The Edmonton Oilers and the Salary Cap

Oilers brain trust

Almost lost in all the talk about an expansion draft coming out of the last set of general managers’ meetings was a significant update on the status of the salary cap. According to NHL deputy commissioner Bill Daly, the cap will depend on the NHLPA being willing to trigger its five percent escalator. If the union does so, the salary cap should rise to the neighborhood of $74.0 million, but if the players opt not to trigger the escalator the cap will stay flat at $71.4 million.

How does this effect the Edmonton Oilers?

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Money Spent

NHL Numbers has all the details on Edmonton’s salary commitments for next season, but it is helpful to break the list down by current commitments and by future commitments. The following is the list of contracts, divided by position, to which the Oilers are currently committed and which we can reasonably expect will not be bought out over the summer or buried in the AHL:

Left Wing Centre Right Wing Left Defence Right Defence Goal
Hall Nugent-Hopkins Draisaitl Klefbom Fayne Talbot
$6,000,000 $6,000,000 $3,400,000 $4,167,000 $3,625,000 $4,167,000
Pouliot McDavid Eberle Sekera Davidson Brossoit
$4,000,000 $3,775,000 $6,000,000 $5,500,000 $1,425,000 $750,000
Maroon   Yakupov Nurse    
$1,500,000   $2,500,000 $1,713,000    
Hendricks Letestu        
$1,850,000 $1,800,000        
  • Forward (10): $36,825,000
  • Defence (5): $16,430,000
  • Goal (2): $4,917,000
  • Total (17 players): $58,172,000

Likely Expenditures

44-Kassian-2

To the list above we need to add restricted free agents. In Edmonton’s case the key ones are probably Zack Kassian and Iiro Pakarinen, and in each case I’ve used their qualifying offers as placeholders for their new deals. There’s at least a chance the Oilers don’t qualify Kassian and re-sign him at a lower pricepoint, but we won’t guess that that here. We might also consider Adam Clendening and Jordan Oesterle for full-time NHL jobs next year, but that’s far from certain in either case so I’ve omitted them here.

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Both Lauri Korpikoski and Anton Lander are under contract, and the possibility of buyout or AHL demotion is worth considering in each case. Lander’s deal is low enough that he will barely cost anything to bury in the minors, and while I personally like him fine as the No. 13/14 forward it would be understandable if Edmonton wanted someone who could score even a little bit in that role. In my view, Korpikoski shouldn’t even be in the conversation for an NHL job with the Oilers next year, but he is under contract and the coach keeps using him, so I’m going to assume here that he returns.

It’s hard to envision a scenario where a healthy Andrew Ference isn’t bought out.

That adds three players to our hypothetical roster, as well as two salary cap charges:

Left Wing Centre Right Wing Left Defence Right Defence Goal
Hall Nugent-Hopkins Draisaitl Klefbom Fayne Talbot
$6,000,000 $6,000,000 $3,400,000 $4,167,000 $3,625,000 $4,167,000
Pouliot McDavid Eberle Sekera Davidson Brossoit
$4,000,000 $3,775,000 $6,000,000 $5,500,000 $1,425,000 $750,000
Maroon   Yakupov Nurse    
$1,500,000   $2,500,000 $1,713,000    
Hendricks Letestu Kassian Ference buyout    
$1,850,000 $1,800,000 $2,000,000 $1,080,000    
Korpikoski Lander buried Pakarinen      
$2,500,000 $38,000 $885,000      
  • Original 17 players: $58,172,000
  • Five new charges: $6,503,000
  • Total (20 players): $64,675,000

There’s an additional worry that Edmonton will be carrying bonus overages from this past season. Twitter’s speeds wrote a good piece on this point back in February. Trades as well as injuries to Klefbom and Pouliot will have worn away at his initial estimate; my guesstimate is that something in the $1.5 – $2.0 million range is possible but that’s a total guess. It’s weird that the Oilers have kept Nikita Nikitin in the pressbox rather than Brad Hunt if they’re really staring down the barrel of this, so I’m leery that there’s something significant here we’re missing. For now I’m not factoring this time in, but it’s something to be aware of.

Summertime Shopping

62-Gryba-4

There remain three essential holes on the roster in need of being filled:

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  • A top-pair right-shooting defenceman, who would push down Mark Fayne and Brandon Davidson.
  • A third-line centre, ideally a right-shooting pivot who can play on the power play.
  • A No. 7 defenceman, ideally a right-shot.

