Let me start this post by saying that the CBA is here (interesting part at 205-208) and I've misread it before, so I would really appreciate it if someone would check my work on this one.
I've been working on another fanpost about the offseason summer of 2009, and I decided to try to figure out what a Nylander buyout would look like. The bottom line is that the team would be crazy to buy him out this summer. (And in that next fanpost, I'll explain why the team can afford to keep him around for another year -- even if he's just a healthy scratch every night)
According to the NHL Numbers Washington Capitals page, Nylander is signed for two more years: 09/10 at 5.5M and 10/11 at 3M. His cap number (the average annual cap hit over the life of the contract) is 4.875M
Step 1: Add the two years together (8.5M) and calculate an annual average for the remaining life of the contract: 4.25M for both 09/10 and 10/11
Step 2: Multiply by 2/3. This is the total buyout price: 5.667M
Step 3: Calculate annualized buyout prices (2/3 salary) for each year: 09/10 at 3.667M, 10/11 at 2M.
Step 4: Calculate the average price of the buyout over twice the remaining length of the contract (here, the Step 2 number divided by 4): 1.417M per year through the 12/13 season
Step 5: Subtract each year's actual salary from the Step 4 number. This is the "Buyout Savings" according to the CBA: 09/10 at 4.083M, 10/11 at 1.583M.
Step 6: For the remaining life of the contract, subtract the Step 5 "savings" number from the
Step 1 annual cap hit original average annual contract value (4.875M for Nylander): 09/10 at 0.1667M 0.792M, 10/11 at 2.667M 3.292M.
The Step 6 number is the cap hit for each remaining year in the contract; the Step 4 number is the cap hit for the two following years. So the bottom line is that if he is bought out this summer, Nylander's cap hits will be:
Semin, Backstrom and Fleischmann are RFAs in the summer of 2010, and it's very likely that the salary cap drops that year, so it looks to me like the Caps would be crazy to buy Nylander out now because of that nearly 3M cap hit just when the team is trying to sign its next batch of young guns.
On the other hand, if the Caps buy Nylander out in the summer of 2010, his cap hit would be 1M for each of the 10/11 and 11/12 seasons. So the three options are:
- 1 Don't buy him out at all (cap hit: 4.875M for each of 09/10 and 10/11),
- 2 buy him out this summer (cap hits listed above), or
- 3 buy him out in the summer of 2010 (cap hits: 4.875M in 09/10, 1M in 10/11, and 1M in 11/12).
I think Option 2 is the worst of the bunch. I'm betting on Option 3.
Ed. note: an interesting addendum per Capitals Insider:
McPhee said on Breakdown Day that he "doesn't think" he's going to buy out the remaining $8.5 million on Michael Nylander's contract because it does not make financial sense. I'm hearing that the structure of Nylander's contract makes the buyout figure (and cap hit) for 2009-10 significantly higher than the $1.42 million amount that's been previously mentioned. So that's one more thing management must mull when deciding what to do with No. 92.
Bonus: Chris Clark calculation
I don't think the team should buy Chris Clark out. I think he's a very good hockey player when he's healthy -- which he hasn't been for the last two years. But folks are talking about buying him out, so here's how that would look.
Salaries: 09/10 at 2.65M, 10/11 at 2.5M. Annual cap hit, 2.633M
Step 1: 5.15M total, 2.575M per year for 09/10 and 10/11
Step 2: 3.43M
Step 3: 09/10 at 1.767M, 10/11 at 1.667M
Step 4: 0.858M per year through 12/13
Step 5: 09/10 at 1.792M, 10/11 at 1.642M
Step 6: 09/10 at
0.783M 0.842M, 10/11 at 0.933M 0.992M
11/12 at 858,333
12/13 at 858,333
Buying out Clark this summer causes, in my opinion, the same problem as buying Nylander out now. It puts the biggest burden on the 10/11season, and the 2010 offseason is the most important one for the Caps. And it stretches the payments on his contract out to 2013 -- times when the cap will probably be tighter than it is now. And you're paying someone for not playing. If Clark is going to have to be bought out, the summer of 2010 is the time, not now.