Performance Bonuses

Obviously the current season’s lack of high-level on-ice success for the Calgary Flames has dominated the headlines as of late, but one other aspect has flown under the radar. So let’s talk about the salary cap and performance bonuses, folks.

We’ve written a bit about the upcoming new contracts for Sean Monahan and Johnny Gaudreau, but the implication of their high level of play on this season’s (and next season’s) salary cap hasn’t really been explored.

In short? I’m a little bit worried for a few reasons.

THE SALARY CAP

This season, the NHL’s cap is $71.4 million US.

Next season, the expectation is that the cap won’t go up very much – if at all. The reason for that is the rough patch the Canadian and American economies have taken. The low world oil price has hammered Canada and the dollar in particular, and it’s unlikely that the NHL will push the cap up too much – even with NHL revenues being really strong – because a ton of the league’s revenues come from Canada and bumping the cap up too much would put the Canadian teams at a competitive disadvantage.

For the purposes of our discussion, let’s presume the cap doesn’t move at all. But bear in mind the possibility that the low dollar and low oil prices might actually drag the cap down.

The NHLPA decides in the summer, typically prior to the draft, whether or not to use their salary cap escalator: a tool they have at their disposal to bump the cap by up to 5%. But if the cap goes up and revenues aren’t insanely strong, that likely results in an increase in the escrow paid by players (e.g., the league holds onto a percentage of their paycheques until the season is over to ensure the 50/50 revenue split is actually 50/50). If you’re a player, it’s a trade-off between having more contract money for the players… and potentially having a larger portion of everyone’s money withheld until the year’s over.

The theory is that the cap will go down a bit unless the NHLPA decides to use the escalator, at which point the cap would be roughly flat from this season’s.

PERFORMANCE BONUSES

One of the unique aspect of entry-level NHL contracts – as opposed to “regular” contracts – is the inclusion of performance bonuses. Essentially, it’s a way of “market correcting” for the production of younger players. You don’t know how much they’ll produce, so you can incentivize their contracts to compensate for them carrying your team. And they only count against the cap if you hit them, so there’s very little downside.

Well, unless you’re Calgary, and your most prolific point producers are all on entry-level deals.

CAP OVERAGES

Because you never know if you’ll need to actually spend money on the performance bonuses, NHL teams are allowed to go over the cap during the season by what’s known as the “bonus cushion” – up to 7.5% of the overall cap – as long as what pushes you over the top is expected bonuses. If you’re over the cap by actual bonuses (or at all), it comes off next season’s salary cap.

The challenge for the Flames is this: they have a lot of veteran guys making a lot of money, and their cheapest/youngest players all have performance bonuses tied to their deals. And shocker, these guys happen to be driving the team’s offense.

WHO’S GOT BONUSES?

Four current Flames have performance bonuses:

  • Johnny Gaudreau – $1,850,000
  • Sam Bennett – $2,300,000
  • Sean Monahan – $850,000
  • Markus Granlund – $133,000

Now, we don’t know what the performance bonuses are, but they’re usually tied to things like goals, points or games played. Based on their performances this year, I think it’s safe to assume that Gaudreau, Bennett and Monahan hit most (or all) of their bonuses.

So that’s an expected bonus hit of about $5 million between those three players.

THIS YEAR’S CAP

Right now, the Flames have a pro-rated cap hit – including allowances for how long players have spent in the minors or elsewhere – of about $73.448 million, according to our sister site NHL Numbers. So they’re projected to be over the cap by about $2 million, which they’re allowed to do because what’s pushing them over the top is their performance bonuses.

But unless some serious coin is taken out of the team at the trade deadline, the Flames will probably be over the cap by a couple million dollars – which will come out of next year’s cap.

NEXT YEAR’S CAP

For the sake of argument, let’s just presume two things: Johnny Gaudreau’s cap hit will be around $6 million and Sean Monahan’s will be about $5 million. (Those are wild stabs, but I don’t think a combined $11 million cap hit between them is unrealistic.)

Here’s next year:

LW C RW
Gaudreau
$6.000M
Monahan
$5.000M
Frolik
$4.300M
Bennett
$3.194M
Backlund
$3.575M
Ferland
$0.825M
Bouma
$2.200M
Stajan
$3.150M
Bollig
$1.250M
LW4
?
C4
?
LW4
?
13F
?
14F
?
LD RD G
Giordano
$6.500M
Brodie
$4.650M
Starter
?
Wideman
$5.250M
Hamilton
$5.750M
Backup
?
Smid
$3.500M
Engelland
$2.917M
7D
?

