Saturday, March 2, 2013

A Deeper Look at the Tim Thomas Trade

Greetings fellow hockey fans, and welcome back to another of of Chase's patented commentaries on NHL happenings after they've become old news. Regardless of age, however, today we're afforded a rather interesting and enlightening topic: Tim Thomas and the trade that sent his $5 million cap hit to the New York Islanders. If you'll allow a quick refresher on this deal and its surrounding circumstances, I'm prepared to argue that this is a great move for New York, stemming from reasons outside mere compliance with the salary cap's Lower Limit requirement. Brent noted a few weeks ago how the new CBA is causing teams like the Isles to make smarter roster decisions, and believe it or not, this trade serves as another example of excellent asset management.

Looking back to the afternoon of February 7th, Isles GM Garth Snow gave the mainstream media and twitterverse something to talk about following the acquisition of the two-time Vezina Trophy winner from Boston. Per Bob McKenzie, only a conditional second-round draft pick would be headed the other way, compensating the Bruins only if Thomas reports to Long Island (or another club should New York trade his rights elsewhere) under his current contract.

At first glance, many assumed the trade would purely serve the purpose of helping the Islanders, a team that frequently used performance bonuses to reach the Lower Limit under the 2005 CBA, continue to find roundabout ways to pay less than what equates to (a prorated) $44 million this season. Such a view would be supported on its face, considering bonuses have been removed from the floor equation in the new agreement (a change likely tailored specifically as the 'New York Islanders Rule'). What is more, Thomas signed his current contract after his 35th birthday, meaning the cap hit shall remain on any team's books for the duration of the deal if he retires before its expiration. With all of this in mind, it becomes easy to see why such a justification from the Isles' perspective would make a good bit of sense.

To borrow a catchphrase from Lee Corso: "Not so fast, my friends."

Partly a reason for taking so long to write this article, conducting a bit of research on how the salary cap's Lower Limit is calculated revealed quite the interesting realization. Similar to how teams can add cap hits seemingly larger than their available cap space at the trade deadline, teams can similarly "bank" floor space throughout the year, trading players at the deadline that would appear to put them below that season's floor requirement.

Allow me to illustrate using language from the '05 CBA, translating a bit of lawyer-speak to English. In Article 50, Section 50.5(c)(i) at page 200, the accounting practices for the Lower and Upper Limit are set forth:
Lower Limit. No Club shall, after commencement of the regular season, be permitted to have an Averaged Club Salary that falls below the Lower Limit for that League Year.
Noting the presence of the term "League Year," i.e. that the floor must be met over the course of the year as opposed to each individual day, the only definition left for us to understand is that of "Averaged Club Salary." Removing language about performance bonuses since they cannot be factored into the equation under the new agreement, Averaged Club Salary is defined as:
[T]he entire aggregate amount committed by each Club in a League Year, calculated daily, as Player Salaries . . . in that League Year . . . .
in 50.5 (d)(i) at page 201. The definition also goes on to indicate:
Averaged Club Salary . . . is utilized to determine a Club's Payroll Room.
Keeping in mind that Payroll Room is merely the difference between the Upper Limit and a team's Averaged Club Salary, i.e. how far below the salary cap a team currently is for the season, we're left with the rather ambiguous task of figuring out what this means when inverted and applied to the salary floor.

With all language pertaining to the accounting of the Upper and Lower Limits being Article 50 components, the following example from Bill Daly on page 451 serves to outline the basic idea behind how all of this is calculated:
The Upper Limit is $40 million. A Club has an Averaged Club Salary of $38 million. With $2 million in Payroll Room at the halfway point of the season, the Club may sign or acquire a Player with a one-year SPC that has a $4 million face value. In this circumstance, even though the Upper Limit has not changed, and the face value of the contract would appear to put the Club above the Upper Limit, the passage of time from the start of the season to the midpoint of the season has created Payroll Room for the Club such as to allow the acquisition of a $4 million face value SPC.
In other words, because Averaged Club Salary is an aggregate sum of the amount paid to each player on the team's roster up to the current season day, a team below the Upper Limit by $2 million for half the season has saved $2 million against the cap, and can add that to the $2 million they are on pace to save for the second half to acquire said player with a $4 million cap hit.

