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.

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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:

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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).

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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.

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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.

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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


  • paulvechkin

    Agreed on buying out Ference. Nikitin if you ate 2mil of actual money but no cap space could be desirable for a team like Arizona or Florida to help them get over the floor. Ference isnt going anywhere because A) hes terrible and B) he has a no move clause. At the very worst Niktin has powerplay upside where Ference has “leadership”. Sitting Nikitin in the pressbox looks a lot better than sitting your captain.

      • BigMcD

        Wow, all the Schultz haters on this site. How many were quoted saying they wanted to sign Mike Green in his place.
        Last year Schultz played 81 games as a top 2 defenceman. 81gp, 31 pts. -17.
        Mike Green in his second year – 70gp, 12pts, -10
        Mike Green 2013/2014: 70gp, 38pts, -16. Played top 4 for Washington. Almost identical stats as JS.
        Last year Trotz played him as top 6: 72gp, 45pts, +15.

        Before we run Shultz out of town as we did Coffey, as we did with Petry, we have to give McLelland and staff a chance to teach this young man the NHL defence game and give him the proper placement in the rankings. We have seen his deficiencies as well as the talent. I say proper coaching can reduce the mistakes and allow more of the talent to grow.

  • Randaman

    I think Ference makes more sense as Nikitin is more versatile and hopefully more motivated to earn another contract. As long as that next contract isn’t here.

  • Señor Frijoles

    I think (and hope) you’re right. It makes sense to use your buyout to wipe out two bad contract years (Ference) rather than only one with Nikitin. And with Nikitin on his final year, he would likely be fairly easy to move at the deadline, with the destination team taking no risk in adding a pending UFA to their playoff run. I also agree that Nikitin has much more potential for a bounce back than Ference – who is on the steady downhill slide and gaining speed.

  • paulvechkin

    Why not buy out both? Or for that matter, why not buy out Ference, Nikitin, & Purcell, then turn around and sign Ehrhoff and either Eric Fehr or Curtis Glencross to cheap deals? That’s what I would do.

  • paulvechkin

    This blue line so log jammed its insane

    LD

    Sekera
    Klefbom
    Nurse
    Reinhart
    Ference
    Niktin

    RD
    Fayne
    Schultz
    Gryba

    Now, Klefbom, Sekera, Reinhart and Nikitin can all “play” the RS as well. One will have to or else the LS keeps an NHL caliber Dman in the minors.

    My best guess

    Sekera-Fayne
    Klefbom-Schultz
    Nurse-Gryba
    Ference/Nikitin

    Reinhart in the AHL.

    The idea of Schultz on the second pair makes me ill though

  • paulvechkin

    Well, I’m no lawyer either and have not much understanding of legal mumbo jumbo, but if PC is initiating this, it just goes to show how much knowledge he has. Good on him. I don’t mind which of Ferrance or Nikitin gets bought out, but after reading the article, seems like Ferrance to go is a better bet. Thanks for the info Jonathan.

  • Quicksilver ballet

    The decisions made by members of the former administration are sure biting them in the arse this summer. If you look close. You might even see their influence continuing with some of the moves that have been made.

    Can a buyout/cap hit for the 2016-17 season be traded? Seen plenty of examples of LTIR cap hits/players getting offloaded. Maybe Peter could included that cap hit if they end up having to sacrifice one of their young in a deal.

  • Quicksilver ballet

    I would buy out Ference, Trade Nikitin while retaining half his salary for anything, and sign and trade Schultz. I would bring in Erhoff on a one year 4-4.5 mil deal, and keep Nurse. I would even look at Franson for 4 years x 5.

  • Bandwagon jumper

    I am not a big fan of Nikitin, but why the rush to unload him. Sure, he is way over paid and he way under performed, but it’s not like we have a stable full of qualified #1 and #2 defencemen to fill his spot. We have some prospects and some suspects with only a couple guys who may be able to handle #1/#2 type icetime.

    It seems to me we are not facing a cap crunch this year so I would keep Nikitin around this year. If he is a bust and/or some of the kids step up and out perform him, we can just send him to the minors. No one will pick him up on waivers.
    And having a warm body may come in handy down the road when injuries occur. That would be much more preferable than having to bring up an AHL kid.