    If you add everything up, the Flames would have about $58.3 million already committed. And they still need to re-up or otherwise acquire two goalies, a defenseman and five forwards, and they only have $13.1 million to do it.

    These calculations ignore two distinct possibilities: that the salary cap might actually go down by up to $4 million and that the Flames might burn off a couple million dollars on performance bonuses from this season.

    IT’LL BE A CHALLENGE

    The issue for the Flames heading into the trade deadline and the summer are this: we’re not sure yet what the cap projection is for next season, and a lot of it depends on how the NHLPA membership is feeling about escrow at any given time.

    Just one more thing to keep an eye on as we tumble head-long towards the NHL’s trade deadline on February 29.

    • Captain Ron

      Amazing how the team hasn’t even accomplished anything and we have no #1 picks on the roster and yet still can’t ice a competitive team. That’s sad

        • MattyFranchise

          Meant #1 overalls..like The Oilers have how many on their team. Don’t know how they manage it. If we had one oh god we couldon’t even manage it. I can’t wait to shed all these dead weight contracts! !! Wideman, Russell, Smid, Engelland, Raymond , our goalies, Jones, Hudler just seriously take off already all of you

          • RealMcHockeyReturns

            I see, well let’s not count on a lucky #1 overall pick. But perhaps a #2 or 3 to get a big Finn RW. I agree most of those players should go, but do you get a good replacement for Hudler? Does Engelland not work as #7D?

            • RealMcHockeyReturns

              Does Engelland not work as #7D?

              Paying almost 3 per for a 7th D is abhorrent cap management.

              If he was coming in at 900K no one would care. As it is…

          • VoRaCS

            You know how you do it… You manage the depth end of your roster properly. Pay your stars like stars and the don’t overpay on the rest.

            Case study = Chicago.

            Of their 13 fwds they have EIGHT making under $1 million. That’s right, only 5 forwards making over $1 million. They pay the elite players, elite money, and pay the rest, “the rest” money.

            If on the Hawks Backlund would be the 4th highest paid forward, behind Kane/Toewes/Hossa.

            The point is, the problem isn’t Johnny, SM & SB etc. THe problem is the entire 3rd/4th lines and the 5-7 d men. Mgmt royally messed it all up and it’s not gonna be a quick fix.

            This will take a few years to purge out properly especially now that Johnny has accelerated his pay raise timeline.

            http://www.generalfanager.com/teams/chicago-blackhawks

            • MattyFranchise

              Stajan at 4M. Ramo at 3.8M. Brutal. How/why they want to re-sign Russell is beyond me.

              The placeholders must be shed and replaced by guys like Grant, Agostino, Wotherspoon, Kulak, Nakladal.

              Only problem is we don’t have a coach who would play any of those guys.

    • Captain Ron

      I mean can’t afford to ice a full competitive team. You’d think we had won 3 cups in 4 years the way our money is getting shelled out..but no we haven’t won a damn thing and still can’t afford our players. Something is really wrong there

      • MontanaMan

        You don’t get a discount for being a non competitive team; in fact, teams out of the playoffs will often pay a premium for free agents as most want to sign with a club with a chance at the big prize. Lots of examples but look no further than free agent signings by the Flames, Oilers, Blue Jackets, etc and you’ll see what bad hockey teams need to spend to attract veteran free agents.

    • RKD

      Wow, a $2.3 million bonus for Bennett! Talk about some extra motivation. Yes it will be a challenge, I bet some teams if not all are hoping for some relief in an expansion draft whenever that will be but it probably won’t come soon enough. The more we rid ourselves of bad contracts the better off we will be. Too many overpaid players underachieving veterans. A falling cap will be hard to fill some big holes on this team, a #1 starter, one top 4 d-man and another top 6 forward. Treliving has got to find some creative trades.

        • supra steve

          I agree to a certain extent. However, when your leadership group signs for below market value (Gio, Brodie, hopefully JG and SM) then there is the option to pay a little more to your Stajan/Bouma type of players. Leaders lead.

          I am not at all convinced that Chicago will be winning another cup, now that their pigs (Kane/Towes) have firmly planted themselves at the trough, to the detriment to the rest of the roster. Instead of leading, they have gone on ahead, leaving the rest of the squad behind and in the dark.

          Time will tell.

    • MattyFranchise

      If it makes you feel any better the biggest chunk of Bennett’s bonus money is likely tied to Calder consideration, it’s pretty standard for a lot of high end rookies, and luckily for the Flames’ wallet he likely won’t finish very high against Domi, Duclair, Eichel, and McDavid.

