What a Theo buyout would look like

by Gould Old Days on Apr 25, 2009 8:49 AM EDT

Glad the weekend's here -- I've been meaning to do this all week...

Last month, I calculated what buyouts for Michael Nylander and Chris Clark would look like in the summers of 2009 and 2010.Here’s the same calculation for Jose Theodore:

Step 1: Theodore has one year left on his contract at 4.5 Million.

Step 2: The buyout price is 2/3 of that – 3 Million.

Step 3: The annualized buyout price is the same because there is only one year left.

Step 4: The average over twice the length of the contract is 1.5 Million.

Step 5: Subtract the Step 4 number from each year’s actual salary to determine the "Buyout Savings" – 3 Million in 09/10.

Step 6: For the remaining life of the contract, subtract the Step 5 number (3 Million) from the original average annual contract value (4.5 Million): 1.5 Million.

The Step 6 number (1.5 Million) is the cap hit for 09/10; the Step 4 number is the cap hit for 10/11 (1.5 Million). So the bottom line is that if the team buys Theodore out, the cap hit in 09/10 is 1.5 Million and the cap hit in 10/11 is 1.5 Million. If not, the cap hit in 09/10 is 4.5 Million.

As pointed out in another fanpost, 10/11 is a crucial year because Semin and Backstrom are each free agents in the summer of 2010 and because the salary cap is likely to drop. From a pure salary cap perspective, it wouldn’t be crazy to keep Theodore around as the backup in 09/10 just to keep his salary from having any effect on 10/11. But if it was my call, I’d buy him out and re-sign Brent Johnson.

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The “Savings” wouldn’t really be 3 million since you’d have to spend money on another goalie.

by Sombrero Guy on Apr 25, 2009 9:11 AM EDT reply actions

BJ makes 800K. We could resign him and still have at least 2 million in savings.

by Rob Parker on Apr 25, 2009 10:37 AM EDT up reply actions

“Savings” is a technical term in the CBA. It’s 3 Million as defined in that document.

by Gould Old Days on Apr 25, 2009 7:40 PM EDT up reply actions

From a pure salary cap perspective, it wouldn’t be crazy to keep Theodore around as the backup in 09/10 just to keep his salary from having any effect on 10/11.

From a pure salary cap standpoint, I think this is the way to go (we can discuss the on-ice stuff at another time, or here if people are into it). $1.5m of dead space in 10/11 would be a very bad thing for a team that should be contending for a Cup.

Another, undiscussed (here) option, however, is waivers. Jose does not have any sort of NMC, so he could be waived and, if not claimed on the way down, put on re-entry waivers, where a team could snag him for half of his current salary. The downside there (re-entry) is that the Caps would still take a $2.25m cap hit for 2009/10, but would be free and clear in 10/11, obviously.

So the options are pretty much:

1) Status quo – $4.5m cap hit in 2009/10
2) Buyout – $1.5m cap hit in 2009/10 and 2010/11
3) Re-entry waivers – $2.25m cap hit in 2009/10

Obviously that third option requires another team to be interested (and to that end we could add a 4th option – trade JT, in which case there’s no cap hit on him). Of the three above, though, I think I’m partial to taking a chance on #3, knowing we’re probably stuck with #1.

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by J.P. on Apr 25, 2009 9:46 AM EDT reply actions 2 recs

Agreed. No way can you buy him out with a cap reduction in the shadows. I like option #3 if it works, but that’s a really big if, unless there’s a team out there that can afford the 2.25 mil cap hit for a year that needs a vet for a backup. Too bad we’re stuck with him, because Johnson is clearly the preferred option for a backup for at least one more year, at least pre-surgery. I really feel for the guy, he was having a terrific year before he go hurt. Maybe there’s something to him not being durable enough to be a starter?