To accomplish these goals and using our math above, Edmonton will have somewhere between $6.73 million (with a flat cap) and $9.33 million (with the 5 percent escalator). The team could also plausibly go a little higher thanks to the bonus cushion, but as such a strategy depends on Leon Draisaitl and Connor McDavid missing their bonuses this is inadvisable.  

The No. 7 defenceman should be relatively cheap, and there are a number of internal options, including the aforementioned Clendening and Oesterle as well as pending unrestricted free agents Eric Gryba and Adam Pardy and a whole pile of external options.

8-Reinhart-1

The one caveat here is Griffin Reinhart: If he ends up on the opening night roster, the Oilers may be on the hook for his full $3.213 million entry-level deal (including bonuses) against the cap. The reason for this is that Edmonton is loaded with entry-level bonuses and the bonus cushion is only 7.5 percent of the salary cap, meaning anything that exceeds that cushion is as bad as real dollars from a cap perspective. Again, speeds had a nice piece on this at the time of the trade; it’s one of those weird situations where Reinhart would be a cheap addition for almost every other team in the league, but for the Oilers he’s almost prohibitively expensive. A trade or another AHL assignment should not be out of the question here.

Assuming the Oilers go cheap on their depth defenceman, they probably have enough money to address both defence and centre, particularly if they’re able to swing a trade for Travis Hamonic and his beautiful $3.857 million cap hit. It may also be possible to dump money, but it’s worth remembering that other teams are going to be in tighter salary binds than Edmonton, so moving a deal like Korpikoski’s may prove difficult.

RECENTLY BY JONATHAN WILLIS

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  • Kevwan

    Willis you’re not adding in the potential salary of a top 5 pick.

    Also wouldn’t the top pick be in the same situation as Reinhart as his bonus money would push the Oilers over the limit?

  • Spydyr

    There remain three essential holes on the roster in need of being filled:

    A top-pair right-shooting defenceman, who would push down Mark Fayne and Brandon Davidson.
    A third-line centre, ideally a right-shooting pivot who can play on the power play.
    A No. 7 defenceman, ideally a right-shot.

    If that is all the changes made in the summer expect 11 years outside the playoffs.

    The team needs two top four defenceman, some tough skill in the top six and a complete rebuild of the bottom six with at least three bigger, stronger and meaner players brought in.

    Maroon was a good start.

    • Jay (not J)

      Larger escrow. There are some fairly detailed analyses out there but it stops feeling like reading about hockey and more like doing the job I’m blowing off to read about hockey after a sentence or two. I think that 16% of what they signed for is currently held in case they get ‘overpaid’ for the year. That 5% escalator would be 5% more that they would not get on their cheques until the year end numbers were crunched and they might see a portion of it deducted.
      Thant’s how I ‘understand’ it anyway.

    • ubermiguel

      A larger salary cap means some GMs will have more space to spend stupidly. For players with contracts signed already this means they will likely end up losing more of their escrow at the end of the year to the stupid GMs (and owners) who over-spent.

      The whole system is set up to protect the league from GMs’ destructive self-interest.

    • pkam

      Like some other bloggers post, it will result in a higher escrow, or in other words, the players in existing contracts have to chip in more for the new contracts.

  • RJ

    It’s times like this when all of the failed second and third round picks are most problematic. It sure would be nice to have decent depth players at less than the rookie max.

    Trading one of the $6m kids would also add to cap space.

  • Oil should be in good to very good cap position if they elect to trade Reinhart (I hope) and also trade one of the core, which seems like a foregone conclusion (eberle). At that point combined with an earlier posters strategy of taking advantage of cap-strapped teams, I think we can find our way into a solid defence without giving up any major assets (a la 4, 93, 25). Don’t get me wrong if the right deal comes up then hey you have to hear it out, but I just don’t see any OELs becoming available in the off-season, so the mock depth chart of

    Klef-Hamonic

    Sekera-Demers

    Davidson-Whoever

    Starts to look like more and more of a real possibility.
    Then we can go after some FAs… Would love to have Lucic, trash me all you want.

    • Copper

      Lucic worries me. He will want term and dollars for what he has been for past 5 years not what he will be in next 5 years. I foresee his contract being a problem 2-3 years from now.

