As we approach the trade deadline, I think it is important for some fans to understand how Tkachuk's performance bonuses are going to impact the cap space the Flames have at the trade deadline and next season.
First a primer on the information shown by CapFriendly
The most important numbers are:
Projected Cap Space - how much cap space the Flames are projected to have at the end of the season.
Current Cap Space - the projected total full season cap hits the Flames can add today without having to move salary out
Deadline Cap space - the projected total full season cap hits the Flames can add at the deadline without having to move salary out
It is important to understand that as the season progresses and salaries are paid out, teams can acquire players at less than their full season cap hit. For example, a player with a $1 mil full season cap hit can be acquired for picks at the half way point of the season with only $500k cap space.
This is how teams with cap space (and not using LTIR) can acquire players with much larger full season cap hits. At the trade deadline approximately 21.5% of a player's full season cap hit remains.
This is all great and looks extremely promising. According to CapFriendly the Flames can bring in $5.314 mil at the deadline without needing to move anyone out! That means they can add Wayne Simmonds or Kevin Hayes at the trade deadline without needing to move salary out!
Well technically they can, but it is complicated by the performance bonuses Matthew Tkachuk is going to earn by the end of this season.
What you need to know about performance bonuses for this topic
- Tkachuk is expected to max out and fully earn his $850k Schedule A performance bonuses
- While there are other Flames who could potentially earn performance bonuses, only Tkachuk has a realistic chance of earning them
- The CapFriendly numbers from earlier don't include any performance bonuses. It is really difficult for CapFriendly or any other NHL Salary Cap tracking website to keep track of performance bonuses as they are earned, but maybe a future feature update will allow them to do so.
- If at the end of season, the Flames don't have enough cap space to accommodate Tkachuk's $850k performance bonuses, the outstanding balance gets rolled over to next season.
The CBA allows teams to exceed the salary cap by 7.5% for potential performance bonuses (known as the Bonus Cushion) because it is not practical to assume all potential performance bonuses will be achieved. However, if at the end of the season, a team does not have enough cap space to cover the performance bonuses actually achieved by players, the excess gets rolled into next season and counts against next season's cap.
This means that if Treliving "goes ham" at the deadline and uses all his remaining cap space without any consideration of Tkachuk's performance bonuses this season, the Flames will have $850k less cap space to work with in the 19/20 season while needing to re-sign Tkachuk, Rittich, Bennett, and fill any other holes in the roster.
If the Flames only have $400k in cap space at the end of this season, the Flames will have $450k less cap space to work with the 19/20 season as the bonus overage rolls over to next season.
What does CapFriendly's numbers look like if you do account for Tkachuk's bonuses 100% counting towards this season?
If there is to be no bonus overage to roll over next season:
Projected Cap Space - $292,848
Current Cap Space - $633,369
Deadline Cap Space - $1,361,473
This means without deferring any of Tkachuk's performance bonus to next season, the Flames can actually only acquire $1.36 mil in full season cap hit at the deadline without moving any salary out.
Conclusion
How to handle Tkachuk's performance bonuses become an interesting choice for Treliving at the deadline. Essentially Treliving has to choose whether to defer all or some of Tkachuk's bonus to next season's salary cap so he can be a bigger player at this season's trade deadline at the cost of cap space for next season. For every $1 of Tkachuk's bonus the Flames defer, they can potentially add ~$4.65 in full season cap hit at the trade deadline. Deferring all of Tkachuk's $850k bonuses to next season means an extra ~$3.95 mil in "Deadline Cap Space"
Of course there are other tools for Treliving to use, such as moving some big salaries out or getting the other team to retain salary. Just want this out there because the numbers CapFriendly is showing has some consequences and as the trade deadline approaches fans need to understand this as they think about trade scenarios.
Notes:
- Flames will also likely want some cap space left over after the deadline so that they can still do some call ups if they have injuries between the deadline and the end of the regular season. So expecting them to fully utilize any cap space at the deadline is not wise. They need some breathing room.
- There is an assumption that the cap space will remain relatively the same from now until the deadline. If the Flames have to use more cap space for call ups, injuries, etc, they will have even less space to work with at the deadline.
- While I am pretty confident that no other Flames will reach their performance bonuses, I haven't researched it fully. I could be wrong about that.
- I am not saying that deferring all or some of Tkachuk's bonus is the right move or wrong move. That is up for debate.
- There is still a slim chance that Tkachuk, for some reason, he doesn't earn all his bonuses (assuming all his performance bonuses are based on minimum values allowed by the CBA). He has already earned $212.5 k for scoring 20 goals and he just needs to reach 3 of the following to max out: 35 assists, 60 points, .73 points per game, top 3 forwards in +/-, top 6 forward for ice time. All of which he is really likely to get.
tldr: In order to take full advantage of the $5.3 mil deadline cap space as shown by CapFriendly, the Flames will have to take a $850k "cap penalty" to
the 2019/20 season