Follow Leafschatter on Twitter

Friday, September 17, 2010

How New Jersey Can Use Bonus Deferrals and Toronto To Fix Its Cap Problem

Do the Devils Have Enough Cap Space
Next Season to Renew Parise's Contract
New Jersey has two BIG cap problems.  First, they are over this years cap by approx $3 mil while needing to fill two more roster spots.  This makes the cap gap $4 mil if you assume they fill the last two spots at the $500k minimum salary. 

They also have a cap issue for next year.  They have approx $10.1 left in next year's cap with ten roster spots to fill.  Zach Parise is an RFA at the end of this year.  His salary for this season is $5 mil with a contract structure giving a $3.1 mil cap hit.

You can expect his new contract to create at least a $5.5 mil cap hit.  Thus, $4.6 mil in cap space with nine spots to fill.  The $4.6 mil space shrinks if New Jersey finds a way to maximize this season's bonus deferrals to address this year's cap problem.  A team can defer bonuses to next year's cap up to 7.5% of the current year's cap.  With its present contracts, New Jersey only has $750k of the allowable $4.455 mil bonuses available to defer.

Reports/rumours had Lou Lamoriello trying to trade Bryce Salvador (age 34 - two years remaining at $2.9 mil); Dainius Zubrus (age 32 - three years remaining at $3.4 mil); Brian Rolston (age 37 - two years remaining at $5 mil); and Jamie Langenbruner (age 35 - one year remaining at $2.8 mil) without success.  It has been suggested he believes other managers are not showing interest in these players as a way of punishing him for the Kovalchuk deal. 

He has even intimated/threatened that he will simply demote Zubrus and Salvador to the minors if he can't trade them implying money is not a concern.
Frankly, if this is the case, he should do it so he can solve this year's cap problem and have the cap space to resign Zach Parise without creating another cap problem next year.  Plus, he will have money left over to deal with Jamie Langenbruner and Jason Arnott when they become free agents at the end of the season.

However, reports of no initial contract discussions with Zach Parise give you a real reason to believe this option is not available to Lamoriello.  Furthermore, reports/rumours now have him quietly shopping around Travis Zajac (age 25 - three years remaining with $3,887,500 cap hit with salaries of $3.5/$4.5/$4.8 mil).
It seems like money may afterall be an issue for New Jersey.  Most managers can deal with a cap problem by sending a one way contract to the minors if it is in its final year and within $1 mil.  However, if it is a multi-million dollar contract with multiple years remaining, it better be a contract done by a previous manager such as the case with Jeff Finger or Cristobal Huet.  Otherwise, you have some explaining to do to the team's owner.  You will have to give your rational as to why you overpaid a player so greatly that no other team will take him from you.  This is not good for job security and best be avoided.

Looking at Kovalchuk's contract, you can tell New Jersey is carefully managing its budget.  At its peak, his salary is in the $11 to $11.8 mil range.  However, his salary is only $6 mil in the first two years before going up to $11 mil in the third year.  Coincidentally, Brian Rolston has two years remaining on his contract at $5 mil per year.  It almost makes you think New Jersey convinced Ilya to subsidize Rolston's salary.  If money wasn't a big issue, Ilya would be making $11 mil a year out of the gate.

So, trading marketable players such as Travis Zajac, Zach Parise, David Clarkson, and Jamie Langenbruner for your young high ceiling players who have contracts heavily loaded with bonuses may be Lou's only option of reducing the cap without putting (his) bad contracts in the minors.  You can call me crazy for including Zach Parise in this list.  However, if New Jersey maximizes its bonus deferrals, they won't have the cap space next year to sign Parise.  In fact, they will need to heavily utilize the bonus deferrals a second time.  By the way, a nice by-product of using the bonus

Brian Burke has prepared his team for this opportunity.  He has three players in particular:

  • Tyler Bozak - $3.725 mil cap hit - $2.85 mil bonus - $875k salary - one year

  • Luke Schenn - $2.975 mil cap hit - $2.1 mil bonus - $875k salary - one year

  • Nazim Kadri - $1.72 mil cap hit - $850k bonus - $870 salary - three years
To illustrate ane example, you can have a trade where Travis Zajac and Tyler Bozak are the two principals.  This would give New Jersey a cap savings (and salary) of $3.012 mil.  Of course, Zajac is the best player in the deal.  He is being called New Jersey's first line centre.  Myself, I would think that job goes to Zach Parise.  Not withstanding, Toronto would have to add some sweeteners to make help New Jersey save face.  If this is accomplished, New Jersey can shop Jamie Langenbruner for fair value to address the remaining cap gap of about $1 mil.  However, this solution only digs a deeper hole when it comes to the problem of resigning Zach Parise.

