Why Nylander Should Not Be Bought Out This Summer

by Gould Old Days on Mar 14, 2009 11:19 AM EDT

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:

09/10: ~~166,667~~ 791,667

10/11: ~~2,666,667~~ 3,291,667

11/12: 1,416,667

12/13: 1,416,667

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

Bottom line:

09/10 at ~~783,333~~ 841,667

10/11 at ~~933,333~~ 991,667

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.

If this FanPost is written by someone other than one of the blog's editors, the opinions expressed in it do not necessarily reflect those of this blog or SB Nation.

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Comments

Nice analysis. If I get a moment in the next couple days, I will check the CBA and run my own numbers to see if I reach the same conclusions.

Doubt they buy out Clark.

According to your numbers, the decision boils down to:

1. A $4.875M hit next year with $1M hit in ‘10-’11, or
2. A $167K hit next year with a $2.67M hit in ‘10-’11

I do think that the team’s performance in the playoffs will inform this decision to a substantial degree. If they flame out early, with the D and the PK looking bad, I rather think the team will bite the bullet and buy him out early for the purposes of bringing in a veteran D. On this list of FA’s, there are a couple of names that could help the Caps out…and if GMGM determines that an addition or two gives them a legit shot to contend for all the marbles, I expect Nylander goes, the cap savings is allocated to upgrading the D corps, and we all collectively hope for the best.

by fat_daddyo on Mar 14, 2009 12:02 PM EDT reply actions

I am surprised by the dearth of defensemen on that list

by Moonage Daydream on Mar 14, 2009 12:09 PM EDT up reply actions

Good stuff, G.O.D. (wow… nice acronym).

I hope you don’t mind, but I edited the title because the way it read before was as a statement of fact – “Nylander Will Not Be Bought Out This Summer,” which was a bit too authoritative lookin’.

Japers' Rink: Hockey blogging from the most powerful city in the world

by J.P. on Mar 14, 2009 12:23 PM EDT reply actions

Sounds good to me — I was trying to be provocative, but maybe it was over the top

by Gould Old Days on Mar 14, 2009 1:40 PM EDT up reply actions

Well done, you’ve dug deeper than myself and other to include some of the nuances that arise when the averaged amount differs from the year-to-year salary.

Quick note: Step 6 is Line 2 (Original Averaged Amount) minus Line 5 (Buyout Savings) and from my calculations results in cap hits of 795,000 next year and 3.295M the following year, which is the Semin/Backstrom RFA year. So I have to say you are still saving 1.5M over the 4.875M he was originally going to make.

The meat of your argument though, is pretty good, in that if we wait one more year we will save 3.875M in the RFA year, versus saving only 1.5M in that year. I have to say that merits consideration.

Will the playoffs this season be our guide? If we make minimal noise (i.e. 2nd round loss), then I lean towards your proposal of 2010 buyout. But if we do make noise and end up getting thisclose, I might have to ponder how that extra $4M could help this team next season. Remember, JT and his 4.5M is also off the books in that RFA year.

For the record, after listening to Chris Clark talk on CSN I’ve had a little change of heart. If the guy can get healthy, legit, I’m ok with him getting another shot to contribute. He certainly brings more intangibles than Nylander (who brings none IMO).

Lastly, I am not in the doom and gloom camp with regard to the salary cap. Some stagnation I could see, but significant cap decreases I do not see. Not with the league on the uptick and TV deals about as bad as they could be right now and with only room for improvement.

Great post.

Russian Machine Never Breaks

by macvechkin on Mar 14, 2009 12:25 PM EDT reply actions

I believe Step 6 uses the annual cap hit over the remaining life of the contract from Step 1 (4.25 M), not the annual cap hit over the entire life of the contract. If so, my numbers are right. But I admit this confused me as I read the CBA.

by Gould Old Days on Mar 14, 2009 1:43 PM EDT up reply actions

I believe they are using original averaged amount – I was looking at the examples on pp 206-207. Not that I lack confusion.

Russian Machine Never Breaks

by macvechkin on Mar 14, 2009 1:56 PM EDT up reply actions

My understanding is that it uses the cap hit from the total contract (see my comment below)

by David Getz on Mar 14, 2009 2:44 PM EDT up reply actions

Went back to the CBA and I’m now convinced this is right. Edited the post.

by Gould Old Days on Mar 14, 2009 3:01 PM EDT up reply actions

Oh, and thank you both for checking it. That’s the best part of this community — getting the input from other folks.

by Gould Old Days on Mar 14, 2009 3:09 PM EDT up reply actions

Two other things to note about Nylander:

1. His NMC expires after next season
2. His salary is “only” $3m for 2010-11 (cap hit, obviously, remains the same)

So while buying him out in the summer of 2010 is an option, so is trading him.

Japers' Rink: Hockey blogging from the most powerful city in the world

by J.P. on Mar 14, 2009 1:27 PM EDT reply actions

Would the team trading for him take a 3M cap hit or the ACV of 4.875M?

Then again, if he had indeed waived his NMC at the trade deadline, perhaps he might also do that over this summer. A guy can dream.

Russian Machine Never Breaks

by macvechkin on Mar 14, 2009 1:42 PM EDT up reply actions

I think it’s got to be 4.875 for the acquiring team. Otherwise some pretty nefarious cap shenanigans could take place. I think they take on the contract, just as if they were the Caps.

This could actually be a boon for a small market team. They can pick up a playmaking center, pay him 3 Million, and get credit for 4.875 Million over the cap floor.

by Gould Old Days on Mar 14, 2009 1:45 PM EDT up reply actions

Yeah, it’s the full cap hit, but like Gouldie says, it makes him a lot more attractive to a team to whom the salary cap either isn’t an issue or for one where the floor is.