    • Just a Fan

      I have no inside information but I am very confident that this is exactly what will happen. It is clear that Ference can not play and it is easy to make the argument that the hip injury has slowed him and resulted in his inability to play. He can be 100% healthy and still be on IR if the effects of the injury are a reduction in ability.

      The NHL opened this door. All the Oilers have to do is walk thorough it.

  • Heschultzhescores

    The Oiler’s need to stop signing guys for more money and longer terms than they’re worth. There are very few guys that can’t be replaced…on the Oilers there is 1 guy who can’t be replaced, and we all know who that is. So, why panic and pay the big money, let guys move on, it’s not like we can’t find a replacement for a multi-year, last place, non team player. People aren’t beating the door down to pay proven losers big bucks…trust me on this one. I’m tired of having money tied up in guys that either can’t play, are playing in the minors, or are now playing for another team. You sign guys with big hearts, who score big goals and make big plays, and are big team players to big contracts…how many of those guys play for the Oilers right now?

  • The Goalie 1976

    Also to consider, Yak will be gone, that’s a guarantee. His 2.5 will be off the books, and presumably used towards the 3C spot. Kassian will play the 3RW spot.

    Faynes 3.6 could also be on the way out, perhaps in a trade addressing the 3C spot. And I think we all assume Eberles 6 mil is gone, and that money put towards RHD.

    That’s over 12 million to address 2 RH defense spots and the 3C. Likely a combination of astute trading and free agent signings.

    It’s definitely doable, but there isn’t much margin for error, if any.

    The likelihood of PC making good on this in infinitely better than MacTavish, so at least there’s that haha.

    Hamonic low contract makes everything a lot easier. Expecially in a Eberle swap, that’s about a 2.5 mil cap savings.

  • Heschultzhescores

    Hall, Ebere, and Hopkins, the softest 18 million in the NHL. If that’s what 18 million gets you, then we need a 100 million cap to get a competitive roster.

  • A-Mc

    I would definitely try to clear out Yak and Korpi over the summer. These guys are 5.5M worth of cap space with very little added value to the team.

    Maybe they go for picks at the draft, or maybe prospects but i can’t see much coming in return for these guys.

    I’d like to grab 2 right-shot defensemen this summer and hopefully push Fayne down to the #7 role. I’d keep Davidson as the 3rd pairing RD. If PC can get this done, I’m sure thousands of Oiler fans would be thrilled.

  • Gadgets

    You have to consider the fact that a Hamonic isn’t a free agent and isn’t simply an addition to the cap, salary will be moving out to obtain him. His addition will also result in a combination of a defenceman getting traded in return, or forward moving out and a defenceman moving to the minors/getting traded elsewhere.

    How nice would it be to move a player (say Eberle just for example) for Hamonic, trading Fayne to make room, drafting Laine and actually saving money on the cap?

  • a lg dubl dubl

    So, it’s unlikely PC wooo’s Stamkos then with having about 9mil in cap space for next year, eh.

    Seriously though, I am hoping PC can get Demers signed this summer to go with the rumoured Hamonic addition, that should push down Davidson and Fayne(if not moved) to their rightful spots.

    Hamonic/Sekera

    Demers/Klefbom

    Fayne or ?/Nurse

    Reinhart/Gryba

  • Keeping Korpikoski on this team makes no sense whatsoever. He just makes everyone around him worse than they already are, i.e. Yakupov.

    I don’t understand why they don’t at least use Lander instead of him.

    Other than that, the forward lineup is looking better and better. It would be nice to have a heavy 3rd line two-way centreman.

    And there are several good left-shot defensemen that should be considered in a trade this summer for top right-side guys.

  • McRaj

    For all of the writers on this website, can someone do a piece on Hall, Eberle, and Nuge. Showing their underlying numbers (Quality of Competition, Quality of Teammates, Comparable Players, Etc). I would love to see if Nuge is as good two-way handling tough minutes as we think, and if someone like Drai is a product of playing with Taylor Hall.

  • MrBung

    Where’s Scott Howson? I don’t think they have enough management in that picture. I can imagine what those clowns are thinking. Wow. We have ourselves a solid 29th place team.

