

You wouldn’t think it possible considering the coaching staff’s propensity to keep him in lineups, but if the name of the game in clearing cap space, Glass should be an easy, albeit minor, cut. He has one year remaining on a $1.45 million cap hit as a 4th line winger. And, unlike Nash, he actually receives $450,000 less in actual salary than his cap hit next season, making him very attractive to teams like Arizona or Florida, whom use unconventional ways of affordably making it to the cap floor. However, since Glass’ spot would have to be replaced by someone with a cap hit of no less than $600,000… the maximum “theoretical” savings for 2016-17 would be no greater than $950,000. Simply put, trading Glass isn’t a standalone solution to keeping all the free agents we’ve been discussing.

Tougher Candidates

It seems extremely unlikely the Rangers will be able to keep all of Hayes, Kreider, Miller & Yandle going forward. To do so would entail a salary cap increase next season, which no front office in the league is currently banking on; or it would mean trading away a big contract like that of Nash’s. And there’s seemingly no reason to believe the front office values Nash lower than these four impending free agents.

However… there is one other option. Buyouts.

Girardi or Staal cannot be traded without the player’s express permission, as both have No-Movement Clauses in their big contracts that remain for quite some time. So if pawning one or both on another team is extremely unlikely (it is), then let’s examine the idea of a buyout.

Buyouts are done in June, where a player is basically given two-thirds their remaining salary over double the years remaining on their contract. There are specific rules for distrubution based on the player’s age, but that is the overall gist.

So, if the front office makes the official decision in February that it will buyout either Girardi and/or Staal in June, in order to procure the cap space needed to retain the free agents; could that be enough to prevent a deadline trade? Yes, it would. If Gorton is determined to “keep the band together” with Hayes, Kreider, Miller & Yandle… without trading a big contract like Nash… then buying out Girardi & Staal would be enough to do so.

In fact, there would be enough room to sign both Yandle AND Miller to long-term extensions while accommodating a shrinking cap. That is, if the team felt the tradeoff of deleting Girardi & Staal from the blueline to keep the forwards together was a worthwhile proposition. This chart assumes that Dylan McIlrath would be able to handle 2nd pair minutes, Brady Skjei would transition smoothly into the 3rd pair role, and the 6th & 7th defenseman slots would be filled with $2.15 million in free agent pick-ups.

Conclusions?

– If the team is expecting a salary cap reduction, they must know that keeping all of Hayes + Kreider + Miller + Nash + Yandle is virtually impossible. The only way the keep all of them is if A) they plan to buyout another large contract in June, or B) retain all players on the roster for a 2016 playoff run, knowing full well you’ll lose Yandle for nothing in July.

– If the team considers itself within grasp of Stanley Cup contention, it may go “all-in” once again, burning another batch of picks/prospects for a rental or two. If the team believes this is the final year of the “window” being open, it may very likely go for broke and once again double down on short-sighted movements that will result in a hangover come 2017 and beyond.

– If the team does not consider itself to be in the grasp of Cup contention, it may very well make moves more about trying to prepare for a Cup run in 2017 or 2018 than now, which could mean selling Yandle for assets. Admittedly, this would be a big deviation from the Sather-era school of thinking, as anytime the Rangers had a playoff chance come the deadline, Sather would make moves determined to equip the team for the postseason, regardless of its actual chances in the big dance.

Personally, for better or worse, I’d bet on the Rangers acquiring a rental or two once again. The team is in playoff position, and this spring represents Henrik Lundqvist’s final postseason under the age of 35. Girardi’s contract lasts until he’s 36. Staal until he’s 34. These are big contracts meant to grease the wheels in the now, and admittedly hurt later. Thus, the team making an admission of recalibration while the team sits in the playoff picture, without much ability to do much with these contracts… it seems unlikely.

And it’s not like Broadway is sitting on a treasure trove of draft picks & blooming prospects; no, most of them have been sold off in rental deals of yesteryear.

I’d expect more of the same this February.

I predict Yandle is traded for assets; if not a bundle of picks/prospects, then a roster skater more easily kept in 2016-17, even with a shrinking salary cap likely coming.

The trade deadline is February 29th. That’s only five weeks away. The Canadian Dollar is unlikely to change dramatically in that time span; but the NHL standings, as well as Yandle contract negotiations, surely can.

P.S.: Here’s a graph of the strength of the Canadian Dollar vs the American Dollar… Sleep tight, big-market teams!

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