With no language indicating that "floor room," if you will, would be calculated any differently, I was left to assume that teams could similarly build an Averaged Club Salary to a certain point, allowing them to remove players from their roster so long as they reached $44 million in salary paid by the end of the season.

Put another way in the context of Daly's example, say that this year's Islanders have an Averaged Club Salary of $46 million with $2 million in "floor room," or the difference between Averaged Club Salary and the Lower Limit. At the halfway point of the season, the club may trade or remove a player from their roster with a $4 million face value. In that scenario, the Islanders would pay less than the per-day requirement to meet the Lower Limit for the second half of the season (only paying $21M in total instead of $22M), but still reach the minimum of $44 million paid.

Through correspondence with the NHLPA and the League themselves, I was able to confirm that teams may not owe salary commitments that wouldn't reach that season's floor number, and could indeed dip below (what this year equates to $444,444) the prorated salary floor requirement for each season day.

Shifting to how all of this relates to Thomas and the Islanders, my aforementioned assumption on how the Lower Limit was calculated prompted the sending of this tweet on the night of the trade:


A little while after, McKenzie divulged the following:


Further expanding on just how compliant the Islanders were, James Mirtle's aforementioned article reveals that the range between the Upper and Lower Limits is ~$10 million larger than we saw last season. Another source of possible confusion, this year's $44M number is lower than both last season's $48.3M floor, and what would have been a $54.2M Lower Limit had the old CBA run through 2013.

After a short break for a deep breath, we may now gaze upon New York's roster. This year, the NHL season began on January 19 and is set to end on April 27, making it possible for a player to spend a maximum of 99 days on a team's active roster. Before adding Thomas, his contract was on Boston's books for 19 days for a total of $959,596 spent against the Bruin cap*.

Below is recreation of capgeek's daily tracker, as it stood on the night of the trade. One notable distinction about McKenzie's tweet, however, the assumption that players on suspension do not count toward a team's Lower Limit. Reading:
For Players that are suspended, either by a Club or by the League, the Player Salary . . . that [is] not paid to such Players shall not count against a Club's Upper Limit or against the Players' Share for the duration of the suspension, but the Club must have Payroll Room for such Player's Player Salary and Bonuses in order for such Player to be able to return to Play for the Club.
Article 50, Section 50.10 (c) at page 226, there is no language about a suspended player being counted "against," i.e. not being added to, a Club's Lower Limit number. It only speaks to the Upper Limit implications and the accounting that must be done upon a player's return, thus I have included Visnovsky's 19 suspension days toward the Islanders' Lower Limit charts.

PlayerPosFullLTIR35+BuriedRetainedSOIRCap Cost ($)
Active Roster
Tavares, JohnF99000005,500,000
Visnovsky, LubomirD80000004,525,253
Streit, MarkD99000004,100,000
Thomas, TimG80000004,040,404
Moulson, MattF99000003,133,333
Grabner, MichaelF99000003,000,000
Okposo, KyleF99000002,800,000
Nabokov, EvgeniG99000002,750,000
Nielsen, FransF99000002,750,000
Carkner, MattD99000001,500,000
Reasoner, MartyF99000001,350,000
Bailey, JoshF99000001,050,000
Boyes, BradF99000001,000,000
Martin, MattF99000001,000,000
Hamonic, TravisD9900000875,000
Cizikas, CaseyF9900000790,000
Ullstrom, DavidF9900000704,166
McDonald, ColinF9900000700,000
Hickey, ThomasD9900000700,000
Aucoin, KeithF9900000650,000
Strait, BrianD9900000605,000
Martinek, RadekD9900000600,000
Joensuu, JesseF9900000600,000
MacDonald, AndrewD9900000550,000
Boulton, EricF9900000540,000
Finley, JoeD9900000525,000
DiPietro, RickG99000004,500,000
Buyouts
Yashin, AlexeiF99000002,204,000
Suspensions
Visnovsky, LubomirD19000001,074,747

Total-------$54,116,903

Should the Islanders keep his salary until the end of the season, a maximum 80 days, Thomas will have an effective $4,040,404 price tacked on to New York's Averaged Club Salary. On pace to spend $54,116,903 for the year before burying Rick DiPietro and recalling Kevin Poulin, that number stood at $50,076,499 without Thomas and $45,551,246 without the remaining 80 days and $4,525,253 of Visnovsky's contract.