      • MattyFranchise

        I was a little off on this, here’s a link about (who else?) McDavid’s contract but also the ELC bonus structure:

        “A” bonuses (paid out by the team)

        Time on Ice – Aggregate (total): must be in Top 6 among forwards on the team, minimum of 42 games played.

        Time on Ice – Per Game: must be in Top 6 among forwards on the team, minimum of 42 games played.

        Goals: minimum of 20

        Assists: minimum of 35

        Points: minimum of 60

        Points per game: minimum of 0.73, minimum of 42 games played.

        Plus/minus: must be in Top 3 among forwards, minimum of 42 games played.

        Member of post-season all-rookie team.

        All-Star Game participant.

        Awarded All-Star Game MVP.

        The Calder thing is a “B” bonus which is paid out by the League although the team may opt to pay out an additional sum if it chooses although I’m not too clear on that.

          • MattyFranchise

            Oilers curse, since Gretzky (who didn’t win one), they will NEVER win a Calder. RNH was the best player from his draft that season and he lost the Calder to Landeskog, who did worse scoring wise, because RNH missed too many games. Games played is a HUGE factor in Calder voting.

            • Dan the Drunk

              RNH was the best player from his draft that season and he lost the Calder to Landeskog, who did worse scoring wise, because RNH missed too many games.

              I emphatically disagree. Landeskog fully deserved the Calder that year because he was more valuable to his team.

              RNH played sheltered minutes alongside Jordan Eberle. Their only responsibility was to score, and they did. Landeskog was a legitimate Selke candidate that year. The Avs did NOT shelter him. At all. And he still scored over fifty points.

              Landeskog won because he was the best rookie that year. Full stop.

    • Bean-counting cowboy

      First off, those are very optimistic numbers for Gaudreau and Monahan. Barkov came in at 5.9. But with the team’s cap concerns and the uncertainty regarding the cap going forward, I expect Treliving to convince Monahan’s agent to get a Dougie type deal right at 5.75.

      Tarasenko came in at 7.5. But with the same issues as stated above, plus Tre convinces Gaudreau to not one-up the captain so he comes in at 6.75, same as Gio. That’s a cap hit next year of 12.5

      If unable to be traded, per General Fanager a Wideman buyout saves $4 million on the cap next year. Raymond = $2.1 million. Smid = $2.66 million for a total of 8.76 mil saved against the cap next year on what would have been $11.90 in contracts. That is huge savings on the cap in the year we need it (a whopping 74% of original contract value is saved on those 3 contracts).

      Somehow I think Egelland will avoid the buyout.

      We trade Russell and Hudler to Dallas at the deadline for Nichushkin and re-up him for a little less than Yakupov Money (2 mill) (or similar, Hayes?) and,

      Lines and cap hits look like this:

      Gaudreau/Monahan/Ferland = $13.325

      Granlund/Bennett/Nichushkin = $3.85

      Bouma/Backlund/Frolik = $10.075

      Jooris/Stajan/Colborne = $5.375

      Brodie/Gio = $11.40

      Kulak/Hamilton = $6.406

      Engelland/Nakladal(or schlemko type) = $3.741

      UFA goalie (Ramo?) $3.5
      Backup = $0.8

      Pressbox (extras) =
      Bollig $1.25;
      Grant $0.70;
      UFA replacement level D $0.90

      Buyout cost from above 11.9 – 8.76 = $3.14

      Gaudreau prior year bonus = $1.85
      Monahan prior year bonus = $.850
      Bennett prior year bonus = $2.80
      Granlund prior year bonus = $0.133

      Total cap hit on above = 70.095

      Current year cap = 71.40

      This assumes Bennett, Gaudreau and Monahan hit every one of their bonus targets (unlikely Bennett hits all) and that the cap remains the same (possible).

      In conclusion… if the cap goes down (I highly doubt it), ya… we could have issues. It would mean buying out Engelland also and perhaps trading Hudler and Russell for picks rather than a player you need to re-up next year, or it means playing more ELC’s.

      #capmanagement

      • RealMcHockeyReturns

        Good ideas but I doubt Flames buy out even 1 player unfortunately. I agree with your ideas but doubt Dalls gives up on Nichushkin also, and could they afford those 2 guys next year?

    • RealMcHockeyReturns

      Hey Flamesnation team! When do we get to briefly submit our trade ideas for Flames?? Start a “You tell the Nation” thread about how Flames should fix themselves!

    • flames2015

      Completely agree with you Kurt, what we are are paying our 3rd and 4th line, plus the bottom D pairing is poor asset management. Had players like Stajan & Bouma hit free agency, I honestly believe they wouldn’t have gotten close to what we are playing them. 4th line type players, come across the waiver wire quite often that we don’t need to be shelling out that kind of money for to retain them.

