The Signing Bonus: Rise Of The Buyout-Proof Contract (A Reprise)
This article was originally published in July of 2016, but seems extremely relevant a year later. Most of the players discussed inside underachieved in their first season, and again we saw signing bonuses handed out like candy this summer. Included at the bottom is an update with new contracts from this offseason.
The life of an NHL agent is tough. As the league continues to tweak (or totally overhaul) their CBA each few seasons, changing contract regulations and offering teams different ways of structuring deals, agents are always trying to find ways to circumvent them and get the best offers for their clients.
With teams becoming more and more willing to use buyouts to rid themselves of the horrible contracts that they sign on July 1st – famously a day of simultaneous excitement and regret – agents around the league needed to find a way to protect their clients from losing out on a third (or sometimes two-thirds) of the salary the sides agreed on.
The most recent buyout window, which lasted from June 15th to 30th, saw a dozen NHL players bought out, including household names like Thomas Vanek and Dennis Seidenberg. While some fans may see this as an opportunity for a player to earn two contracts at the same time – Vanek was signed on by Detroit for $2.6MM on July 1st, more than the $1.5MM he surrendered in his buyout – most take it as a personal slight, an indictment of their play or character. Regardless, agents continue to try and secure guarantees for their clients, instead of leaving the power in the hands of the league’s general managers.
Enter the signing bonus, this summer’s contract-du-jour. All across the league, big name free agents have inked deals that will see them paid almost entirely in signing bonuses, with very little actual salary being given out each season. Take Loui Eriksson for instance:
2016-17 – Salary: $1MM, Bonus: $7MM
2017-18 – Salary: $1MM, Bonus: $7MM
2018-19 – Salary: $1MM, Bonus: $6MM
2019-20 – Salary: $1MM, Bonus: $4MM
2020-21 – Salary: $1MM, Bonus: $3MM
2021-22 – Salary: $3MM, Bonus: $1MM
While Eriksson’s cap-hit sits at $6MM per year, he’ll make more than that in bonuses alone each of the next three seasons. There are a couple of reasons why this would benefit the player.
For one, everyone loves getting a big check rather than a weekly salary – who would turn down a piece of paper with six zeros? As any economist will tell you, money in hand is worth more than money promised to come, and just as teams in other sports are deferring payments for this reason long into the future, having money up front is actually more valuable for the player in question.
It’s in the buyout rules that the contract really holds value though, as – hinted at by the title – these contracts are basically buyout-proof. Under the current CBA, buyouts are calculated by taking two-thirds of the remaining salary owed, not including signing bonuses, and spreading it out over twice the remaining contract length. The new cap hit is determined by subtracting the savings from the average annual value of the deal which includes signing bonuses.
This means that if the Canucks were to want to buy out Eriksson after say, the third year of his new deal, they’ll only be saving $333K of cap hit in 2020-21, an insignificant portion of the $6MM number. That last season of $3MM is a bit better for the Canucks (they would save $2MM of his cap hit), but structuring it this way almost guarantees that Eriksson will collect at least $35MM of his deal – more than 97%. It’s just not worth it to buy him out any sooner than his final year.
Andrew Ladd, Milan Lucic, Kyle Okposo all signed deals heavily impacted by signing bonuses, protecting them against a buyout through all but the very end of their agreements. Even Matt Martin, a career fourth liner secured a $10MM deal that is 65% bonus. He’ll only be collecting $750K in salary in years three and four of the deal.
While this doesn’t necessarily mean trouble for clubs around the league, you can bet the owners and NHLPA will take a look at it when negotiations begin on the new CBA. The current agreement expires in 2022, though the two sides have the option to end it a year earlier.
Just as the league has used cap recapture and contract limits to close loopholes in the past, be sure that if they want to continue to have the option to buyout bad contracts they’ll remove this option from the equation. Creating a rule that would make signing bonuses only be able to hit a certain percentage of each season’s salary would be the easy fix, but expect push-back from the NHLPA.
Even if they do end up closing it, agents will work on another way to get their clients the best possible guarantee; they always seem to be one step ahead of the league.
This summer, signing bonuses have taken off even further. Carey Price‘s eight-year extension with the Montreal Canadiens is over 80% signing bonuses, with the goaltender making a maximum of $2MM in salary per year. A $10.5MM cap hit through age-38 will be impossible to buy out, offering almost no cap savings. The Blackhawks face a similar situation with Brent Seabrook, whose 2015 contract is looking worse and worse, and provides little incentive for a buyout.