In Layman's terms, the Islanders were on pace to comply with this year's cap requirement by $1,551,246, or 3.53%, before Visnovsky was activated. After, the team was on pace to beat $44,000,000 by a more comfortable $6,076,499, or 13.8%.

Fast-forward to this year's trade deadline, which falls on April 3rd at 3 PM EDT. Salaries are added to a team's Averaged Club Salary each day at 5 PM New York time, meaning that any player traded on deadline day will count against his new team's cap for 25 days. Consistent with the Islanders roster on February 7 (sans Thomas), it would follow that removing both Streit and Visnovsky on deadline day would result with the following:

PlayerPosFullLTIR35+BuriedRetainedSOIRCap Cost ($)
Active Roster
Tavares, JohnF99000005,500,000
Visnovsky, LubomirD55000003,111,111
Streit, MarkD74000003,064,646
Moulson, MattF99000003,133,333
Grabner, MichaelF99000003,000,000
Okposo, KyleF99000002,800,000
Nabokov, EvgeniG99000002,750,000
Nielsen, FransF99000002,750,000
Carkner, MattD99000001,500,000
Reasoner, MartyF99000001,350,000
Bailey, JoshF99000001,050,000
Boyes, BradF99000001,000,000
Martin, MattF99000001,000,000
Hamonic, TravisD9900000875,000
Cizikas, CaseyF9900000790,000
Ullstrom, DavidF9900000704,166
McDonald, ColinF9900000700,000
Hickey, ThomasD9900000700,000
Aucoin, KeithF9900000650,000
Strait, BrianD9900000605,000
Martinek, RadekD9900000600,000
Joensuu, JesseF9900000600,000
MacDonald, AndrewD9900000550,000
Boulton, EricF9900000540,000
Finley, JoeD9900000525,000
DiPietro, RickG99000004,500,000
Buyouts
Yashin, AlexeiF99000002,204,000
Suspensions
Visnovsky, LubomirD19000001,074,747

Total-------$47,627,003

This demands the further inquiry: if Garth Snow's intended goal was to circumvent the cap, allowing him to get assets in return for Streit or Visnovsky, why was trading for Thomas a critical component of allowing them to do so? The math simply does not shake out, further muddling why the hell the Islanders made this move.

Thinking through the situation a little deeper, consider this: Thomas's actual salary is set to be $3 million for the final season of his current deal. Were he to hit the free agent market, what would he fetch? Martin Brodeur just got $9 million over 2 years at age 40. Though he's two years older than Thomas, the latter has been the best goalie of similar age since 2007-08. It shouldn't be unreasonable to think Thomas could get a similar deal in a heartbeat, and would assuredly want a contract paying more than the $3M he'll be owed if he decides to return.

All things considered, it seems that Thomas would have incentive to play for the Islanders, possibly even this year, a concept many have dismissed altogether. If Thomas wanted to maximize his financial gain, he'd probably report before the the end of the season, meaning New York couldn't toll the contract and keep it on their books for next year. The odds seem stacked against this happening, but it's still hard to ignore the money Thomas is giving up by hiding in his bunker.

Furthermore, regardless of whether he plays this season, if Thomas decided to return to the league next year, it stands to reason that the Islanders immediately control a player of at least equal value to the second-round pick they forfeit. Even if Thomas doesn't want to play for New York, the team could easily package him in a trade for another player that could step in right away, adding to an ever-improving young squad. Also, at the beginning of the Evgeni Nabokov saga, it was less than certain he'd ever suit up for the Islanders either. However, when push comes to shove, if Thomas wants to come back to the league and have a shot to make Brodeur money on his next contract, he's going to have to honor the final season of this one.

If New York truly intends to keep him, the team holds all leverage in such a situation. If Thomas does indeed don an Islanders uniform, he'll again be worth his price tag, even if it's only for one season. What is more, it is important to note that Nabokov has been lackluster in 2013, and an elite goaltender like Thomas would immediately solidify what's been a position of concern for some time now.

While it would be rather ignorant to argue that Tim Thomas doesn't provide Lower Limit benefits for a team like the Islanders, the numbers and mere logic behind his value as an asset show that he's also much more than simply an avenue to circumvent the salary cap.

*Note: I refer to salaries on a larger scale for ease of understanding. The proportion of salary spent against the cap remains the same.

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