If there’s one thing this year’s NHL Trade Deadline has taught us, it’s that there’s a creative way to move salary around in today’s NHL. Whether you’re taking on salary or trying to send salary out, teams have found what some are calling a “loophole” in the NHL’s CBA (even though it isn’t), and using a third team to broker deals that might have otherwise seemed difficult, if not impossible, is a trend that will continue.
This is something the Edmonton Oilers didn’t take advantage of at the most recent trade deadline, but certainly could in the offseason.
An Interesting Strategy Oilers Should Consider
Puck Pedia is a fun follow on Twitter if you’re a salary cap junkie. They know the ins and outs of the NHL cap and have a handle on what teams can and cannot do. Recently, they tossed out the idea of an interesting theoretical when it comes to the Edmonton Oilers.
Many insiders believe the Oilers will consider buying out James Neal. Puck Pedia wondered if the Oilers would be better off taking a different approach. They noted that general manager Ken Holland may find it more useful to use a third team to move Neal’s $5.75 million contract, versus buying him out this offseason.
How the Neal Trade Would Work
They write that the Oilers could take the same approach to moving Neal that teams like the Toronto Maple Leafs and Tampa Bay Lightning did when the Nick Foligno and David Savard trades went down. The only difference is, Edmonton would look at it from a seller’s perspective.
In those previously mentioned trade deals, the buyers got other teams to retain 50% of the salary and the third team in the transaction to retain 50% of what was remaining, leaving the acquiring team to cover only 25% of the player’s total contract. It’s how Toronto and Tampa Bay were able to take on such highly-priced players for nothing. What if Edmonton retained 50% and got a second team to trade Neal and retain salary as well? If doable, Neal becomes a cheap asset or an easy buyout candidate.
Specifics on Neal Trade
Puck Pedia hints that perhaps the NHL marketplace has set a new asking price associated to retaining salary as a third team. They note: “If it costs a 4th Round Pick for a team to retain ~$1.2M for 25% of a season, what’s the cost to retain $500K for a few years? Could we see a new buyout strategy?”
Looking specifically at Neal, a buyout costs $1.92M/year for four years. However, if the Oilers retained 50% in a trade to Team A, then Team A retained 25% in a trade to Team B, things get interesting. Team B could buy Neal out and the buyout cap hits for the next four years would be:
- Oilers: $960,000/year
- Team A: $480,000/year
- Team B: $480,000/year
That’s manageable for all teams involved but it would cost the the Oilers a bit of a sweetener (in draft picks or other assets) to Team A and Team B to host a $480K Cap Hit for the next four years.
Is This Worth it for the Oilers?
If the cost is low, is that a better move for Edmonton than having $1.92 million in dead cap space for four additional seasons? It’s savings of $960K and that’s a contract for a bottom-six forward in today’s NHL marketplace.
Look at everything Holland did this past offseason with so little money. An astute GM could stretch $960K a long way in a flat cap NHL marketplace and if all it costs is a 5th or 6th round conditional pick to do so, it’s a strategy the Oilers may want to consider.
In fact, it’s a strategy Puck Pedia believes a few teams might consider.
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