  • Ron Burgundy

    Dream scenario:

    We win the lotto, every head in Toronto explodes, and we then trade the pick plus Fayne to Arizona for OEL and a pick/prospect. Net cap impact of Fayne vs. OEL is +$1.875MM to our spend, but we are actually ahead because we don’t have Matthews’ salary to account for.

    Just like winning the lottery shouldn’t be your retirement strategy, this shouldn’t be Chia’s current strategy to fix the D, but man that would be sweet.

    Failing that, Jonathan’s math makes it even more clear to me that one of the Six Million Dollar Men has to go.

    • McRaj

      First off, OEL is not getting traded. Yotes have forward prospects, they need more D. If they want a local kid, they will take Tkachuk. Likely they are aiming for Chychrun.

      Secondly, we need a RHD and OEL is not that. Also, I would want to bring in a player from a winning organization. Pietrangelo is a player I target if we win the Auston Matthews sweepstakes.

  • Serious Gord

    Please God Mact won’t be here next season

    Reinhart is a bust. It’s time for the fanbase to admit it.

    Two of the six million dollar boys is going to have to go to make room for physicality and defense.

    It seems pretty likely that chia will be the busiest GM over the next eight months – by a wide margin

    Hamonic hasn’t been moved after an entire season. Are we still sure he wants to be moved?

    The oil is going to be a very different team in October – maybe the biggest changeover in at least twenty years.

  • GCW

    JW: can you clarify how the bonus thing works?

    For next year they have to plan as if the ELC players hit their bonuses and can go over by up to 7.5%?

    But, in final accounting, it’s the bonus money achieved that matters, correct? I.e if they plan to be 7.5% over and the players achieve the bonuses, there are implications for next year, but if they don’t, there is no implication for the following year?

  • McRaj

    Question for Oilers Nation. If the Oilers win the draft lotto, do fans actually want the Oilers to keep the pick or trade it for a true #1 D-Man?

    For the sake of sanity I would hope that they want to trade the pick because adding another 18-19 year old will not help the Oilers improve next year.

    • Ed in Edmonton 1

      Whatever draft pick the Oil get, it must be considered in play. The Oil cannot wait for player who might be productive 3-5 years from now. By then the McD era might be nearing completion.

    • camdog

      Adding a top 3 pick and then trading a veteran winger for help on defence will help this team a lot more than just trading the pick. I absolutely do not understand the loyalty some have to the core, absolutely mind boggling!

    • Seriously Bored

      If they win the lottery I don’t see anyway they can trade the pick away with the possibility of an expansion draft coming up. I could see them trading down in the draft and trying to work something out that way.

  • toprightcorner

    If PC wants to make any other changes/additions, financially one of Eberle and Nuge will likely have their $6 mill cap hit traded. More likely Eberle at this point since he is a winger. It has nothing to do with wanting to trade them, it has to do with cap limitations.

    Over and above Hamonic; Lucic, Demers, Vatanen and Frans Neilsen have been mentioned by many to fill some of the holes but salary would have to go out to make that happen. Trading the 1st round pick does not help shed salary to make room for these players.

  • S4H1

    Trade proposal: Steen, Berglund & Parayko for Hall, Reinhart, and Osterle.

    St Louis gets some cap space, an elite top-line scorer, a high-value defenseman prospect, and a potential value defenseman prospect.

    Edmonton gets an aging, two-way winger on an expiring contract, an overpaid depth winger, and a potentially elite, right-shot defenseman.

    I’m not sure St Louis would be up for this, but I really f-ing want Parayko in copper & blue! I’d add draft pick(s) to our side if necessary. Osterle could be exchanged for a prospect forward in our system.

    • RJ

      Hitchcock was on Edmonton radio last week. They asked about Parayko. Hitch figured within two years he will be a 30-minute a night player.

      Given his age and his contract status, they aren’t trading him.

      • S4H1

        That may very-well be true.

        Something else that is very likely is that Hitch won’t be there after this year. A new direction can lead to some interesting decisions being made. They have Pietrangelo and they may settle for resigning Shattenkirk, who is only 3 years older that Parayko.

        Hall would make their forward’s offensive production elite. Maybe the Blues would like to market a more exciting brand of hockey.

