Make Way For Contract Extensions, Ya Sumbitch!

Created 3 years 24 days ago
by Michael DeNicola

Tags: RJ Umberger Ron Hextall Vincent Lecavalier
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Views: 2969

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by Michael DeNicola


Tuesday, November 18th, 2014 --



Since Hextall took over as the Flyers' general manager, I have noticed that a majority of Flyers fans can be categorized in one of these two groups:

  • This fan understands the financial shitshow our prior GM got us into, and have completely accepted the fact that Hextall will need a good amount of time to right the ship. This fan understands that there's zero room for additions, and this fan understands how virtually impossible it is to move bloated contracts that we're committed to. In short, this fan has adopted patience and is looking forward to watching our prospects crack the roster in years ahead. 
  • This fan ignores everything mentioned above. This fan's fist is clenched so tight that their knuckles are whiter than the GOP. This fan couldn't give a damn what the financial circumstances are, or the fact that operations is under new management. This fan wants wins, and they want wins today. Their biggest argument fluctuates everywhere from "WE'RE WASTING GIROUX'S PRIME YEARS!" to "WE'VE WAITED LONG ENOUGH! FIRE SNYDER!"

It's spelled "Snider" by the way, you unappreciative douchebags. 


Nevertheless, from what I have observed, those are the two popular groups. Of course there are blends of each: For example, I understand the financial dilemma this team is in today and how it'll remain a headache for five more seasons; but I am also aggravated at the fact that Giroux's prime years aren't being maximized. I'm aggravated that management is struggling to strengthen his peripheral tools because of Holmgren's regime burying us in mud holes. 



What bothers me the most are the deep-rooted liabilities we're contractually committed to. Primarily the terms belonging to RJ Umberger and Vincent Lecavalier. 


Now, I am still a fan of the Umberger-Hartnell trade. I know why a trade of that nature had to be done: given the market, the salary cap environment, certain clauses preventing contractual movement, and the long-term reasoning.


My friend Shawn Reznik from The Hockey Writers put it this way in his article -- 


Fact of the matter is the Umberger/Hartnell trade wasn't about the performance of both players. It never was. It never will be. Scott Hartnell is the better offensive player. His numbers speak for themselves. It was about being able to build for the future. Hextall is aiming to ice a Stanley Cup contender over the coming years and it started with the Umberger trade.



It was about being able to build for the future.


Some naysayers might question how trading a 20+ goal scorer for the likes of RJ Umberger is any form of forward thinking. I revert back to Shawn's explanation --


The difference between RJ Umberger's contract and Scott Hartnell's (monetarily speaking) isn’t much different. Umberger is a modest $175k less than Hartnell’s, but the major difference is Umberger’s ends two years earlier. 


That’s two years earlier that the Flyers will be able to use money to fill a glaring hole in the lineup (#1 defenseman or 1st line LW). That’s two years earlier that the Flyers don’t have to shuffle lines every game to find a perfect fit. That’s two years earlier that the Flyers can start competing for a playoff spot.



Umberger's contract is good value, specific to us, from a flexibility standpoint. But there's an issue here... Jakub Voracek, Michael Raffl, Brayden Schenn and Sean Couturier are all due contract extensions before the 2016-17 season. Umberger's final year is 2017-18, so his $4.5 million AAV sticks around while Hextall tries to fit extensions on payroll.


As it stands today, the Flyers have ten players under contract and ~$24M in cap space by July 1, 2016 (minus the four skaters mentioned, of course). To complete a 23 man roster, the remaining thirteen spots will average $1.85 million per player. When you add Voracek's extension, Couturier's extension, Schenn's extension and Raffl's extension, that 1.85 gets even smaller. A lot smaller.


So something has to give...


The easy answer is trade. Yes, I'd love to trade both Umberger and Lecavalier, but it'd be difficult.