Interestingly, the Nashville Predators have continued in their practice of avoiding signing bonuses altogether. After signing Filip Forsberg to a bonus-free deal last summer, both Ryan Johansen and Viktor Arvidsson have taken similar structures in their long-term extensions this year. GM David Poile has taken much of the risk off the table even as he allocated many of his resources to his trio of young forwards. Though they pose little risk of age-decline, all three carry large enough cap hits to really hurt the Predators if they were to take a step backwards in their development. It’s hard to see any deserving a buyout, but the option is still there.
Alexander Radulov may be the biggest example among 2017 unrestricted free agents, as his contract with the Dallas Stars is both front-loaded and filled with signing bonuses. Radulov will earn just $13.25MM in salary over the next five seasons, making it difficult to buy out even as he enters his mid-thirties. For a player who has a relatively short track record of success in the NHL, it may quickly turn into a problem if he starts to feel the draw of father time.
Summer Predictions: Central Division
The hockey world is at a standstill now that August has rolled around. With all of the arbitration cases now decided and just a few restricted free agents left to sign, players and fans alike are counting the days until training camp starts. While there are still several names in free agency that could still help an NHL club, it seems like many are destined either for professional tryouts or late-summer deals after injuries strike.
So now we’ll get into our summer predictions. Before the start of the year we’ll be releasing a full season preview with projections for each club and the expected playoff teams, but first we’ll ask you to give us your take on how you believe each division will end up. We’ve looked at three of the divisions so far, with the polls pointing to the Pittsburgh Penguins, Tampa Bay Lightning and Edmonton Oilers as the top seeds. All three of those teams failed to lead their divisions in 2016-17, but are expected to take another step forward.
Today we’ll finish the series by taking a look at the Central division, which last season gave us the top two records in the Western Conference and the Stanley Cup finalists. Once again choose who you think will win the division this season, and make sure to leave your full prediction for the division standings in the comments. As a proxy for the overall standings, we’ll be sure to publish these results alongside our own PHR rankings in September.
Who will win the Central Division?
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Chicago Blackhawks 22% (309)
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Nashville Predators 21% (291)
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St. Louis Blues 19% (267)
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Minnesota Wild 17% (238)
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Dallas Stars 12% (163)
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Winnipeg Jets 7% (105)
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Colorado Avalanche 2% (31)
Total votes: 1,404
[Mobile users click here to vote!]
Dallas Stars’ Upcoming Roster Crunch
While everyone points to the Toronto Maple Leafs, Chicago Blackhawks and Washington Capitals and their upcoming training camp cap crunches, there is another team that may be facing the reality of losing a player on waivers before the start of the season. Toronto and Chicago will both likely use long-term injury space to clear room on their salary cap as the season begins, but the Dallas Stars don’t have that luxury (if you can call it that).
Looking at the Stars’ CapFriendly page, there are 22 skaters currently listed in their NHL portion. Each of these 22 are waiver eligible, and 20 of them are on one-way contracts. Devin Shore is still on his entry-level deal, but it would be shocking to see him spend any time in the minors this year after a solid 2016-17 campaign in which he registered 33 points. The other two-way deal is Brian Flynn, a prototypical 13th forward who hasn’t seen the minors in almost five years.
When combined with the more than $12.3MM Dallas is paying goaltenders this year—including the buyout of Antti Niemi—the team currently projects over the $75MM salary cap. The Stars will have to remove one of the players just due to roster constraints, but there is also the case of Julius Honka. Honka is still waivers exempt, but many believe he’s ready to take the next step and join the Stars full-time. The 21-year old is poised for a breakout campaign, that could end up costing the Stars one of their other defensemen.
It’s extremely unlikely that the team will carry nine defenders, meaning that if Honka makes the team out of camp at least one would need to go. The most likely candidates are Greg Pateryn or Patrik Nemeth, though it may be tough to squeak either of them through waivers. While neither has shown the ability to contribute in the top-4, both would provide solid NHL depth to a team looking to improve their blue line. If Dallas doesn’t make a move in the next month to trade off some of their surplus defense, the battles in camp may be some of the most interesting to watch around the league.
Vegas Had Interest In Stephen Johns Before Expansion
- Although center Cody Eakin was selected by the Golden Knights from the Stars in the Expansion Draft, they at one time had their eyes on defenseman Stephen Johns which played a big role in Dallas protecting him, notes Mike Heika of the Dallas Morning News. The 25-year-old was in and out of the lineup as part of their defensive rotation last season but since they ultimately decided to protect him from Vegas, that may give him a better shot at securing more of a full-time spot in the lineup in 2017-18.
A Quiet 2017 Off-Season
By the time August rolls around each year, it seems like the off-season is dragging on. The July 1st free agent frenzy is long behind us and it’s been weeks since the last major signing. Fans are struggling to get their hockey fill and counting the days until the puck drops on preseason hockey. In 2017, fans have all the more reason to be sick of the off-season. When compared with the summer of 2016, this off-season has simply been boring. It was expected to be as such, but no one could have predicted just how quiet this summer could be.