      Case and point, someone like Jarrett Stoll, his off ice issues aside. Big body, roughly the same point production as Stajan, good on the dot, can play on the PK. $800k. Lee Stempniak, I get why we got rid of him when we did, but he’s provided the Devils with some great secondary scoring for $850K. He’s been decently productive since he’s left us.

      Basically what I’m getting at it is, over the next few years once some we shed these horrible contracts off. These are the type of players that we should be filling out 3rd & 4th line with along side prospects from the AHL. We either get the same level of production that we are getting now, at a fraction of the costs or we luck out and a player has a career year with us.

    • RedMan

      I don’t believe the situation is as desperate as Ryan says…Trades/Buyouts are an option for Wideman/Smid/Engelland/Bolig…that clears up a lot of cap space…

    • KiLLKiND

      Well one way which I suggested earlier is too not sign a new goalie this year. We could have Poulin, Ortio, Gilles, Simpson and maybe someone like Berra try out on a PTO. We would save a ton and worst case scenario we burn off the final year of Calgary’s awful contracts and aquire one last high end prospect. Raymond, Engelland, Smid, Wideman and not even mentioning the Russel leaving this year. Our team isn’t great yet and it will be fine to not have great goaltending.

      Best case scenario one of the above takes job and runs with it. We know Ortio does have unbelievable games in him last year in Vancouver. Honestly I think you give all of these guys a chance someone will impress.

          • MontanaMan

            This is the problem with the “fire Hartley” crowd. They want Hartley gone which is fair but have no plan to replace him. Give the position to Yeo who couldn’t win with high priced talent heads above the Flames current roster? You’re kidding right?

            • MattyFranchise

              Yeah, I have no idea who would replace Hartley but Yeo is a guy that could is all I’m saying. He has 5 seasons of success at the NHL level with a team that started off at the bubble stage and ended up losing twice to the Blackhawks in the offseason. Minnesota was his first head coaching gig but he learned on a Cup winning team in Pittsburgh.

              He has the pedigree, he has the results, and with BT being a person early in his GM career maybe what he needs a person early in his coaching career.

              I’m not advocating changing coaches just to change coaches, I’m just saying that I don’t think Hartley is still the right coach for this rebuild. Coaches that start a rebuild almost never finish it, either way it’s time for a change.

              Besides, there’s a fair to good chance that Therrien gets skidded this offseason and I bet Hartley would love to get that job.

    • BlueMoonNigel

      Mike Yeo should have been Schmidtcanned last season, but he wasn’t as DD saved his job. DD couldn’t do it again this year, so bye-bye, Yeo-Yeo.

      If the 2014-2015 Flamers played like the 2015-2016 Flamers, I’m guessing Hartley doesn’t get his extension. I think Hartley will be back for the start of next season, but does he hold his job until the end of the season?

      Not sure what all this means. Perhaps it is that inevitable can be delayed but it can’t be avoided.

      • BlueMoonNigel

        Great idea, but the powers that be just aren’t ready for it yet.

        To that list I would add Cassie Campbell and Gerald Didiuck’s sister, whose name slips my mind.

      • MontanaMan

        What exactly would any of these women bring to an NHL club? I’m not sexist but women’s hockey is not the level of the NHL (the Women’s Olympic team used to play Midget teams for practice) and the NHL is a long way from the Women’s Professional League. Like many former NHLers, if the women are good coaches they should start in the CHL or University hockey, progress to the ECHL or AHL and prove their coaching skills. To say that the Flames should consider a current or former female hockey player for their coaching staff is ridiculous.

        • BlueMoonNigel

          I believe the implication was that just like a man wanting to coach in the NHL, a female would have to work her way up the ranks before she got to the big show. (Unless she is related to Wayne Gretzky.) Flames own the Hitmen. Why not have a female assistant coach with the Hitmen and if she proves capable, move her to the next level and so it goes.

          How is it that power skating coach Laurie Hamm has taught two generations of male hockey players, including NHLers, to improve their skating?

          On a related matter, why can’t a woman be the GM of an NHL team? Again, it would be advisable for her to work her way up the ranks to the NHL, but why not? There is no pre-requisite that says an NHL GM has to be a former NHL player.

        • Dan the Drunk

          Lindy Ruff of the Dallas Stars has no coaching experience outside of the NHL. It’s not unusual for a former player to be placed in the coaching staff. They didn’t work their way through the minors and the “machine”.

          For the last couple of weeks people have been scratching their heads looking around for potential replacements and future coaches. Most suggestions are pretty stale. Let’s try a solution using a different approach; Well how about a lady? Even Treleving and Giordano are throwing out voices in support, and believe a lady could become coach in the NHL.

