Justin Schultz and the Edmonton Oilers’ second buyout window

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It’s been clear for a while now that the Edmonton Oilers have too many poor defencemen signed to NHL contracts, but what hasn’t been clear is how the team planned to thin the herd. On Monday we seemed to get an answer.

There’s a lot of confusion about whether taking Schultz to arbitration would open up a buyout window, and some of that confusion is my fault. On Saturday, I wrote that it was my understanding that the Oilers would need two cases to open up the buyout window. Reading through the CBA again, they may actually only need one.

The CBA Stuff

Scott, Bill

My understanding was based on paragraph 11.18 of the CBA:

11.18 Ordinary Course Buy-Outs Outside the Regular Period. Clubs shall have the right to exercise Ordinary Course Buy-Outs outside the regular period for Ordinary Course Buy-Outs in accordance with Paragraph 13(c)(ii) of the SPC. Each Club shall be limited to no more than three (3) such Buy-Outs outside the regular period over the term of this Agreement pursuant to Paragraph 13 of the SPC. However, in the event that a Club has only one salary arbitration hearing pursuant to Section 12.3(a) in a given League Year, such Club shall not be entitled to exercise such an Ordinary Course Buy-Out outside the regular period. Moreover, a Club shall not be entitled to exercise an Ordinary Course Buy-Out outside the regular period for: (i) any Player who was not on the Club’s Reserve List as of the most recent Trade Deadline, or (ii) any Player with an Averaged Amount less than $2,750,000. The dollar amount of $2,750,000 set forth in this Section 11.18 shall be increased on an annual basis at the same percentage rate of annual increase as the Average League Salary, with the first such increase occurring based upon a comparison of the 2014/15 Average League Salary to the 2013/14 Average League Salary.

(emphasis mine)

The bolded section of the text clearly indicates that the Oilers would need multiple 12.3(a) salary arbitrations to trigger a buyout window. The 12.3(a) arbitration is the one we’re familiar with – where a team takes an overpaid player to arbitration in order to get his salary reduced. That’s why it makes sense that a team would need multiple hearings to trigger a buyout window, because the second buyout window is designed to help teams get out of cap trouble and a 12.3(a) arbitration has the same purpose, likely resulting in a reduced salary. So there’s no need for a buyout to clear money after a 12.3(a) hearing.

However, there’s a second kind of club-elected arbitration: 12.3(b).

12.3(b) Club-Elected Salary Arbitration For Players Who Receive Qualifying Offers.
(i) If a Group 2 Restricted Free Agent has not accepted his Club’s Qualifying Offer, nor filed a request for Player-elected salary arbitration in accordance with Section 12.2 above, the Club may elect to file for salary arbitration to determine that Player’s Paragraph 1 Salary for that League
(ii) If a Club elects salary arbitration in accordance with this subsection, the Club’s offer in salary arbitration must be equal to or higher than the Player’s aggregate Paragraph 1 Salary plus Signing, Reporting and Roster Bonuses in the final League Year of the Player’s SPC.

This is arbitration designed to prevent holdouts. Unlike 12.3(a) there’s no possibility of reduction in salary here; an offer to a player must be at least equal to his total compensation in the previous season. That means there’s no chance of the team saving money, which is why (if I’m reading the CBA correctly) it only takes one arbitration of this kind to open up a buyout window.

TL;DR Summary: There are two kinds of club-elected arbitration: 12.3(a) and 12.3(b). 12.3(a) allows a team to get a player’s salary reduced, but there need to be multiple arbitrations of this kind to trigger a buyout window. 12.3(b) doesn’t allow for salary reduction, but does trigger a buyout window. My guess is that the Oilers have opted for 12.3(b) with Schultz. Finally, as always, I am not a lawyer.

Schultz & The Buyout

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If I’m right that it’s a 12.3(b) arbitration hearing, the annoying thing about all this is that it means Justin Schultz will continue to be overpaid. He didn’t deliver value on the $3.675 million he was paid last year, and he’s going to get at least as much money this time around.

But it should open up a buyout window.

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It’s been generally assumed that Nikita Nikitin would be the buyout candidate. He has one year left on his deal at a $4.5 million cap hit, which would mean the Oilers would be on the hook for $1.5 million in each of 2015-16 and 2016-17 if they were to buy him out. But the more I look at it, the more I wonder if Andrew Ference isn’t a preferable buyout candidate.

Ference has two years left on his deal, and because the salary varies over the course of the contract the buyout math is a little bit complicated. I calculated it back in February using the CBA’s examples as a reference point and ended up with a buyout cap hit of $0.67 million in 2015-16 and then $1.17 million in each of the three seasons following that.

If the Oilers buyout Nikitin, it means they have Ference taking up a roster spot and a big chunk of cap space for two more years, followed by nothing. If they buyout Ference, it means they have Nikitin taking up a roster spot and a big chunk of cap space for one year, followed by three seasons of modest cap hits related to Ference’s deal.

I don’t think it’s at all clear that Ference is the superior player to Nikitin at this point in time. Nikitin gets better results on the penalty kill, can fill-in on the power play and historically has been much better playing his off-side than Ference. He’s bigger, younger, and has a better chance of bouncing back this season with good health. He may even have some trade value at the deadline, and unlike Ference does not own a no-trade clause.

Nikitin’s more versatile, and more importantly his contract is done and gone at the end of 2015-16, meaning the Oilers won’t have to go through this whole process again next year when they try to dump Ference’s deal.

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One can make a case either way, but I’d be sorely tempted to buyout two years of Ference rather than one year of Nikitin.

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  • Joy S. Lee

    The buyout is just more of an option for the Oilers, a just-in-case, break glass scenario but I doubt they will exercise it. The question is how do you buyout a dman such as Schultz after choosing the Oilers from all the other teams after leaving college and not signing with Anaheim. After all, the Oilers never did provide him with a vet dman that can mentor him. Just like the other young guns forwards, they were left to fend for themselves with nary an experienced vet as a mentor. Now we learn a little too late that this type of situation hampers development.