Umberger's AAV is huge compared to what he brings to the Club. And what's worse is, his salary money is still $4.5 million annually. That's all outta pocket, and an unjustifiable expense to most Owners. Teams are not desperate to reach the cap floor today, and I cannot imagine that changing through 2016. So, GM's won't be interested in acquiring Umberger's over-inflated term. Trading him him for League minimum is not as easy as it sounds; in a salary cap environment, it's virtually impossible.

Lecavalier's contract is anchored by a strict no-movement clause. So finding a trade partner becomes a three-way street; we must shop Lecavalier, find an interested partner, then Lecavalier would have to agree to waive his NMC to go to this 3rd party organization. All of that diminishes this as a possibility. 


Trading one or both players and retaining salary is an option, but that'll come at a cost. We'd be hit by the difference on our salary cap until the contract(s) expire. The amount is dependent on what percentage of the salary we retained. I'd expect 40 - 45%. That's a lot to chew on for three and/or four more League Years. Besides, why retain a salary percentage when you don't technically need to yet?


Like I said, we have extensions coming up, but nothing significant until 2016-17.



So, for the sake of argument, let's just say there are zero teams who are, or will be, interested in trading for either one of these two players. By 2016-17, what do we do?


Since compliance buyouts are no more, there is the option of an ordinary-course buyout. In ordinary-course buyouts, the team's NHL salary cap hit for the player is stretched over a period of twice the remaining length of the contract. [Wiki] Teams have the ability to buyout contracts at a reduced cap hit from June 15 to 30 each year. [CapGeek]


If the Flyers exercise an OCB creatively, they could wind up freeing space for extensions, ridding themselves of RJ Umberger and Vincent Lecavalier, and accomplishing all of that for a modest cost and no long-term effect.


Here's what our cap penalty would look like if we bought out RJ Umberger before his final year --


www.capgeek.com



Even though we'd be penalized on the salary cap, it's a much smaller amount than his full term is now, obviously. And the added flexibility could go a long ways for another player(s) signing.


Keeping the same theory associated with Lecavalier, the final year on his contract is 2017-18. Using an ordinary course buyout in June, 2017, would result in this salary cap scenario --



www.capgeek.com



The expense timeline would look like this...


Year 1, 2016-17:

Umberger has been bought out, saving the organization $3 million in cap space and a roster spot. The combined cost of Lecavalier's AAV and Umberger's buyout penalty is $6.1 million. Compare that to the $9.1 million status quo, and you have found value. 


Year 2, 2017-18:

Lecavalier has been bought out, saving the organization $2 million in cap space that would have otherwise been devoted to his AAV. The combined penalty cost of Lecavalier's Year 1 and Umberger's Year 2 is $4 million. Compare that to the $9.1 million status quo, and you have found value. 


Year 3, 2018-19:

Umberger's buyout penalty has expired. Lecavalier's Year 2 has begun, and rests against the salary cap as a measly $1 million hit. That saves the organization $3.5 million and one roster spot. Compare that to the $4.5 million status quo, and you have found value. 


Year 4, 2019-20:

There are no remnants of Vincent Lecavalier or RJ Umberger anywhere. Life is good. Party naked. 



These are only ideas I've cooked up in my head. Who the hell knows what the salary cap's upper limit is going to look like by then -- it could go up, down or stay somewhat the same. There's speculation to support all three, which is scary. But the Flyers do have options to save cap space and lock up real value. 


Without moving Hartnell's contract for Umberger's, this short-term planning would not have been possible. Had we kept Hartnell, buying him out in June, 2016 would resort in six years of heavy penalties

  • $1.3+ million in Year 1
  • $1.6+ million in Year 2
  • $3.1+ million in Year 3
  • $1.3+ million in Year 4, 5 & 6


There's nothing we can do about the salary cap. It has been here for a decade, and it's here to stay. Unfortunately the prior regime did everything in their shortsighted power to royally fuck us through the long-haul. However, with a little creative thinking and cap manipulation, Ron Hextall has set us up for some very innovative implementation. 



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