Armchair GM 2020: Buyouts and clearing salary cap room

I started to take a look yesterday at the off-season that Ken Holland has ahead of him by walking through all of the restricted and unrestricted free agents on the Oilers’ roster. It becomes very clear very quickly that there won’t be much wiggle room to work with.

The Oilers have 10 forwards, five defencemen, and one goalie committed to their roster for next season at a cap hit of roughly $70 million. Holland will then need to sort out new deals for restricted free agents Ethan Bear, Andreas Athanasiou, and Matt Benning, and then use what’s left over to flesh out the rest of the roster, possibly figuring out new contracts for unrestricted free agents like Tyler Ennis, Riley Sheahan, and Mike Smith.

If the salary cap remains stagnant, which seems inevitable at this point due to the amount of revenue the league lost in the wake of the COVID-19 pandemic, Holland will only have around $11 million to fit in all of those aforementioned players. A major part of his job this off-season will be clearing cap room in order to open up more financial flexibility.

Assume Athanasiou signs a deal worth $3,500,000 annually for two years, Bear gets a bridge deal worth $2,000,000 annually, and Benning re-ups for a couple of years at $2,250,000 against the cap. Those are just quick, crude predictions, but already $7,750,000 of the roughly $11 million Holland currently has to work with has been spent on only three restricted free agents.

It would be a major game-changer for all 31 general managers if the league allowed teams even one compliance buyout this off-season to help navigate the lower-than-expected salary cap ceiling. After the 2012 lockout, each team got two get-out-of-jail-free cards where they could buy a player out without any salary cap ramifications. Hopefully, we see that again in this situation, but it isn’t a given.

If there are compliance buyouts, the obvious choice for Edmonton would be chopping James Neal’s contract, which has three more years left at $5,750,000 annually. If there’s a second compliance buyout, getting out from under the final year of Kris Russell’s $4,000,000 deal would be sensible.

Oct 14, 2019; Chicago, IL, USA; Edmonton Oilers left wing James Neal (18) looks to pass the puck against Chicago Blackhawks center Jonathan Toews (19) during the first period at United Center.In a perfect world, I don’t think either player would need to be bought out right now. Neal can still contribute on the power-play and as a veteran in the locker room and Russell is still a fine bottom-pairing defenceman. But that was when the cap was expected to rise to at least $83 million a few months ago. It’s a different world now.

A few months ago, it was a lot easier to assume that the Oilers could find a trade partner for the final year of Russell’s deal. But now, with everybody around the league having to tighten up with a lower-than-expected cap, finding a trade partner becomes much, much more difficult.

If there are compliance buyouts, Holland could save nearly $10 million against the cap for 2020-21 by chopping Neal and Russell. That would make life a lot easier. It would allow Holland to have the flexibility to consider a long-term deal for Bear rather than a cheap bridge deal. It would also allow him to easily have the room to keep a guy like Tyler Ennis around and make an upgrade in net on the open market.

If teams don’t get compliance buyouts, Holland will have to get more creative in his strategy for clearing salary cap room.

At this stage, I feel even a regular buyout of Neal is inevitable. The nice thing about the Lucic-for-Neal swap is that, even if the players were a wash on the ice (which they weren’t, Edmonton won this swap handily), the Oilers got the easier player to buy out. Neal’s deal isn’t buyout-proof like Lucic’s deal, so he would only cost the team $1,916,667 against the cap for six years. I mean, it isn’t ideal, but it’s a savings of $3,833,333 for three years, which helps.

A regular buyout for Russell doesn’t make much sense. He would cost the team $3,000,000 against the cap in 2020-21 and then $500,000 in 2021-22. You’re only saving $1,000,000 the first year and then taking on a penalty of $500,000 the following year. It doesn’t seem worth it to me.

So, if we go ultra-conservative here and assume the league won’t hand out get-out-of-jail-free cards and GMs have to navigate this storm on their own, we do only the Neal buyout, giving Holland $14.5 million to work with. That more than likely would be enough to handle the restricted and unrestricted free agents on Edmonton’s roster, though it doesn’t leave much, if any, room for upgrades. This is where the difficult decisions come in.

While Holland might not be able to deal Russell away this off-season, there would still be appetite around the league for somebody like Adam Larsson or Matt Benning. If it allows Holland the flexibility to improve the roster, dealing one of those aforementioned players might be the way to go.