    • S4H1

      Ok, so this concept is getting a resounding no. I will explain the reasoning behind my idea in it’s entirety. Perhaps my logic will sway some of you towards my proposal, though I understand the refusal to move Hall…

      1. Colten Parayko is showing all the signs of becoming a premiere RH defenseman in the NHL. He compares very favorably to Weber at this point in development, and possesses all the same characteristics as Weber (big, booming shot, physical with a mean streak). He is 23 years old, meaning he is young and entering his prime…

      2. Taylor Hall has failed to generate any chemistry with the future face of the NHL. Given the talent these two individuals possess, this is concerning. Pairing those two should put fear into opponents, but it doesn’t.

      3. The dispersal draft (as I understand it) demands that at least 25% (roughly $18 million) of your team salary cap be unprotected. Expiring contracts are included in the number. The combined $9.5 million cap-hits for Steen and Berglund represent over half of the amount, and will allow us to protect more valuable players like Pouliot, Eberle, etc. The $9.5 million in expiring contracts will also leave us tremendous space for 2017 free agents nd/or extensions for Leon, Conner, Darnell, and potentially Parayko.

      4. Further to the dispersal draft, second year pros are automatically protected. McDavid, Nurse, Parayko would all qualify. However, I do not believe Davidson would. The rule is that seven forwards, 3 defense and 1 goalie can be protected, or eight skaters and a goalie. In the first scenario Edmonton could protect: Draisaitl, Nuge, Ebs, Pouliot, plus three forwards; Klefbom, Sekera, Davidson, and Talbot. In the second scenario Edmonton could protect: the same four forwards, Klefbom, Sekera, Davidson, and the premier add from this summer (eg. Hamonic/Demers), and Talbot.

      The way I see it, the only way to maintain our best players through the 2017 expansion is to replace one of our top forwards with a 2017 second-year pro. IMO Parayko is the most valuable 2017 second-year pro defenseman in the league, even above Ekblad (who is unattainable anyway). A Lucic signing would necessitate moving Pouliot, but the end result would be the same for dispersal.

      Someone who is more knowledgeable than me may see mistakes or flaws in my thinking. Perhaps Parayko does not qualify for protected status, perhaps my understanding of the dispersal draft is inaccurate. In any case, I leave my work up for your evaluation.

      • cityofchampions

        Simple reason for the trashes. St. Louis isn’t trading Parayko. Young RHD with elite potential that doesn’t have to be protected in the dispersal draft? He isn’t going anywhere unless you give them Connor (and that woudl be stupid).

        If they were going to trade him, they’d have to be asking for Nurse plus a $6M dollar man, and we would have to take some bad contracts back to even up the money. I’d probably do that deal to balance our defence (give quality to get) but St. Louis would be stupid to consider it.

        • S4H1

          Young D with potential for an elite winger and some extra cap space to resign Backes. I don’t think that is stupid at all from St Louis’ perspective.

          We all love Nurse and everything, but in reality Reinhart’s value isn’t too far behind that of Nurse. I’d do a similar deal with Hall and Nurse for Parayko, but that would require more coming back than I proposed above.

          Edit, PS: I don’t mind the trashes at all. I just wanted to gauge the interest in Parayko among oilersnation readers.

          • cityofchampions

            I’d love to get Parayko. Love it. I just don’t see why St. Louis would do it.

            It just doesn’t make sense for St. Louis….unlike Nashville they don’t have a crying need for a centre (or we could offer RNH) and they are close to the cap so if they deal any Dman it’d be Shattenkirk for picks/prospects to get cap relief.

            I think they’ll find a different solution around cap issues though. Get good dmen – keep good dmen is always a sound strategy.

          • S4H1

            Glad to hear that someone else in this city is as high on Parayko as I am!

            I agree that they have other options for clearing space. My proposal is based on an assumption that they would be excited to get Hall, and may be willing to surrender potential production for proven production.

  • Micbilly99

    Unless they move one of Nuge/Hall/Eberle for some defensive help, the Oilers will be drafting from the 25-30 position again next year. If the Oilers determine that they want to improve (and nothing has happened yet to prove that they do)they need to give up valuable assets to get value in return. Let’s see what happens. The ball is in your court Peter, what are you going to do?

  • BlazingSaitls

    That Reinhart trade just looks worse and worse to me. It was an underwhelming trade at the draft and its even more underwhelming now seeing that $3.213million cap-hit.

    I hope Oilers cut their losses and trade Reinhart or send him to the AHL. Sure he’s improved of late but there’s no way he’s worth a 3.2m cap-hit on a horrid d-corp.