This time of year, financial terms are bandied around regularly. Yesterday the NHL officially announced a 2016-17 salary cap ceiling of $73 million and a floor of $54 million.
With $ in the news, here are a few things on the Canes front financially:
Misconception that the Canes need to add players to reach the salary cap floor
I have seen this assertion in a few places. It is not correct. General Fanager has the Hurricanes salary cap hit at $48.3 million and needing to add $5.6 million to reach the minimum. But if you first swap in Sebastian Aho and swap out Derek Ryan, that adds $300,000. If you then budget $3.5 million for Victor Rask and $1 million for Ryan Murphy, both of whom are restricted free agents, the total jumps to $53.1 million which leaves only $900,000 to add a final forward to get to 13.
If Rask and/or Murphy come in cheaper, it could give the Canes $2 million to reach the cap floor, but it is not as if Francis needs to go on a shopping spree to reach the minimum. Whatever the Canes spend/Francis does will be dictated by internal budget much more than either salary cap boundary.
Once Canes do reach the floor, cap hit is completely irrelevant – only actual salary matters
Once the Canes do reach the floor, salary cap becomes completely irrelevant for the 2016-17 season. The team’s internal budget will be far short of the ceiling which is a full $19 million higher. The impact here is twofold. First, whenever a writer (usually from another market) starts talking about how the Hurricanes could do this or that because they have salary cap space, that is not completely true. The real $ matter. That is why I predicted a couple weeks back that Francis would swing a deal to collect a small amount of future assets in return for taking on Pavel Datsyuk’s contract. Since there would be no real salary and the Canes can easily fit the salary cap hit, it would be a no-brainer to collect something for providing this service.
In that regard, Justin Faulk’s contract is often talked about incorrectly
People often talk about Justin Faulk’s $4.8 million cap hit as being a bargain. In the totality of his contract, that is absolutely true. But that discount was fully baked into the first 2 years of his deal when he earned only $2.5 million in 2014-15 and $3.5 million in 2015-16. The discounted part of his contract has been used up. When you look forward, Justin Faulk is scheduled to earn $5.5 million for 2 years followed by $6 million for 2 years which makes for an average salary of $5.75 million. Based on some recent deals and looking at only what is left on Faulk’s contract, his average (actual) salary is $5.75 million, and he is pretty fairly paid relative to similar players.
Another way to say this is that Faulk’s deal was discounted only in 2015-16 in terms of actual salary but is discounted for the remainder of the contract in terms of salary cap hit. But again, right now, salary cap is irrelevant to the Hurricanes.
But next summer Francis could need to add players to reach the minimum
For the first time since becoming GM, Ron Francis entered the summer with a decent amount of budget to spend. In the interesting move to add Teravainen and Bickell as a package, Francis actually pushed some of that money forward. By investing a significant chunk of that money ($4.5 million) in Bryan Bickell, Francis essentially pushed that budget out to the 2017-18 season in return for adding Teravainen.
But when you look at the Canes roster, all of Ron Hainsey, James Wisniewski, Jay McClement and Bryan Bickell will come of contract. This set of players represents a significant $13.5 million in salary cap. That is a significant amount of money that Francis must somehow add back into his cost structure in short order. New contracts for RFAs Phil Di Giuseppe and Teuvo Teravainen will add some salary cap, but Francis will need to add 4 players next summer at an average cost/cap hit of $3.4 million. If the young defensemen continue to develop at the NHL level, the cost to fill mostly bottom half of the roster players could be much less than that. The result could be the need to add a higher-end player or 2 to make it to the league minimum. This changes somewhat if the Canes add a higher-end forward this summer who is under contract for next year and beyond, but there is still going to be a bunch of money freed up next summer.