The smoke has settled and Lance Bouma and Ryan Murphy are no longer members of the Calgary Flames. One of the common refrains we’ve seen on social media is questions about what the benefit of buying out the two players rather than merely burying their contracts in the American Hockey League. In a few key ways, the buyouts were the smartest move that the Flames could make if they had no plans for either player on their National Hockey League roster.
Buyouts versus burying
Under the CBA, buyouts are functionally the “get out of jail” card for general managers to wriggle out of bad deals. They’re particularly useful in terms of players younger than 26 at the time of the buyout; if a player is 26 or older, the player gets paid out two-thirds of their remaining salary and if they’re younger they get one-third of it (spread over double their remaining contract length).
In terms of burying a player, if they’re on a one-way deal then they get the entirety of their NHL salary but the cap hit is their NHL cap hit minus $1.025 million. (The $1.025 million figure comes from the league minimum salary of $650,000 plus $375,000 as stipulated in the CBA).
Lance Bouma is 27 years old and received a two-thirds buyout on his one remaining season.
- Buried: $1.175 million cap hit, $2.2 million cash
- Buyout: $666,667 cap hit (in 2017-18, $776,667 in 2018-19), $766,667 cash (in 2017-18, $1.533 million total)
The Flames save $666,666 in total cash ($1.43 million this season) from buying out Bouma rather than burying him. The cap hit savings are $508,333 this season compared to burying him in the AHL. In either sense, the buyout gives the Flames the most flexibility despite having a lingering cap hit in 2018-19.
Ryan Murphy is 24 years old and received a one-third buyout on his one remaining season.
- Buried: $0 cap hit, $787,000 cash
- Buyout: $100,000 cap hit (in 2017-18, $137,500 in 2018-19), $137,500 cash (in both years, $275,000 total)
The Flames save $512,500 in total cash ($650,000 this season) from buying out Murphy rather than burying him. They take a $100,000 cap hit ding that burying the contract would not have had. It was a calculated gamble, in the sense that $100,000 isn’t a ton cap-wise and the cash savings would seem to make up for it.
Overall, the two buyouts save the Flames $1.18 million in cash ($2.08 million this season) compared to burying the two deals. Cap-wise, they save $408,333 this season with the two moves but they’ll have a combined cap penalty of $914,167 next season. It seems that they judged the financial flexibility they gain in the short-term (cap-wise and cash-wise) to be worth the penalty in 2018-19.