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.

RECENTLY BY JONATHAN WILLIS

  • oilerjed

    This just in……

    Vancouver Island and most of BC is completely covered in smoke due to the massive tire fire that is the Canucks organization. I can actually smell of the jerseys that have been thrown on the fire. Apparently they really liked Eddie Lack.

    Now back to your regularly scheduled programming..

    • ubermiguel

      I know this statement was supposed to be funny, but as someone living with the forest fire smoke, I am not really amused. There are 3 fires buring on Vancouver Island, 1 on the sunshine Coast, and 1 in Pemberton, that are combining to make breathing difficult for a lot of people.

      • oilerjed

        As someone who is living On Vancouver Island and won’t let my kids go outside due to the smoke being as thick as fog, I get what your saying, but…………..
        Hopefully your hurt feeling will blow away with the smoke.

        You can confirm that it isn’t blowing out of GM place though can’t you.
        😉
        I know; terrible.

  • AJ88

    I with the vast minority of ON believe Schultz will have a major turnaround year in 2015/16. I believe he has been totally mishandled by coaching (Eakins) and management. The constant degrading by ON writers and posters of players is bordering on pathetic, guess that is what a few years of losing does to some people. I know, let’s just trade Schultz for Weber, Nikitin for Doughty and Ference for Toews and forget the buyouts.

    • OilCanFan1

      I also think that Schultz will have a turn around year as will Nikitin. I think both of these players have self respect and know they each performed well below expectations. Both players also want new contracts so there is further incentive for improvement. I also believe that Nikitin played injured when he should not have due to the crappy depth last year.

    • Being mishandled or not is borderline irrelevant in the argument for Schultz.

      The player is soft as butter, has little compete level, is constantly caught out of position, doesn’t stand up for his teammates in scrums, and is infamous for inventing “jultzing”. He’s actually regressed as a player!

      Sure, you can blame Eakins and management for misusing him but regardless of what pairing he plays on.. he’s still going to jultz and he’s still going to cost the Oilers games.

      Schultz is 25, not 21. If he hasn’t figured it out by now, odds are he’s never going to.

      • AJ88

        The concept of mishandled would naturally lead to “regression”. Good management and coaching should lead to progression of all players which we will see this year. However most of ON has written him off as others have written off Hall, Eberle, trading RNH, etc. By the way “jultzing” is only infamous with the ON wannabes.

        • Excuses Excuses. Again, Schultz is 25. You can’t magically change a players personality. He either wants it, and is willing to work for it or he doesn’t. RNH improved his overall game under Eakins despite being thrown to the wolves ever night, and while I don’t deny that Eakins was a garbage coach, to think Schutlz will do a 180 is wishful thinking.

          And who has written off Hall, Eb’s or RNH?

          Btw you can google “jultzing” and 593 results come up.

          • The Soup Fascist

            Defense is a team concept.

            The numbers don’t mesh with the visuals, and too often Schultz was paired with can’t skate Ference or Nikitin and our skill players floated way too often in the D zone.

            Besides much of the “jultzing” was him isolated vs. opposition skill players with nobody to help out or teammates vastly out of position and even elite defenders give up goals in those situations.

            It’s not a surprise that he played better with a rookie who could skate and assist with mismatches.

            With an improved defensive corps, McLellan stressing more of a team defensive game and most of Justin adding some weight and more physicality and effort under a coach with some concept of accountability,, we could see a vastly different player.

          • Joy S. Lee

            Nicely said. I’m not a big JS fan due to his past lack of intensity and defense, but it is almost always a good calculated gamble to see what talented players do under different (upgraded) coaching. Few things cause greater inspiration for change than those of humility and shame. Put it all together and it’s definitely worth seeing what some of the previously untapped potential around here is truly capable of. #97 spurs that, as do the new coaching, management, and direction of the organization and team. I would be one who is skeptical of trading away untapped talent, no matter who they are; including Schultz.

            I’m all for the vastly different player. And I think that he has to be.

          • AJ88

            No problem, we can disagree, in March let’s carry on this conversation. 593 results! All from ON, Copper and Blue, etc, it must be infamous. Actually the saying is quite disgusting coming from a pack of hockey wannabes.

            You don’t think ON followers have not written off some of the core players on a consistent basis? though it has got a little quiet since McD entered into the picture, And yes RNH is the one that has improved his play despite the negative environment, it is one of the reasons he should be considered untouchable.

            Interesting year ahead