  • Señor Frijoles

    Didn’t realize that Braden Holtby was filing for arbitration – how about a buy out of Ferrance, trading Scrivens and Nikitin plus retaining some salary for Holtby? He’s a proven number 1. That would also leave $$$ for Franson or similar. Just dreaming.

  • Joy S. Lee

    We used to have to rely on MacT telling us stuff, or someone in the organization leaking everything (constantly) and telegraphing their moves to the world. As a fan I appreciated MacT’s honesty, but he and the team constantly handcuffed themselves. Now, with Chiarelli here, that’s not happening (wisely discrete intel and communication).

    That makes this good investigative journalism. Nice work. We get to understand what’s going on in the board room of Oilers Inc. Thanks for the insight, I appreciate having a better grasp of what choices they could – or have to – make, without putting the club behind the eight-ball in negotiations with their competitors.

    • From the relevant paragraph of the Standard Player Contract:

      For Clubs who have Club or Player elected Salary Arbitration filings pursuant to Article 12, within the forty-eight (48) hour period beginning on the third day following the later of: (i) the Club’s receipt of its last salary arbitration award; or (ii) settlement of its last case (provided such award was received or such settlement occurred prior to 7:00 p.m. New York time; awards or settlements that occurred or were received at or after 7:00 p.m. New York time will be deemed to have occurred or received the following business day for purposes of this provision).

      (emphasis mine)

      • oilerjed

        Thanks JW,

        So not until 3 days after Shultz’ hearing (which are in August??) or less if they settle.
        Am I right?

        I’m thinking that PC would rather have this cleared up before then so as to not have money tied up between now and then.

        Any word on whether JS’s side is eager to get this done quickly?

  • 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.

  • Cheap Shot Charlie

    Jonathan, what’s the case if Ference and/or Nikitin are sent to the AHL? The big club pays their whole salary but what is the cap hit? 100%?
    Ference may be worth sending down. If he goes, great. The young kids can learn from him. If he retires, fine. We own his cap number for 2 years.
    If either gets claimed on waivers it’s a win-win.
    I’d like to see if Nikitin can get back his CBJ form. He and Schultz might really improve if they aren’t playing 20 mins a night.

  • Double Dees

    Ference is our captain. Show some respect. He planted roots here with his family. Plus he’s a good leader and battles. Yes I agree he’s nothing more than our third pairing but buying him out to save only a couple million doesn’t make sense for oilers/Katz for that matter.

    Like get it through your heads ppl!!!!! Buying someone out is more than just to get rid of a player cuz you think he can’t play anymore.

    Like seriously. Use your heads. Inc you author!!

    • oilerjed

      YOur right it does mean more then that. It also means that we have an opening for a Dman that can keep up in the NHL. It also means that the Oilers can erase another mistake made by Eakins when he came in without a clue and made Ference the Captain when he had never even stepped in the room yet.

    • OilCanFan1

      Last time I checked, the NHL and the Oilers were a business so doing what is best for the team/business means making hard choices (some of which, *cough Howson/MacT/Lowe cough* haven’t been made) so if it makes sense to buy out the aging, albeit great community guy, then so be it.

    • bazmagoo

      Agreed. Buying out your captain would be a foolish move by management in my opinion. It would send a bad signal to our young team. I’m indifferent on whether they buy out Nikitin, either way would be fine.

  • Kevwan

    I think it’s Nikitin. The cap penalty only lasts this year and next. Ference’s cap penalty lasts for 4 years. The cap savings this year is about the same.

    There has to be a player acquisition that PC is looking at that caused this move. Otherwise he would have done the buyout in the normal window. I’m guessing a UFA’s ask has come down. I wonder who it is?

    • AJ88

      No buyouts

      NN + AF Combined

      2015/16 = $7.75
      2016/17 = $3.25
      2017/18 = $0.00

      Buyout NN 2015

      NN+AF Combined cap hits

      2015/16 = $4.75
      2016/17 = $4.75
      2017/18 = $0.00

      Buyout AF 2015

      NN+AF Combined cap hits

      2015/16 = $4.567
      2016/17 = $1.67
      2017/18 = $1.67
      2018/19 = $1.67

      Buyout NN 2015, AF 2016

      Combined Cap hits
      2015/16 = $4.75
      2016/17 = $1.08
      2017/18 = $1.08

      Apart from the spending of actual $ aspect, I think the best play is to buyout NN this year and AF next year

      • Kevwan

        I agree. $ spent and playing ability aside (they’re both bad). Buying out Ference now is the least palatable option. If Ference has a decent year @5/6/7 D, he might be movable next summer with $ retained.

