Thinking and looking ahead are keys to Caps' salary cap management
When the Caps hit the ice in 2008-09, it’s extremely likely that the team’s payroll will exceed its ’03-04 level. After a few years in which the payroll was – by design – closer to the mandated league minimum, the Caps will almost certainly find themselves pushing closer to the cap. It’s conceivable that the 2008-09 Capitals will have the highest payroll in franchise history.
“We may,” admits Caps general manager George McPhee. “It’s a nice problem to have. We like our team a lot now because we have good players, but they happen to be really good guys. We just seem to have a bunch of players who are good players and good guys. It sure makes a difference in performance, we think.
“That may be the difference between this team and the team we had five years ago. There is a lot of character. We are deep, and that’s a good problem to have. Making decisions in that kind of situation is never easy, but making decisions in this business always has risk attached to it. We’re going to have to make some tough decisions this summer, but when we get to September we hope we’ve made the right ones and we’re an even better team than we were last year.”
Beginning with Wednesday’s qualifying offers to five restricted free agents (defensemen Mike Green and Shaone Morrisonn and forwards Eric Fehr, Boyd Gordon and Brooks Laich), the annual off-season ritual of fitting 20-23 good hockey players within the parameters of the NHL’s salary cap is underway. Potential arbitration cases and free agent signings lie ahead for all 30 teams in the weeks to come, and there is a sense that more poaching of restricted free agents (RFA) could occur this summer, too.
For the Capitals, this summer will be a bit trickier than the previous three. Because Washington’s rebuilding effort went so well and because the team hit paydirt with so many of its young players and draft picks, it will start to become challenging to keep the team together at some point. While it will become trickier, fans shouldn’t worry too much just yet. The Caps aren’t in the position of a team like Pittsburgh that is faced with the utter impossibility of keeping a Stanley Cup finals team together in 2008-09.
“We don’t foresee it as being a problem,” says Capitals general manager George McPhee. “Our plan was to build our team and work on the team that we think we can have and if it’s a good team then we’re going to pay to keep them. We don’t expect to be bumping up against the cap, so we’re not that concerned about it at this point. We might be there in a few years, but if we do things right we shouldn’t be.”
In the pre-salary cap era, there were no limits on spending. While the Detroit Red Wings began that 2003-04 season with a payroll of $77.8 million, the Nashville Predators were at the other end of the spectrum at $23.2 million. Interestingly, the Tampa Bay Lightning went on to win the Stanley Cup that season with a season-opening payroll of $33.5 million, 21st in the league.
The 2008-09 NHL salary cap ceiling will be $56.7 million. With a salary cap in place for three seasons and league revenues driving the annual amount of the cap, the maximum amount NHL teams may spend on payroll will have risen by about 50% in a span of just four seasons after the lockout.
For the first three seasons of the NHL’s salary cap era, Washington did not have to concern itself much with the upper end of the cap mandated by the collective bargaining agreement between the league and the players’ association. The Caps were a team largely populated with few established veterans and relatively many entry-level players who were still a few years shy of hitting their big payday in the league.
Several Caps players will hit that big payday starting with the 2008-09 season, but good long range planning – a crucial element of effective salary cap management – has the Capitals in good shape relative to the cap as the upcoming season approaches.
Washington’s reluctance to spend money on free agents in the summers of 2005 and 2006 was not because it wanted to save money, but rather because it wanted to make sure it had money to spend on its own players. That strategy has paid off as the team's young players have flourished.
In drafting players such as Alexander Semin, Alex Ovechkin, Mike Green, Nicklas Backstrom and others, the Caps were banking on the fact that those players would eventually earn big-time contracts. Semin got his in October. Ovechkin got his in January. Green might get his this summer. Backstrom’s next payday is still two summers away. But for hockey operations departments around the NHL, effective salary cap management has to be every bit as much about “tomorrow” as it is “today.”
“You always have to be mindful of what goes on inside the locker room when a certain player gets a contract,” says McPhee. “All the other players are looking at that saying, ‘How does that affect me? Is that the right for him? Are they valuing him more than me?’ So you have to be mindful of that when you’re doing contracts for your players. And when you bring in somebody from the outside and pay him a lot more than your own guys, he better be a lot better than your own guys. If he’s not, then you’re going to create some tension in your room.
“We like to draft our own players, develop our own players and pay our own players.”
In addition to re-signing the five players who were tendered qualifying offers on Wednesday, the Caps are trying hard to retain goaltender Cristobal Huet, who achieves unrestricted free agent status if he is not signed by July 1. The Capitals are also exploring the possibility of resigning veteran center Sergei Fedorov. Both Huet and Fedorov came to the Caps in Feb. 26 deadline day deals.
