Friday’s Daily Cup of Joe looked fairly narrowly at the Hurricanes’ salary cap situation specifically for the 2017-18 season. In the discussion that followed it was pointed out that the 2017-18 situation could not be looked at in isolation because of the number of contract renewals (with certain raises) scheduled for the next few years – definitely a great point.
Consider the following salaries for the 2017-18 season — Jaccob Slavin at $792,500, Brett Pesce at $892,500, Sebastian Aho at $925,000 and Noah Hanifin also at $925,000. That makes four players all of who could play in the top half of the lineup in 2017-18 for a grand total of $3.6 million. But that incredible bargain is scheduled to expire. The defensive trio is up for new contracts next summer and Aho the following summer. All are certain to earn significant raises that must be factored into Ron Francis’ math as he builds the Hurricanes roster for the 2017-18 season and considers adding players whose contracts extend beyond it.
Today’s Daily Cup of Joe builds on Friday’s article and takes a longer look at the Hurricanes likely salary situation out 2-4 years.
At the goalie position, Scott Darling is locked in for four years but with interesting contract terms (per CapFriendly but listed as unconfirmed). CapFriendly shows Darling earning $4.75 million for the first two years of his contract, $4.1 million in year three and only $3 million in year 4. Unless bought out, Cam Ward and Eddie Lack’s contracts will both come of the books at the end of the 2017-18 season.
When one looks out past 2017-18, the total cost of this position actually has the potential to decrease especially if Scott Darling has a strong first season in Raleigh. For the sake of math, let’s assume that Francis either trades or buys out Eddie Lack. (The math is roughly the same if you want to assume Cam Ward instead.) In the more expensive case of a buy out, the Hurricanes will spend $8.85 million at the goalie position for 2017-18 ($4.75 million for Darling, $3.1 million for Ward and $1 million for Eddie Lack’s buy out). If Darling seizes the starting role and plays well, it makes it possible (with some risk) for Francis to sign more of a #2 at a lesser price for 2018-19 and beyond. A backup priced at $1.5 million plus Darling at $4.75 million in 2018-19 plus another year of Lack’s buy out of $1 million saves $1.6 million. That total jumps to $3.25 in 2019-20 and $4.35 million in 2020-21 as Darling’s actual salary decreases.
Net change going forward: Could actually save $1.6 – $4.0 million growing over time depending on what Francis does with the second goalie slot starting in 2018-19.
As noted above, the Hurricanes have inevitable price increases coming soon at this position. All of Slavin, Pesce and Hanifin will need to be re-signed for the 2018-19 season. Faulk is locked in for two more years, but his contract actually escalates from $5.5 million in 2017-18 to $6 million in the final two years of his deal.
Right now, I would peg both Slavin and Pesce at $4 million annually for their next deal based on their play in top 4 (actually top 2) roles in 2016-17. Unless one had a significant setback in 2017-18, I do not see much downside to these prices, and if one or both broke offensively, the $4 million could escalate significantly. For now, let’s assume either that Francis signs them this summer, not risking a break out offensively or that their 2017-18 seasons are similar to 2016-17 with modest scoring totals. I will stretch a little and count the duo at $4.25 million each.
Noah Hanifin is a different situation. While he did play pretty well in a top 4 role for a run of 25ish games at the end of the 2016-17 season, I would not say that he is established in that role. If he has a decent 2017-18 season, maybe logs some time in the top 4 but is still developing and a notch or two below Slavin and Pesce next summer, then I think he lines up more for a bridge deal. This might sound strange but if it does not get in the way of making the playoffs, the Hurricanes financials might benefit from only step-wise improvement from Hanifin before his second contract. If Hanifin breaks out in 2017-18, he could instantly join Slavin and Pesce in the $4 million range and even go north of $5 million if his outbreak includes a bunch of scoring. But for this math exercise, I will assume step-wise progress from Hanifin and 2-3-year bridge deal in the range of Lindholm’s second deal and also what Teravainen will get this summer. Let’s call that an even $2.5 million per year.
While I think it is possible that Francis might spend a bit more on a veteran #4/#5 this summer, I also expect such an addition to be short-term. When I look out 2-3 years, I view Slavin, Pesce, Faulk and Hanifin as being the biggest expenses and the final three slots being filled by either inexpensive veterans or rising youth (read McKeown, Fleury, Bean) still on cheap entry-level deals. Total cost for the final three slots would then be a total of only about $3 million.
Net change going forward: Compared to the 2016-17 opening day lineup that included Ron Hainsey at a middle-ish price, the escalating contracts add up to an increase of about $8 million, but that could increase by another $1-2 million if the Hurricanes decide to or need to pay a #5 defenseman at a higher rate either because someone like Haydn Fleury rises up and earns it or because the team does not have enough young, competent depth and needs to add a middle-priced veteran.
The forward position has a bunch more moving parts, but for the sake of keeping the math as simple as possible and not getting bogged down in the smaller things whose net effect is fairly small, let’s make a few assumptions. First is that the Hurricanes will stock the bottom 3-4 roster spots with $1 million-ish or less players which is reasonable for those slots. Veteran depth forwards can be had for this price, or alternatively slots can be filled by young players on entry-level contracts. Second is that the Hurricanes do make one big (and expensive) addition this summer.