  • oilerjed

    JW – IF they use 12.3(b) to trigger a buyout window, and then buyout 1 of NN/AF, between the time they buyout the player and have their arbitration hearing could they sign Schultz to say a 2x$3.25 deal if the player agrees to it?

  • ubermiguel

    @JW;

    EDITED: (due to reading comprehension issues on my part) Right you are, sounds like paragraph 12.3(b) is designed to prevent RFA hold-outs; however the Ordinary Buy-out clause (12.3(a)) states “pursuant to Section 12.3(a)” so 12.3(b) arbitration will not trigger a new 12.3(a) buy-out window.

    I’m holding out hope that new coaching will improve Jultz’s play.

    • oilerjed

      “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”

      in order for the buyout to be triggered the person being taken to arbitration had to have received a qualifying offer

      • ubermiguel

        Correct. However that “salary arbitration hearing pursuant to Section 12.3(a)” line in 12.3(a) makes everything under 12.3(b) irrelevant to opening a new buyout window.

        • oilerjed

          I think it is exactly the opposite, where as, everything in 12b makes 12a irrelevant. Two different situations that mutually exclude each other. as I read it anyway.

  • ubermiguel

    Buy out Ference. Todd then can name his Captain
    Sign Franson or Oduya to one year contract to keep Nurse or Reinhart down in AHL. Trade Nikitan and whoever you just picked up at trade dead line. Bring up Nurse or Reinhart after trade deadline

    • Rock11

      That is a pretty good plan. Based on getting the player signed of course. I think the thing to remember is the playoffs are still a longshot this year. I expect improvement to be sure but 35 points or so is too much to ask in one year.

      If we can recoup some of the picks traded this year and forfeited to Boston and SJ in a trade deadline rental then that would help with the pipeline depth. It is important though to get a decent length look at Nurse and Reinhart in the NHL this year. The core of forwards may not need to be broken up if Nurse and Klefbom and Reinhart all look to be first pairing(ish) guys and the only way to know that is to play them. Ideally a year split in the AHL and NHL for Nurse and full time NHL duty for the other 2.

      I will also say that the prior regime(s) deserve credit for the Hall/RNH/Eberle contracts. All you have to do is look at what Buffalo payed O’Reilly and at the Kane/Toews deals to see the value in those contracts. If the cap continues to stagnate or slowly climb at least the Oilers will be able to keep most of the pieces they choose as opposed to being forced to dump for cap reasons.

      • Oilfan69

        Re: Hall/RNH/Eberle contracts, the better comparable is Saad. He is a 22-year old first line winger with two rings. If anything, this tells me they were over-paid, and with cap increases the over-pay is not as bad as it previously was.

  • Cheap Shot Charlie

    As much as it might make most sense to buyout Ference. I just don’t see it. Too much allegiance from MacT to Chiarelli with Ference + he’s still the captain. Right move? Probably. Gonna happen? Doubt it.

    Mind you i’m still trying to get over the idea the Oilers understand the CBA this well?!

  • I had mistakenly thought the Oilers would need two arbitration cases as well (with Pitlick being #2)based on a CapGeek guide. Thanks for the clarification though. I wish the Oilers could ship Nikitin or other players somewhere at a reduced cap hit though. That would be the ideal choice.

    Actually, a Nikitin buyout gets me off the hook in my keeper league so my selfishness is pulling for a buyout of Nikitin Hah. Maybe a buyout for Purcell though!

      • Joy S. Lee

        Hmm. The funniest – or at least interesting – part of this concept is that the coach that shifted one player from D to Fwd and back to D (for entire seasons) was… Todd McLellan.

        Different player, altogether (Burns and Schultz are polar opposites), but maybe it’s the willingness that counts.

        So, question for ya: how open would you be to Justin Schultz being tried at RW? Almost makes one go, “hmm.” At least worth the consideration, based on him being a softer player, unless he alters that image this year. If he starts the season with the same urgency and tenacity as previous ones, I’d be open to checking out that forward option thingy.