In theory, they’d be getting a $4.875M player for nearly 40% off. Not bad. In theory.

Japers' Rink: Hockey blogging from the most powerful city in the world

by J.P. on Mar 14, 2009 2:02 PM EDT up reply actions

By ‘in theory’ I surmise that you mean in this case they would still be paying a guy $3M for $1.5M in production?

Russian Machine Never Breaks

by macvechkin on Mar 14, 2009 2:06 PM EDT up reply actions

+1
NHLscap FAQ says the cap number does not change.

Russian Machine Never Breaks

by macvechkin on Mar 14, 2009 2:03 PM EDT up reply actions

NMC Expires

This also means that he can be sent to the AHL, correct? Then Ted is still on the hook for his salary, but it doesn’t count against the cap, if I understand correctly

by renstar on Mar 14, 2009 5:32 PM EDT up reply actions 1 recs

Good point. I’m not sure how much Ted is willing to spend but it’s an option. Ted has been willing to sign our own players to keep our core together but I’m not sure he’d be keen on paying 3 mill to keep a guy in the minors. I guess it will depend on what our other options are to do with that cap space and how close it looks like we are to winning a cup. At that point we should be pretty solid cup competitors and I feel confident GMGM could find better uses for 4.875 mill. in cap space. Nylander and Giroux would tear it up in the AHL.

by Rob Parker on Mar 14, 2009 5:42 PM EDT up reply actions

Good point!

by Gould Old Days on Mar 14, 2009 6:03 PM EDT up reply actions

Excellent stuff, very Fishman-ian. Equally looking forward to the offseason post.

"Good crowd out there tonight, boys, let's really try to win this one."

by Bald Pollack on Mar 14, 2009 1:31 PM EDT reply actions

I got different numbers when I did it for Nyls:

09/10: 895,000
10/11: ~ 3.395M
11/12: 1,416,667
12/13: 1,416,667

By my math, his salary due is 09/10 is 5.5M, so the “buyout savings” is (5.5 – 1.42 = ) 4.08M, and thus the cap hit is (4.975 – 4.08 = ) .895. For 10/11 his salary is 3M, the “buyout savings” is (3.0 – 1.42 = ) 1.58M, and thus the cap hit is (4.975 – 1.58 = ) 3.395M.

If that’s the case, the argument against buying him out is even stronger.

by David Getz on Mar 14, 2009 2:39 PM EDT reply actions

Right, that’s using the original average (over his entire contract) versus just the average of the remaining life of the contract. That’s macvechkin’s post above. I’m honestly confused over which is the correct number to use.

by Gould Old Days on Mar 14, 2009 2:45 PM EDT up reply actions

Y’all are right, so I edited the post. The only difference between my analysis and DMG’s is that the Nylander average annual cap hit is 4,875,000 on NHL Numbers.

by Gould Old Days on Mar 14, 2009 3:02 PM EDT up reply actions

I think you’re right, it is 4.875/year as it stands now. Good catch.

Teamwork, man, teamwork.

by David Getz on Mar 14, 2009 3:32 PM EDT up reply actions

As fat_d mentioned though…I’d like to see where this team is at after the playoffs.

Russian Machine Never Breaks

by macvechkin on Mar 14, 2009 2:57 PM EDT up reply actions

excellent work, gouldie, you underscore how important it is for the Caps to develop their next generation of centers to partner up with our wing depth.

I have ~~btiched and moaned~~ expressed disappointment about not dealing Nyls this year, and I continue to believe that GMGM must explore the perfect fit to trade this contract for dust, if needed.

Clark, on the other hand, could very well be healed by September, and is an answer at #2 RW if healthy. He’s worth waiting on.

by bigonetimer on Mar 14, 2009 4:56 PM EDT reply actions

Old Dogs, etc

The biggest problem with Nylander seems to be one of style. The Caps are a go-go north to south team and Nylander is a east-west, west-east, big circle, small circle type of player. Backstrom will slow the game up as well but he has no hesitation to jump in holes and drive to the net, something Nyls will never ever do. If the Caps do keep him for the remaining years on his contract, then something’s got to give. Either Nylander changes his style, holds on to the puck less and distributes sooner (in other words plays Boudreau’s system) or he becomes, like so many other Swedish forwards, a defensive specialist. With the state of the economy and the expected fall in the cap ceiling, I have a hard time seeing any team picking up his contract.

by b.orr4 on Mar 14, 2009 5:09 PM EDT reply actions

I don’t see any chance of Nyls becoming a defensive specialist or changing his game. I doubt anyone will pick up his contract, at least this coming year, but I hold out hope. His NMC is done after this next season so teams may be a little more willing to pick him up since they won’t be forced to keep him if he continues to ~~suck balls~~ under perform. If Jagirl returns to the NHL next year then maybe whichever team picks him up will show some interest in Nyls based on past success. The only problem with that scenario is that so far I’ve only heard PIT and EDM mentioned with Jagirl’s return. PIT is stacked with C’s and EDM… they probably remember the reason we are stuck with this albatross in the first place.

by Rob Parker on Mar 14, 2009 5:26 PM EDT up reply actions

Now that's interesting

Very nice catch, and very true as well. By keeping Nylander in the fold we not only avoid a 3mil vs. 1mil cap hit in a crucial year, we also run the chance of him returning to form next season and turning into viable trade bait. I was in support of buying him out before I read this, but you’ve officially changed my mind.

by DC FURY on Mar 14, 2009 10:29 PM EDT reply actions