Just to be a contrarian, what happens to all this big talk if Varlamov puts up a stinker? That won’t change his status for the future, but does everyone then all of sudden say maybe he’s not really ready? Fans are fickle and quick to pull the trigger.

by gfcaps fan on Apr 25, 2009 9:54 AM EDT up reply actions

Well, that’s the “on-ice” portion of this. Expecting 55 or more starts out of the 21-year-old next year is a bit more than I’d like to rely on, frankly (especially given that there are/have been concerns about his durability). I think 35 would be great, maybe a few more, with a veteran picking up the rest, and Jose’s a fine veteran for that role.

And I agree that Option #3 is a “big if,” but it’s almost certainly more likely that a team would be interested in him at $2.25m than at $4.5m, so I threw it out there. There are definitely worse (or comparable) goalies in the League making more than $2.25m.

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by J.P. on Apr 25, 2009 10:09 AM EDT up reply actions

Varlamov is still on his entry level contract so he can be shipped to Hershey and back without a problem. Neuvith is in the same boat. I’d like to see both of them get a decent number of starts with the Caps next year and have BJ fill the rest. While we are all watching Valamov in awe, it’s easy to overlook the fact that Neuvirth is putting on his own impressive display in Hershey. Young goalies are hard to project so we should continue let both guys get playing time and carefully track the development for a couple years before having to make a decision about the goalie of the future.

by Rob Parker on Apr 25, 2009 10:41 AM EDT up reply actions

Absolutely.

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by J.P. on Apr 25, 2009 11:00 AM EDT up reply actions

Yeah, but Neuvirth is going to be in the last year of said contract, while Varlamov is in his first year of same. This changes thoughts on the organization a little bit.

While I agree that the 1/1A jobs next year should be open competition, Theodore will probably stay (barring appealing trade offer) so we can take the expiring contract space. In a wilder thought, I think both contract status and asset appeal might push Neuvirth to trade bait (for a high pick or prospect), barring a huge camp, because Holtby’s in the wings too.

On a high level, giving 60 starts to a guy who’s sort of proven and a guy who’s not, while carrying a 3rd goalie who’s coming off hip surgery, might not be the best use of assets.

If I had the wings of an eagle,
If I had the arse of a crow,
I'd fly over New York tomorrow,
And shite on those bastards below.

by Bald Pollack on Apr 25, 2009 11:12 AM EDT up reply actions

My analysis assumes Theo is gone somehow. There is no way we can resign BJ if we can’t move Theo. I don’t know what you mean by “appealing trade offer.” Is that appealing for us or another team? Theo for a 4th (or maybe even lower) is an appealing trade for me. We’ve got prospects, we need cap space. Neuvirth may be on his last year next year but he’ll be cheap to resign since he hasn’t done anything in the NHL yet. I think he makes very attractive trade bait but I wouldn’t pull the trigger just yet.

by Rob Parker on Apr 25, 2009 11:50 AM EDT up reply actions

IMO, Theo is in Nylander mode in terms of trade offers. Which is to say that there is no such thing as an unappealing offer if it involves only Theo going. I would also be okay keeping him around as the backup, I’d just rather use that money more effectively to sign Johnson and [insert player here].

by grapejoos on Apr 25, 2009 12:00 PM EDT up reply actions

I see what you’re saying, but when one considers the lack of worry the coaching staff has had to do about the back, complicating things by investing time and resources to muddle things is both confusing and (potentially) problematic.

If I had the wings of an eagle,
If I had the arse of a crow,
I'd fly over New York tomorrow,
And shite on those bastards below.

by Bald Pollack on Apr 25, 2009 12:41 PM EDT up reply actions

I hear you. I think the Caps will be fine either way as long as Theo and BB can be cool. So far Theo has handled it like a total pro so far as we can see. He can still help this team next year.

by grapejoos on Apr 25, 2009 1:03 PM EDT up reply actions

Clarification:

Neuvirth and Varlamov’s contracts are identical. Both signed a 3 year entry-level contract in the summer of 2007. Both spent the 2007-08 season playing hockey outside of NA pro hockey as teenagers (with 88 birthyears) so both contracts “slid” a year per the CBA. As a result, the cap hit per season lessened since the signing bonus impacts the extra season added due to the slide differently, but they both have the same cap hit for this season and the 2 remaining seasons after this one. Both will be RFAs in the summer of 2011 .