  • Quicksilver ballet

    Maybe the, time is the only true currency in life, also influences on how business is done in the NHL. .

    If the Oilers choose to go down this road. They could very well pay the price for throwing him over the boards so often. 22+ minute a night defenders who know their way around in the offensive zone don’t come cheap. What has been gained if they win this battle (Nikitin) but lose the war (Schultz) on a non elc player.

  • Strong leaders are needed.
    Even if Andrew is on the bottom pairing he still brings value as a cup winning, healthy living vet.
    They could have traded him at last years deadline, so perhaps they still can at the next deadline. I think he has the mentality to have a bit of a bounce back season.

    Nitikin can go.

  • Spoils

    Niki’s the guy that has to go. Send a message that teamwork and leadership trumps all. and players who show up overweight and underperform get cut first. even if it is not the best business move.

    I think Nikitin should be packaged up in a bigger deal to get a #1D

    • The Soup Fascist

      Package him up with what? Nikitin has negative value.

      For example. If you were going to trade Taylor Hall (just an example folks) for a 1D, if you add Nikitin into the deal you would have to ADD more (say a 2nd round pick) to make the deal happen

      Only way I see “Operation: Shed a Pylon” working is a buyout as discussed or trade a bad contract for an equally bad contract. Hopefully it is something that at least fills a gap while you are holding your nose at the dollars.

      For example maybe a Chicago would take one year of Nikitin at $4.5 / or two of Ference at $3.75 in order to shed two years of Bryan Bickell at $4MM AAV.

      Some “functional size and toughness” on the wing may help – even though BB is way overpriced – and allow a Purcell / Korpikoski to be moved – ultimately freeing up dollars.

      I would rather have Bickell’s bad contract than either of the two turnstiles mentioned. And Chicago was pretty thin after the top 3 D last year and may not mind a veteran D required for 10 mins a night – especially in playoffs vs a Bickell who was an HS in the finals.

  • Lowe But Now High Expectations

    I sure miss the good old days in the 70’s & 80’s when players were traded for players and CBA’s and lawyer crap talk were non existent.

  • Dan the Man

    I’m not sure if this was mentioned yet as I didn’t read through all of the comments but another reason to keep Nikitin over Ference is that Nikitin is trying to earn another contract while Ference would likely retire after his current contract. So you would expect him to play better than last year.

    I would still prefer, if possible, to trade either or both players away and retain salary. That was they are off the books sooner.

  • vetinari

    @JW

    The Oilers likely lose nothing if they did proceed under Article 12.3(b) against Schultz.

    First, the Oilers were obviously prepared to give Schultz his 2014/15 salary since they issued him a qualifying offer to retain his rights.

    Next, the Oilers are probably confident (like most people on the planet) that there is no way an arbitrator would order Schultz to be paid more than his 2014/15 salary so the risk of going to arbitration is minimal save and except that you may tick off Schultz to some extent (it is not a salary knock down so the damage is minor in comparison to what it could be otherwise).

    Regardless of the outcome of the arbitration, they can then pursue a buyout of one of either Ference or Nikitin and likely not have to pay Schultz more than if he had accepted his qualifying offer in the first place.

    If anything, can the Oilers kill two birds with one stone? By that I mean take Schultz to arbitration and no matter the award, walk away from it and THEN also be entitled to a buyout for either Nikitin or Ference? If so, we could have enough cap room to now pursue another UFA defenceman (Franson?) and get rid of 2 out 3 defensive liabilities in one week?

      • vetinari

        One could dream.

        I thought that a team may still have the right to walk away if they believe that the number was still too high after arbitration.

        I guess the same principles still apply- the team won’t likely have to pay Schultz more than last year’s salary but they still get a shot a buyout of one of their underperforming defencemen.

      • Mr Willis:

        Doesn’t Ference have a full NMC ? Doesn’t an NMC mean he cannot be traded (without consent, of course) or demoted to the AHL ? And doesn’t the NMC logically preclude the possibility of a buyout by definition ?

        This would mean the Oilers would have to sit him in the press box for two years, paying his full salary, to open a roster spot for Nurse/Reinhart.