The forward position has a mix of players locked in with a few others scheduled for bigger salaries in the future. Jordan Staal is set to make $6 million annually through 2022-23, and Jeff Skinner is locked in for two more years at $6 million per year. Obviously Skinner’s next deal could impact things but especially since his salary is fairly high already, let’s just use that for rough math.
Then there are a few younger players whose next contract is a bit like Hanifin’s in that there is a wide range of potential salaries depending on their play over the next few years. Lindholm is scheduled to make $2.9 million in 2017-18 in the last year before his contract expires. I expect Teravainen’s next contract (factored in the math for 2017-18 on Friday) will be in a similar range but probably a tiny bit lower. Lee Stempniak, if not lost to the expansion draft, makes $2.5 million for 2017-18, and then his contract expires.
To provide an idea of one path financially, let’s assume that Lindholm has a good but not spectacular 2017-18 season and earns a raise that puts him in the Slavin/Pesce/Rask range at $4 million annually. Let’s assume that Teravainen’s next deal is a 2-3-year bridge deal, so we can put him in the Hanifin price range at $2.5 million yearly. And let’s assume that a few of the Hurricanes’ promising forward prospects mature as hoped and that one of them still on an entry-level deal can take Stempniak’s slot to save some budget.
Let’s also assume that Francis finds a deal he likes and executes on his desire to add a scoring top 6 forward, ideally a center, to the mix this summer. That adds another $6 million instantly though there are some options that could see this addition on a 2-year commitment with the possibility that the slot is then filled by a rising prospect in two years which would be at a much lower price. But for now, let’s assume the maximum that Francis does add a top 6 player this summer and it is at a maximum type price of $6 million and that this player becomes part of the core long-term.
That leaves Sebastian Aho. His 2016-17 season with 49 points actually slots roughly into the Slavin/Pesce/Rask/Lindholm (if added) tier at $4 million annually, but I am in the large camp of people that thinks he is destined for much more in the two years remaining on his entry-level contract. Let’s assume he breaks out offensively over the next two seasons and climbs into the Skinner/Staal range for his second contract at $6 million per year.
Finally, as noted above, without getting bogged down on who exactly it is, let’s assume that the #9-#13 forward slots can be filled at an average of $1 million per slot (slightly higher-end depth veterans might cost a bit more but a couple entry-level players at $700,000-800,000 would average things out) with either inexpensive depth veterans or prospects on entry-level deals.
Net change going forward: When you add up all of the increases noted above and then offset them against some savings of players coming off more expensive contracts (Bickell at $4.5 million and McClement at $1.2 million), the total increase is about $7.5 million compared to the opening day roster for the 2016-17 season.
The Hurricanes also save $1 million after the the 2017-18 season when James Wisniewski’s buyout ends. Alexander Semin’s buyout that costs $2.3 million annually runs through 2o20-21 will eventually free up another chunk of money but unfortunately not in the 2-4 year time horizon of this exercise.
Adding it all up
If you take my assumptions and add it all up, the Hurricanes are looking at a salary increase of about $12.5 million compared to the start of the 2016-17 season. That yields total salary expenditures of about $67 million. The salary cap for 2016-17 was an even $73 million. Estimates are for a flat or tiny increase for 2017-18, and it is reasonable to expect similar for the next few years. If that proves close to accurate, the Hurricanes at $67 million would be basically at the mipoint of an estimated $56 million salary cap floor and a $76 million salary cap ceiling.
Though things could go different directions with individual players, I think different situations could actually pull different directions to make a $65-70 million salary reasonable. For example, if a few of players like Slavin, Pesce, Hanifin, Lindholm, Teravainen and Aho rise up and become $6 million players, the salary increases might be partially offset by veterans like Stempniak, the big top 6 forward addition or even someone like Skinner or Faulk not being re-signed if there is enough depth below to fill holes. And if the Hurricanes get to a point where they have 4-5 elite forward and 4 elite defenseman, the possibility of filling more of the other roster slots with inexpensive but talented rookies increases. That is exactly what Pittsburgh is doing right now with players like Sheary, Rust and Guentzel. If on the other hand, most of the younger Hurricanes players do not rise up, their next contracts could be less but Francis might also need to spend more adding veteran help from outside of the organization. The push and pull combined could make the next step up to $65-70 million a range that can build a competitive team and also a range that can be maintained even as individual player circumstances change.
What say you Caniacs?
Who can find a math error?
If things go reasonably well with players improving and Francis continuing to stock future help in the form of a deep prospect pool, do you think $65-70 million is enough to build a consistently competitive team despite leaving about $8 million on the table compared to the cap ceiling teams?
Which player(s) from the group of Slavin, Pesce, Hanifin, Lindholm, Aho and Teravainen do you see having the greatest potential to break my $4 million / $6 million math by becoming stars who command and get much more?