The Cap Space Argument

St. Louis Blues v Edmonton Oilers

I’m a little surprised at the favourable reaction of many Oilers fans to the Denis Grebeshkov trade. While I didn’t think it was a brutally one-sided deal, I do know that I wouldn’t have made it in Steve Tambellini’s shoes. Because the biggest argument in favour of the trade is the cap space issue, I thought I’d spend a little time on that today.

Despite Edmonton’s struggles with the salary cap this season, it’s actually not all that difficult for them to clear cap space, even if they aren’t able to trade Sheldon Souray or Lubomir Visnovsky – either of whom would give the Oilers room (to the tune of $5.4 and $5.6 million, respectively).

Up front, Fernando Pisani and Mike Comrie are replaceable for less than the combined $3.75 million they took up this season (side point: I almost called “this season” “last season,” which I assume is the mentality of most Oilers fans). With two exceptions (Sam Gagner and Gilbert Brule), the Oilers other free agents, both restricted and unrestricted, won’t be due for much in the way of pay increases either.

Let’s assume the very worst: Steve Tambellini can’t move any of the expensive but useful players, and he’s totally incapable of moving four guys making significant dollars: Patrick O’Sullivan, Steve Staios, Robert Nilsson and Ethan Moreau. How would the Oilers clear cap space?

One word: buyouts. The incredibly helpful capgeek.com has a buyout calculator which tells us what it would cost in terms of both dollars and cap hit to buy out these players.

Because of the age of O’Sullivan and Nilsson, it’s easier to buy them out than it is Steve Staios and Ethan Moreau. In fact, by spending a little over $1.5 million, Daryl Katz could nix both of those contracts. Instead of a nearly $5.0 million cap hit between the two of them, the Oilers would now have a total cap hit of around $0.8 million for the next two years, just like that.

Things are less rosy with Moreau and Staios, but given that at their current level of play they can be replaced with dirt cheap players they still deserve some consideration. For a total cash outlay of roughly $2.8 million, the Oilers could buyout those contracts. Instead of a combined $4.7 million cap hit between the two of them, the Oilers would have a $2.0 million cap hit next season, and a $1.4 million hit in 2011-12. Personally, I think a better move would simply be to dispatch Staios to the minors – the cash outlay is a little less ($2.7 million), the cap savings for next season would be the same, and there would be now pesky 2011-12 cap hit to worry about.

So let’s assume that Tambellini has been given the green light (as both Katz and Tambellini have indicated) to spend about $4.0 million, and he follows the course laid out above (buyout Nilsson, O’Sullivan, demote Staios, let Comrie and Pisani walk). That course of action would clear more than $10 million in cap room.

To make a long story short, I don’t think that clearing cap space is a huge issue for the Oilers. In the worst case scenario, the team can clear $10 million with minimal effort, and it goes without saying that with a few deals Tambellini can improve that significantly.

  • OB1 Team Yakopov - F.S.T.N.F

    The Oil's cap problem was not as dire as you pointed out. stauffer had listed the same options as you for clearing cap room during the off season on his show.

    That said, I recall many listeners were extremely excited when Katz bought the team a couple of seasons ago, because now we had an owner who could afford and wasn't afraid to spend to the cap. I thought then and been proven right now that this is a stupid idea.

    Why would any team want to spend to the cap? It only limits options during the season if the team sucks. Since this season is a write off, cap issues are less of a factor than next season. Still, it's nice to have a larger buffer room to allow for more strategic spending during the off season.

  • Hey, Robin or Jason,

    I'm out on Vancouver Island and I have been hearing some rumblings that Khabuhlin's injury may be career ending. First off is there any truth to this?? And secondly if this was the case how would his contract work? Would it simply be dropped or would we still be on the hook for some of his salary??

    This might be a ridiculous question but I was just curious..

    Thanks,

    • Jason Gregor

      Haven't heard it is career threatening, although there is some concern how he will recover.

      If he is hurt and they keep him on LTIR then they could get some cap relief, but if he actually retires, they are on the hook for his salary. So I don't see that happening.

  • @ beevbo:

    I'm not sure why I'm responding, since your claim is both true and faulty logic (while it's true that I don't have a business degree, Garth Snow does and he's used buyouts).

    18 of 30 NHL teams currently have buyouts against their cap hit. Another two have lost players on re-entry waivers, meaning that two-thirds of the league is paying players not to play for them.

    • Jason Gregor

      Fair enough, I don't doubt there are many teams in the league paying for players who no longer play for them, but I highly doubt any GM considers it a sound strategy.

      Obviously moving salary is a better option than paying it out, we both know that. If I understand your argument correctly you would have bought out O'Sullivan, Nilsson, Moreau and Staios before considering a dump of Grebeshkov's salary for a 2nd round pick.

      In the context of where we're at in the season, this argument makes very little sense. Moreau is mostly gone, I think that's fair to say, and Staios could very well go as well. If Tamby manages to trade both for picks then they've cleared close to 8 million (assuming I've done my math right) of cap space without costing Katz a dime.

      If I'm Katz, that makes me much happier than paying for players who aren't here.

      Will Tamby trade his struggling vets without eating some salary? Maybe? Probably not? But at this point in the season it's worth a shot. If he's got to by players out in the summer, then he'll have those savings plus the savings earned from the Grebeshkov trade. To my mind that puts the organization further ahead.

  • Jason Gregor

    Believe it or not, this article wasn't a shot at you, Jason, and you were far from the only one advocating cap space as the primary reason for the deal – hell, the poll on the right says it and it's getting bounced around message boards and comment sections all over the internet. Thus I wanted to frame the debate – that this deal should be evaluated on it's own merits because cap space won't be that hard for the Oilers to free up, if they want to.

