There have been a lot of questions over the past couple of days in regards to how the Avalanche are navigating their salary cap. So I thought it might be a good idea to try my best to explain what they did.
I do want to preface this with two things. First, I apologize in advance for even writing something like this. I know salary cap intricacies are not everybody’s favorite subject, especially 48 hours before the season begins. But such is a reality in the triple hard-capped NHL.
And second, I believe the front office thinks very highly of new Avs assistant general manager Andrew Wilson, who before getting hired by Colorado this summer, worked in the NHL Central Registry. The purpose of the Central Registry is to maintain all player salary information and help the league verify trades, signings, salary cap maneuvers, etc. This is right up his alley and why general manager Chris MacFarland felt the need to bring him on board.
Anyway, let’s get into it.
The Avalanche announced on Sunday that they were sending Erik Brannstrom to Vancouver for Tucker Poolman at $2 million and a fourth-round pick. Poolman has played three games over the past two years and likely won’t play in the NHL ever again. He is an LTIR candidate and that’s where he’ll be all season. The following day, with rosters due, Colorado announced that Ivan Ivan and Nikolai Kovalenko were among the final roster cuts, and veteran forward Chris Wagner — who cleared waivers over the weekend — was on the opening night roster.
Did the Avs really send down two rookies who were expected to be on the opening night roster on Wednesday? Of course not. These were paper transactions. And when combined with the Poolman trade, makes all the sense in the (salary cap) world why MacFarland and his staff did what they did. But if you don’t understand completely how LTIR works, it might look like a strange set of moves.
LTIR Explained
When a team places a player on LTIR, their entire salary cap hit is no longer counted. This is true, but it’s also not true at the same time. Simply because it’s not always the case. The best way to explain it is that if a team is spending precisely $88 million (which is the salary cap ceiling this season), that means placing a player on LTIR will give you relief equal to his entire contract.
So for example, if the Avalanche were spending $88 million on the nose, and placed Landeskog on LTIR, they would have $7 million in relief to use on a replacement of some sort.
But here’s where it gets tricky. Let’s create another scenario. And in this hypothetical scenario, the Avalanche were using $87 million in cap space. If they were to then place Landeskog on LTIR, they would only get $6 million in relief. LTIR is used to accommodate teams that need to overspend because of an injured player who is expected to be out long-term. It’s not a money-in, money-out mechanism.
So if you already have $1 million in cap space, and you place Landeskog on LTIR and acquire another player to replace him who also makes $7 million, you lose the ability to use that extra $1 million you initially had because you had to dip into LTIR. So again, you’re at $87 million with Landeskog. Then you pick up another $7 million player to replace Landeskog. Now you’re at $94 million in actual salary. Landeskog is then placed on LTIR. And because the team only needs $6 million to get back to the cap ceiling, that’s all you’re going to get out of Landeskog’s LTIR relief.
You ultimately want to be as close to the salary cap ceiling as possible before placing a player on LTIR.
Now let’s look at the Avalanche’s cap picture. We know for sure Valeri Nichushkin’s $6.125 million is not going to count until he’s reinstated. So we can cut that out from the onset.
Let’s also put Ivan, Kovalenko, Wagner, and Poolman aside for now.
This is what the remaining roster looks like, including their salary cap hit:
Jonathan Drouin (2.5M) – Nathan MacKinnon (12.6M) – Mikko Rantanen (9.25M)
Casey Mittelstadt (5.75M) – Calum Ritchie (950K)
Miles Wood (2.5M) – Ross Colton (4M) – Logan O’Connor (1.05M)
Parker Kelly (825K) – Joel Kiviranta (775K)
Gabriel Landeskog (7M), Artturi Lehkonen ($4.5M)
Devon Toews (7.25M) – Cale Makar (9M)
Samuel Girard (5M) – Josh Manson (4.5M)
Calvin de Haan (800K) – Sam Malinski (850K)
John Ludvig (775K) – Oliver Kylington (1.05M)
Alexandar Georgiev (3.4M)
Justus Annunen (837.5K)
This roster above, which includes 10 healthy forwards, eight defensemen, two goaltenders, and an injured Landeskog and Lehkonen comes out to $85,162,500 ($85.1625 million).
So in a scenario where Colorado just simply sends down Brannstrom and keeps Ivan and Kovalenko on the roster, you’re adding Kovalenko’s 896.25K and Ivan’s 840K to that cap hit. That comes out to approximately $86.9 million in total cap, which is pretty close to the fake hypothetical scenario I created above. So again, if in this scenario you placed Landeskog on LTIR, yes, you gain Landeskog’s $7 million in relief, but it wipes out the roughly $1.1 million in cap space you originally had. So technically, you’re only creating $5.9 million in cap flexibility. That isn’t even enough to reinstate Nichushkin in November.
By adding Poolman — another LTIR candidate — and Wagner, and at the same time submitting a paper transaction to “send down” Kovalenko and Ivan, you’re getting closer to your goal. So let’s start from $85.1625 million again. And let’s add Poolman (2M) and Wagner (775K). That puts you at precisely $87.955,625 million. That means the Avs are now only $44,375 from the cap ceiling. So now Landeskog and Poolman both going on LTIR free up $9 million minus $44,375. They’ve now created an extra $1 million of cap flexibility
In the first scenario without Poolman, Landeskog’s $7 million going on LTIR would’ve created $5.9 million in flexibility because you’re losing the roughly $1.1 million in original cap space that you had.
By adding Poolman and Landeskog to LTIR, you’re now gaining $9 million in relief but only losing a measly 44K in cap space. For a team looking to contend for a Stanley Cup, that extra $1 million in cap flexibility will go a long way.
Colorado accomplished this while acquiring a free fourth-round pick in the process.
* It’s worth noting that Landeskog eventually coming off LTIR and Nichushkin also being added back into the lineup will require a whole new set of cap gymnastics. But I’m going to assume MacFarland and Wilson already have a plan mapped out for this.
*Also, being in LTIR isn’t always a good thing, because then you can’t accrue daily cap space (similar to a compounding interest). But, the Avalanche knew they were going to use LTIR at some point this season. So acquiring Poolman made sense to add to the LTIR usage. Vancouver on the other hand didn’t want to be in LTIR anymore. They prefer to accrue daily cap space leading up to the trade deadline. So they paid a fourth-round pick to make it happen. The trade benefitted both teams.
*Shout out to Toronto’s front office. They literally got all the way within $1 of the cap ceiling before submitting their roster. Now when they dip into LTIR, they’re going to get the entire salary of those players in relief minus literally a dollar.
*All salary cap numbers in this article are courtesy of Puck Pedia. They also have the Avs getting dinged for $18,125 for Ondrej Pavel starting on season-opening IR. I’m not entirely sure why that’s the case but I will say, I did add that to my calculations above without actually mentioning it. I felt it might be confusing if it were written with the salaries earlier in the post.