          Shannon Miller is qualified and available today as a coach. 350 career wins in the NCAA as head coach, 5 championships, 11 frozen four victories, former ref, formed the girls minor hockey association in Calgary in 1989, assistant on team Canada in 1992 and 1994… She’s been in the hockey world for thirty five years.

          Hayley Wickenheiser has more medals than Gretzky, and is a local kid. I was being cute but if Gretzky and Roy, Scott Stevens, Adam Oates, Scott Niedermayer, Steve Yzerman and more are qualified based on medals or playing time, well here’s another candidate.

          • MontanaMan

            Many of the coaches you name had CHL time (Roy) or assistant coach time; or, they were strong leaders in the best hockey league in the world. The last time I checked, Shannon Miller never played any high level hockey and certainly neither her or Wick played in the NHL. I’m not saying it won’t happen but comparing women’s hockey to the NHL is apples and oranges.

            • BlueMoonNigel

              Roy was a leader? Man accomplished much in the game but most will remember him for the hissy fit he through when the Bionic Blueberry left him in to get lit up. Punking on your teammates and team because you have an issue with the coach is hardly the stuff of great leaders. Second lasting image of Roy was when Mickey Vernon took him to the woodshed to show the punk a lesson in respecting others and the game. Not saying that Roy didn’t grow as a person after he ended his playing days, but as a leader, do you think guys respect him as a man or the position he occupies?

    • VoRaCS

      SM has played a little better as of late, but I still maintain that too many want to overpay him. I would like to see a bridge type of contract and would not pay him more than $4 million/year right now. I do think Johnny at Gio money is reasonable and that we should lock him up for as long as possible.

      I certainly agree with this thread’s main point which is that we have too many bad contracts and that is a huge problem for the team moving forward. There are no real opportunities for the young players because we have too many over-priced veterans in the lineup and management can’t or won’t do much about it. Unless we shift our mindset, it will be difficult to become an elite team.

    • #97Train/McDavidCopperfield

      No article right now to post this in but thanks Calgary for Brossoit he lost in the shootout but in 2 starts in Edmonton he has been lights out !!
      Now if we only had a D. Sigh

      • Cfan in Vic

        I hated that trade at the time, and now more than ever. Horak, I never lost sleep over, but Smid has never been a high quality addition. Laurent always showed promise.

        Don’t thank the Flames, thank Feaster.

    • BlueMoonNigel

      As the threat of no Canadian teams in the playoffs this season looms even larger, is it time to revisit the idea of the all-Canadian division?

      Lump all the Canadian teams together and them play each other at least 6 times year. Keep the present playoff format, so at least 3 Canadian teams will make postseason every year. Jiggle the playoff format such that no Canadian teams play one another unless they reach the conference final.

      the all-Canadian division makes even more sense with the deflated Loonie expected to be well below the greenback at least until 2020, the possibly return of the Nordiques and who in Calgary wouldn’t get excited about seeing the McDavid-led Oilers and the Matthews-led Senators in your building at least 3 times a year every season?

      • MontanaMan

        I don’t believe in socialism in politics and I certainly don’t believe in it for sports. Don’t artificially create a division to prop up weak teams. The NHL has salary cap so everyone is on an even playing field – teams need to improve or they don’t make the playoffs. Simple as that.

        • BlueMoonNigel

          You are only looking at it today. Fast forward a few years, and who is to say that the Canadian teams won’t be the NHL’s elite? Imagine the Leafs with Stamkos and Matthews and Babs.

          Hard to believe now there was a time when the Oilers and Flames were the elite. Canadiens were also a force during that time. The great Avalanche teams would have been the great Nordiques team.

          Low Canadian dollar will also hurt the Canadian teams as they their revenues are mostly in loonies and their expenses are primarily in greenbacks.

          How many great rivalries involve Canadian and US teams? MTL and BOS, yes. TOR and Det, yes. MTL and the Rangers, no. EDM and Carolina, no. The biggest rivals Canadian teams have is with other Canadian teams.

          What you call Socialism, I call common sense, and common sense will always win out over any kinds of -isms.

        • BlueMoonNigel

          Mtl plays Winnipeg on Mon, Edmonton on Wed, Calgary on Thu and Vancouver on Sat. Some travel nightmare! Tourists from Taiwan and Japan pay heaps of money each year to have this nightmare, and my schedule is a lot less compressed than theirs is. Finally, we are talking about extremely fit young men, not old fat slobs who cringe at the thought of walking a block or eating a carrot stick.