When you pull up the Carolina Hurricanes on CapFriendly (which is my go-to site for NHL salary stuff), the team ranks dead last in the NHL for salary cap expenditures for the 2016-17 season. CapFriendly shows the Hurricanes final salary cap hit as $56.8 million which is a full $7 million below the next 2 lowest teams, and greater than $16 million below the salary cap maximum.
Outsiders or people who are not aware of the Hurricanes financial situation might thing improvement is just a matter of spending the remaining $16 million and improving a team that was reasonably close to the playoffs in 2016-17. But that is not the reality of the situation. In addition to being last in salary (expenses), the team was also last in attendance (revenue). The team has an interesting chicken and egg situation where it needs a better team to fill the arena and at the same time needs a full arena to justify spending on the players needed to improve.
Fortunately for Ron Francis and the Carolina Hurricanes, it is possible to improve and even push into the playoffs while still spending significantly below the salary cap ceiling and adhering to an internal budget. This is possible because of 2 things. First, the Hurricanes are almost completely devoid of bad contracts that inflate salary cap expenditures without a comparable increase in a team’s level of play. Second, with a number of top half of the roster players (Slavin, Pesce, Aho, Lindholm, Teravainen, and possibly Hanifin) still on either entry-level or second contracts, their role and value is significantly higher than their $1 million-ish (for the entry-level deals) or $2 million-ish (for the second contracts) salaries.
The challenge for Francis will be leveraging the bargain years to build a winner and also time expiration of some expensive contracts to match renewal times at much higher prices for the inexpensive young players mentioned above.
Against that backdrop, here is a first look at the Hurricanes’ salary financials heading into the summer of 2017.
What changes for the Hurricanes salaries?
(All numbers in actual salary not salary cap hit, since the real salary is all that matters to the Hurricanes.)
If you look at the Hurricanes salary committed for the 2016-17 opening day roster, key changes when you look forward to the 2017-18 opening day include:
Deductions for salaries lost — $9.6 million decrease
Ron Hainsey — traded — Minus $2.5 million
Jay McClement — not likely re-signed — Minus $1.1 million
Bryan Bickell — retired — Minus $4.5 million
Viktor Stalberg — traded — Minus $1.5 million
Increases for salaries gained/increased — $2.2 million increase
Increases for players already under contract — Add $600K
Teuvo Teravainen — estimated increase for new contract — Add $1.6 million
Net salary change for transactions above — $7.4 million decrease
Note: There are a bunch of other depth players who are also coming off contracts this summer, but none should significantly impact the salary math. Most are on inexpensive contracts and are likely to be re-signed or could be replaced for a comparable salary or not too much more.
What holes are created with the net $7.4 million salary decrease?
In short, surprisingly not that many. The bulk of the money saved comes from players who played limited depth roles and can be replaced for less. Ron Hainsey is the exception, but even his slot might be filled by another inexpensive young player.
So when you net it out, the Hurricanes payroll right now is actually about $7 million less than last year’s opening day lineup, but includes the following
7 top 9 forwards: Staal, Skinner, Rask, Lindholm, Stempniak, Aho, Teravainen (re-signed per above).
A good number of potential inexpensive depth forwards: Nordstrom, Nestrasil (if re-signed), Di Giuseppe (to be re-signed), McGinn (to be re-signed) and Ryan (if re-signed) plus a batch of higher-end prospects who could play a role in 2017-18.
At least 4 defensemen: Slavin, Pesce, Faulk, Hanifin.
And again a next wave of prospects: Fleury, McKeown.
2 of 2 goalies at least for now: Ward, Lack.
When you net it out, Francis would have about $7 million to add 1-2 forwards and 1-2 depth defensemen and still be right at what he committed last year to start the season. The hope, and a reasonable expectation, is that Francis’ budget will be a bit higher than it was last year.
If I was Ron Francis…
If I was Ron Francis and had the $7 million gap plus another $3-4 million, my budget goes something like this:
Priority 1: Upgrade the goalie position
If I cannot package Eddie Lack into a deal to add another goalie, I regretfully buy him out. That costs the team $1 million annually for the next 2 years, but actually frees up another $2 million for 2017-18. I then acquire the best goalie I can get in a $3-4 million (so call it $3.5 million) range via trade, expansion draft maneuvering or free agency.
Priority 2: Add one scoring difference-maker at forward
This is going to be challenging and not likely inexpensive in terms of trade value given up or salary. There could be a few good options who cost slightly less, but I budget on the higher end at $6 million.
Priority 3: Add a medium price proven defenseman
Last year, Francis tried to play an inexpensive numbers game adding 2 defensemen from the waiver (Nakladal, Dahlbeck) and a third who was a fringe AHL/NHL defenseman (Tennyson). In short, it did not work. The tea never really did settle on a solid third pairing. This summer, I think Francis will learn from last summer’s gambling/fishing expedition and make a slightly bigger investment to add a proven defenseman who is capable of solidifying a third pairing and also stepping in as a #4 defenseman if there is trouble in that slot as there was last season. The potential prices for this slot are wide, but I think an absolute ceiling is $3 million because of the other higher priorities and the target is more like $2.5 million.
When you add it up, Francis has made a single, sizable upgrade at each position, and spent about $11 million. That fills out 8 of the top 9 forwards, 5 of 6 defensemen and 2 goalies. The remaining slots should be able to be filled internally or with inexpensive free agents. If it goes down like this, the Hurricanes will start the 2017-18 season with a salary commitment that is about $3-4 million than last summer.
Interesting timing issues
The Hurricanes youth movement creates an interesting timing issue with the defenseman position. I think the goalie addition is a long-term addition, and Francis does get another try at the other in the summer of 2018 when Ward comes off contract. Similarly, I think the higher-end addition at forward is a long-term part of the roster. But on defense, the team has 4 young defensemen who hopefully (possible in 2017-18) are the top 4 and a couple more good young prospects on the way. Because of this, Francis will not want to commit many years to whoever he adds on defense. In fact, I think ideal is to add a player whose contract expires at the end of the 2017-18 season such that Francis can reassess how rapidly the youth are developing and if there is a need for veteran depth again for 2018-19 or not.
In addition Francis needs to be careful that he does not overextend himself on salary looking shortsightedly only at the 2017-18 math. In the summer of 2018 all of Slavin, Pesce and Hanifin will be due new contracts likely to far exceed their sub-$1 million entry-level deals, and Elias Lindholm will also be due for a new contract. In the summer of 2019, Aho, Fleury and McKeown will be up for new contracts. Francis might actually be able to get additional budget to play to win in 2017-18 but might also be limited to trying to find a player on a contract that ends after the 2017-18 season so that money can be redeployed.
The chicken and egg race
The other timing thing is winning and boosting revenue necessary to keep the core of the roster intact as their salaries rise. The worst possible scenario for the Hurricanes for 2017-18 is if Slavin, Pesce, Hannifin and Lindholm all have great seasons, but the team does not. That sets up a scenario whereby those players (if not re-signed early this summer) negotiate for significant raises at a time when the team’s revenue is in the doldrums. The math probably works fine if the Canes win, attendance rises and the players get more money. It is not a pleasant situation, but it maybe muddles along okay if the team fails again in 2017-18, but so do the individual players who do not earn big raises because of it. But the perfect storm of a bad team but good individual seasons for contract year players would be problematic.
What say you Canes fans?
Do you think $11 million for 3 key additions, 1 across each position, is enough to build a playoff team?
Do think I am nuts to want to add even a moderately expensive defenseman?
How much does Teravainen’s new contract cost?