Of the impending restricted free agents, Green will command the highest salary for next season and beyond. The 22-year-old defenseman led all NHL blueliners in goals and emerged as one of the league’s top offensive rearguards in 2007-08. Many believe that if he does not come to terms with the Caps before July 1, another NHL team will step in and offer him a lucrative multi-year offer sheet. If that does happen, Washington is expected to exercise its right to match the offer.
“We try to do the best deal we can that makes sense for him and us,” says McPhee when queried about Green specifically. “We’ve got cap room and we’ve got owners with money, so if somebody wants to fool around with an offer sheet, it will be matched. We put our own offer sheet in on Ovechkin, so if we’re going to do it for our own player, we’ll match other [teams’] offer sheets.”
As the signing period looms, the Caps already have 18 players (one goaltender, seven defensemen and 10 forwards) under contract. The total salary cap amount committed to those 18 players is roughly $37.6 million. That figure does not include the total of the qualifying offers given to the five unrestricted free agents, three of whom (Morrisonn, Gordon and Laich) have arbitration rights.
That would give the Caps almost $20 million with which to sign Green, Morrisonn, Fehr, Gordon, Laich, Huet and Fedorov. If all seven sign, the Caps will have 25 players under contract and it would be unlikely that they’d make any sort of significant splash in this summer’s free agent pool.
“It’s important to let our young core continue to grow and develop,” says McPhee. “I don’t expect to be very active [in free agency]. It’s hard doing nothing, but that might be the right thing this year.”
Huet is obviously a key component in Washington’s plans. If the Caps are unable to come to terms with the 32-year-old netminder and he signs elsewhere in the league after July 1, Washington will still need a goaltender to join Brent Johnson, who is already under contract for 2008-09.
The Caps traded defenseman Steve Eminger to Philadelphia last Friday, and the team is unsure as to the status of blueliner Brian Pothier. Pothier missed the second half of last season with a concussion, and his career is believed to be in jeopardy. There are two years remaining on his contract at $2.5 million per season, but the Caps would gain some salary cap relief if Pothier were physically unable to play during that period.
Incoming rookie Karl Alzner and 2004 draftee Sami Lepisto are candidates to replace Pothier and Eminger on the blueline depth chart, but Washington isn’t likely to carry eight defensemen in 2008-09, as it did for all of last season.
“We carried eight last year because we didn’t think the guys down below were ready to come up and play in a pinch if we had injuries,” declares McPhee. “So to be safe, we carried eight. But that’s hard to do. It’s hard on your team and it’s hard on the coaches.
“We’ll go with seven this year and maybe even six from time to time. We’ve got players who can come up and down now. That helps in a lot of ways. It keeps them playing, it helps with the [salary] cap and as our cap is going up a little bit, that’s a better thing to have.”
Of the 10 forwards under contract, six are considered "top six:" Ovechkin, Backstrom, Semin, Viktor Kozlov, Michael Nylander and Chris Clark.
A player’s salary is charged toward a team’s cap only for the time he spends on the roster. With the Capitals’ AHL affiliate close by in Hershey, Penn. the team can send certain players (those not requiring waivers) up and down to keep its annual cap hit at a minimum. Salary cap hits are assessed based on the number of days a player is on an NHL roster, prorated to his annual salary.
During the off-season, Alzner’s salary cap figure will not apply to Washington’s cap total. Lepisto’s off-season cap figure is calculated on the number of days he actually spent on Washington’s NHL roster last season.
It’s also important to note that there is an off-season payroll period (from July 1 to opening night) during which NHL teams can exceed the salary cap by as much as 10%. So with the 2008-09 cap set at $56.7 million, teams could carry a total payroll of up to $62.37 million until opening night. This allows teams to sign their players and gives clubs room to keep injured players until it can be determined whether or not they are healthy enough to play. Once opening night rolls around, all teams must be within the mandated salary cap limits.
In the first three seasons after the lockout, there has been a lot less movement in the way of trades during the course of the season. The salary cap restrictions have made a rarity of hockey trades between Oct. 1 and the annual trading deadline in February. Because of that factor, more emphasis is placed on putting a team together properly during the summer.
“With this new CBA now, you almost have to put together a team for each year,” McPhee said in the wake of all the wheeling and dealing at last weekend’s NHL Entry Draft in Ottawa. “Teams are making moves to build a team up for this year and see how it goes. There are things done that were different than in years past.”