If New Jersey reaches the conclusion they simply won't have cap space next year to resign Zach Parise, then trading him becomes inevitable.  In other words, trading Zach Parise for high ceiling prospects like Luke Schenn and Nazim Kadri becomes viable.  Like the Travis Zajac scenario, you can address the remaining cap gap by trading/demoting one of the defencemen making under $800k and trading Jamie Langenbruner.  Perhaps, New Jersey gets Toronto to take one of their under $1 mil one-way contract defencemen as part of the trade.
In these scenarios, I assume Brian Burke will have to include additional top prospects and/or high draft picks to even it out for New Jersey since he is receiving the best player.  I will leave that speculation to you.  Never the less, the principals identified in both scenarios do address this year's cap problem for New Jersey and interest Toronto more than enough to part with their top prospects.  Remember, Toronto does not need to make a deal and New Jersey must do something to fix its cap problems of both this year and next year.

I do not envy Lou Lamoriello's situation.  It is almost comparable to Chicago's cap problem.


  1. Update to story. Training camp opens with Kovalchuk on a line with Parise and Zajac.
    This gives you a real reason to believe Devils will demote bad contracts to the minors instead of trading marketable players. Frankly, this is the best route to go if the owner doesn't mind spending the money.

    Players can be demoted starting on the 25th of September when the waiver period begins.

  2. This is a really strong piece. While I don't think it's likely that we'll seea player of Zajac's calibre move out of NJ (because Lou has buried players before), I had never considered bonus deferrals as a way around cap issues.

    Kudos on putting these ideas together.

  3. Thank you for the kind words. I also agree this scenario is unlikely (although not unthinkable) to happen. If I was Lamoriello, I would send Salvador and Zubrus to the minors. By the way, who has he buried in the past. Now that you have mentioned it, I faintly recall this happening once. Irredgardless, we never know what the owner will say.

    Also, Schenn, Bozak, and Kadri can still be used as trade bait right for teams with cap problems right up until the trade deadline.

    I doubt, at this point, Burke will take back bad contracts under any circumstances. His cap situation will be almost completely clean by the end of the year.

    I believe his attitude will be "you have to give to get"...good young prospects with contracts that allow you to leverage bonus deferrals

  4. Need to look into how to setup Disquss for comments. Many of my entries require post script editing which is available with Disquss.

  5. He buried Mogilny and one other player (McGillis maybe?) and he traded Makarov and first rounder to the Sharks to gain cap relief as well. He has an uncanny way of maneuvring around the cap.

  6. Yes...I see your point about how uncanny he can be. By the way, the latest rumour has him sending Dainius Zubrus and a first round draft pick to Toronto. Probably, for someone such as Darryl Boyce. Interesting trade if it happens. Forces a decision on Kadri.

  7. First round picks are in short supply in NJ.

    They traded away Bergfors (former first rounder), last year's first rounder (in the Kovalchuk deal) and also lost a first rounder in one of the next 5 drafts as punishment for cap circumvention on the original Kovalchuk move.

    Given that the owner essentially brow-beat Lamoriello into making the Kovalchuk deal -- irrespective of cost -- I doubt that he'd have a problem burying a few million in the minors. Look for that to happen rather than anything that sends out futures.

  8. That would make the rumour seem less credible. On the flip side. Does Burke want a 32 year old third line centre to be his second highest paid forward? Plus, have $3.4 in cap tied up for three years. Especially after just resolving this type of issue by trading Blake to Anaheim. I can't see overpaying third liners being the path to success.

  9. Should have told Burke that before he dropped $3M a season on Colby Armstrong...

  10. What is your take on Armstrong getting $3 mil per year for three years?

  11. Curt S here is the link to your blogpost on Colby Armstrong. I am adding it in case you are too modest to add it yourself. Please feel welcome to add links to your blogposts. They are good reads.