    Jonathon, I find it interesting that think my response was a shot. I asked you a question. Are you the only who can question others articles or comments?

    You still haven't explained to me why you think keeping Grebeshkov is better than a 2nd. Do you think he is worth his salary moving forward? If this team is going to rebuild, which they are, I don't see how Grebeshkov is a good piece. I don't value him any higher than what they got. Because you see it the other way is fine, and I didn't take it as a shot. I asked you to explain why, rather than just comparing other defensemen.

    The fact is those teams can walk away from Sutton, etc…The Predators can, but if they do keep him it will cost them $3.125 compared to Sutton, who will get less on the open market than the current $2.3 cap hit he makes.

    We saw it last summer when many veteran UFA guys took big discounts to stay, which is why I think the Islanders got Sutton for a 2nd, because Ottawa could re-sign him for much less than what Nashville will have to pay Grebeshkov. That is part of it.

  • Bryzarro World

    Ya and now we have an extra 3.5 mil+ next year on top of the 10mil you say we can save. He isn't worth that much. Neither is Gilbert at the moment but we are into him long term.

    The Oilers have too many players that are of the same type and have to move some of them. Just sounds like you have a little man crush on Grebs. How long would you keep him around at the dollars he is making?

  • Jason Gregor

    It is hard for me to comprehend that O'Sullivan would be hard to trade. The guy has to have some value. And Nilsson with his pedigree. Both guys have performed in the past. They might not garner the best return but anything in the form of throwaway draft picks or expiring contracts would be worth it.

  • Jason Gregor

    In the context of where we're at in the season, this argument makes very little sense. Moreau is mostly gone, I think that's fair to say, and Staios could very well go as well. If Tamby manages to trade both for picks then they've cleared close to 8 million (assuming I've done my math right) of cap space without costing Katz a dime.

    It takes a business degree to realize that it's preferable to trade guys for nothing than buy them out? I'd think such a proposition is so obvious it doesn't need to be stated.

  • @ Jason Gregor:

    I didn't take your comment as a shot, I just wanted it clear that this article wasn't a shot at you.

    As for why Denis Grebeshkov is better than a second-round pick, it's because of a few different things:

    a) I think he's more the 2008-09 player than the 2009-10 player

    b) There's roughly a 10% chance that the 2nd round pick turns into something useful, while Grebeshkov is something useful

    c) Everything Grebeshkov's said to the press made it seem like he liked Edmonton and was committed to the NHL

    d) Even if the 2010 pick does turn out, how long before it's a difference making player? Five years? Do you think the team will still be rebuilding in five years?

    e) The players for picks trade is only one I'd make when the player forces it or the player is of marginal use to the team (I tend to think draft picks are overvalued). I don't see either of those scenarios here.

    f) Denis Grebeshkov's offence last year came despite minimal power play time; at even-strength he outscored some pretty good players. With first unit time, it's reasonable to say he could improve on that.

    Just my thoughts. There's a lot that enters into it, and I've always rated Grebeshkov higher than most.

    • Jason Gregor

      The players for picks trade is only one I'd make when the player forces it or the player is of marginal use to the team (I tend to think draft picks are overvalued). I don't see either of those scenarios here.

      Curious how you expect the Oilers to re-build if you think draft picks are over-rated? Drafting is the only way to develop top-end players. Unless you mean most picks outside of the first round are over-rated.

      Which has some merit, but would also then back up why the Oilers couldn't get a first-rounder for 37.

      Yes, Grebeshkov has value, but they had to choose between him and Gilbert. I don't think this team could progress with both of them.

      I think Grebeshkov could play fairly well in Nashville, because Weber and Suter will take all the tough minutes. And if they split them up, then Grebeshkov might play with one of them, and they will make him better.

      We'll see how it pans out, but clearly we look at Grebeshkov differently.

      • Ogden Brother Jr. - Team Strudwick for coach

        Considering where we sit with our own prospects is it not better to try acquire prospects instead of picks that are going to take 4 years to start showing dividends?

        I guess the question is what do you think the Oilers actually intend on doing? 1-2 year rebuild or suck for 4+ year rebuild. If you sugges the 4+ then fine take the picks, but I just don't see this team taking a long-term rebuild.

    • Unless my memory is failing me I am fairly certain you have repeatedly mentioned the fact that the one thing Oiler's management is good at is evaluating defensemen.

      Is it not well within the range of possibilities that they have simple decided Grebeshkov is not a good enough player to merit the money he will receive and took what they could?

  • Pajamah

    It really comes down to what you think of Grebs, I think he is a soft player on a soft team. At $3mil plus he might be a player you simply choose not to qualify.

  • Max Powers - Team HME Evans

    So the oil could end up saving 10m$ in cap hit with your scenarios. What are they going to spend it on? All they're going to do is spend it on other players who can't make a difference. Instead of buying players contracts out and wasting money, the oil may as well spend the money on those players. I never read all the comments so sorry if I'm just re-hashing an already debated subject.

  • oilerdiehard

    I was sad to see Grebs go. I would have liked to get a little more. I am not devastated either though.

    But with that aside. When you mention the increase on RFA re-ups and the like. Do not forget potentially Eberle (hope they start him in the AHL personally, but they will probably put him straight in the show) will get 1st rounder money. Then of course if we manage to nab one of Hall or Seguin. Their cap hit will be 3 million plus, correct?