by sk84fun_dc on Apr 26, 2009 9:43 AM EDT up reply actions

Right. The only difference is the dollar amount, and it’s not significant for these purposes (though I could sure use a few thousand more dollars!)

by Gould Old Days on Apr 26, 2009 11:43 AM EDT up reply actions

My understanding is that the contracts are identical in terms of cap hit and salary.

original contract: 2007-08 through 2009-10: 850,000; 850,000; 850,000 (each year includes 85,000 signing bonus)

after slide: 2007-08 through 2010-11: 75,000, 850,000, 850,000, 765,000

cap hit calculation after the slide: avg: 850,000, 850,000, 765,000

equals: 821,667 cap hit for 2008-09, 2009-10, 2010-11

see CBA 9.1d and 50.5g(ii)

by sk84fun_dc on Apr 26, 2009 1:38 PM EDT up reply actions

Huh. I’ve got bad info then. I’ve got Varly getting 25K more on the average cap hit. I believe you though.

by Gould Old Days on Apr 26, 2009 8:06 PM EDT up reply actions

Oh, and rec’d for Gould for laying all of this out. Very useful.

by grapejoos on Apr 25, 2009 12:01 PM EDT reply actions

I think they’ll platoon the two and then trade Theo at the deadline. In the regular season games aren’t do or die like it is in the playoffs, Theo can relieve Varly of some workload and provide serviceable goal tending.

by Ovechwin on Apr 25, 2009 12:12 PM EDT reply actions

Trading Theo at the deadline seems to create two problems, though:

- What could the team really get for him?

- Who becomes the backup?

by David Getz on Apr 25, 2009 12:49 PM EDT up reply actions

Neuvy?
I don’t know. I haven’t spent more than a few minutes on this.

by Ovechwin on Apr 25, 2009 1:14 PM EDT up reply actions

I think the answer would be you swap him to a team with a competent veteran backup (UFA) that wants to make a playoff push, then you get said backup in return. Teams are always shuffling keepers around. Vancouver, LA, Pittsburgh, Edmonton (IIRC) – all these teams have made similar deals in the past.

Theo has handled getting bypassed by other goalies pretty well before in Colorado and Montreal, so I don’t think he’s going to rock the boat too much. We cannot go into next year with Varly as our only proven goalie though – he had a tough time playing in long stretches down in Hershey, leading to some injury problems.

My guess is that they’ll keep him for next year. I don’t think anyone is going to trade for him at this point. Waiving him saves us for next year, but creates dead cap space the following year. Much of this is going to depend on the cap number for next year. I think next year’s cap will likely stagnate or fall by around $2m, with another drop the following year. If that is indeed the case, the Caps are probably better off swallowing his cap hit next year and then cutting him loose after ’10.

by D'ohboy on Apr 25, 2009 4:22 PM EDT up reply actions

Why rush things? The way I see it our top priorities in 09-10 all have to do with the way 10-11 looks. It is a total blessing (and should be high praise for GMGM) that Theo has nothing to do with 10-11 unless we want him to. Maybe after next season he will only command the salary of a backup and we keep him (because that’s not so bad). I don’t think it will really work that way, but at least we don’t have to worry about it too much.

I know that makes Brent the odd man out, I hate that as anyone. Unfortunately I think it is the smartest choice, and the summer of 2010 will be a lot easier without him in the mix.

by Love and Osechkin on Apr 25, 2009 4:30 PM EDT reply actions

In the end I think its time to cut bait with Theo and Nyles even if you take a bit of a hit cap wise in the future. I’d rather have lower priced young guys getting a chance than pure dead wood. I think the infusion from Hershey really energized this team this season. I always think it helps an organization if young guys and vets know you are willing if need be to make changes. helps keep vets focused and motivates guys in AHL. If we didn’t have talent down in minors I’d be much more worried.

by Carl Putnam on Apr 25, 2009 7:31 PM EDT reply actions

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