As of today, August 6th, 2017, there have only been two unrestricted free agents signed to contracts worth more than $6MM per year: Kevin Shattenkirk to the New York Rangers (as predicted) and Alexander Radulov to the Dallas Stars. In contrast, there were four such deals signed on July 1st, 2016 alone. Drop that mark down to contracts worth more than $4MM annually, and you get uninspiring names this year like Evgeni Dadonov, Dmitry Kulikov, Nick Bonino, Karl Alzner, Martin Hanzal, and Steve Mason added to the list; hardly a superstar among them. 2016 saw high-profile players like Milan Lucic, David Backes, Loui Eriksson, Kyle Okposo, and Andrew Ladd all find new homes. Those signings came on the heels of the P.K. Subban – Shea Weber and Taylor Hall – Adam Larsson trades as well. The best swaps 2017 has to offer so far are Travis Hamonic or Marcus Johansson being dealt for draft picks. There have simply been a lack of franchise-altering moves made this summer.
Then you have the timeline of when deals got done. By August last year, the best unsigned free agents were Antoine Vermette, Jiri Hudler, and Jhonas Enroth. The year before, Cody Franson and David Schlemko highlighted the August market. In both cases, NHL teams got their deals done in July, filling the month with exciting signing news. This year? Not so much. Legendary players like Jaromir Jagr, Jarome Iginla, and Shane Doan remain available, alongside other able-bodied contributors like Thomas Vanek, Drew Stafford, and Daniel Winnik. That’s in addition to Franson and Hudler as well. Teams are simply waiting around on this market for reasons unknown. Could it end up as an exciting run of signing in August? Maybe, but don’t count on it.
The weak 2017 free agent market coupled with the challenge of preparing for June’s Expansion Draft has simply resulted in one of quietest off-seasons in recent memory. Several teams still have needs and spots to fill and signings and trades remain possible, but at this point the summer is a lost cause. Time to look forward to next season and even next summer when we *hope* to see the likes of John Tavares, Rick Nash, Evander Kane, James Neal, James van Riemsdyk, Paul Stastny, Mikko Koivu, Cam Atkinson, Jonathan Marchessault, Daniel and Henrik Sedin, Mike Green, Jack Johnson, Calvin de Haan, and Antti Raanta all hit the open market. Hopefully that list is enough excitement to get you through the rest of this one.
Dallas Stars Sign Jamie Oleksiak
The Dallas Stars have signed another restricted free agent, inking defenseman Jamie Oleksiak to a one-year $965K contract for 2017-18. Oleksiak was eligible for salary arbitration but chose not to file after his disappointing season.
Oleksiak, 24, played 41 games this season for the Stars and registered just seven points. He still hasn’t developed into the hulking shut down defender the Stars had hoped for when the selected him 14th overall, and can’t seem to keep himself in the lineup for a whole season. This year he spent a ton of time in the press box as a healthy scratch, and has just 119 games since his debut in 2012-13.
With Marc Methot added to the Dallas defense corps, there doesn’t seem to be a regular role for Oleksiak once again. The team has a glut of defenders already established, while Julius Honka is also poised to make his mark in the NHL. It’ll be tough for Oleksiak to pass anyone on the depth chart.
There has been times that moving Oleksiak to forward has been discussed, though it doesn’t seem like that is a realistic option at this point. Instead, the 6’7″ defender—who actually has more skill with the puck than some may think—will have to take a big step forward in his development. That’s not uncommon for players of his size, but it’ll have to come soon.
East Notes: Bylsma, Guentzel, Rowney
The Athletic’s Craig Custance caught up with former Pittsburgh Penguins and Buffalo Sabres head coach Dan Bylsma who had some thoughts on how the Detroit Red Wings should approach their roster. Ironically enough, Bylsma grew up a Detroit fan, since he was a Michigan resident. Custance quizzed Bylsma on a number of topics, including a Red Wings rebuild and his time with the Sabres. On the Red Wings, Bylsma admits that Detroit is no longer model franchise in the league and that fans will “never see” the team they once saw that featured bonafide stars like Luc Robitaille, Brett Hull, Steve Yzerman, and Sergei Fedorov, to name a few. The former bench boss guesses that the Red Wings roster will look dynamically different in three years as they’ll be forced to rebuild a team that has certainly struggled. He also believes fans are ready for a rebuild, preferring to see a competitive team that grows into playoff dominance instead of keeping the “streak” alive with aging players and early playoff exits. He doesn’t believe, however, that the Red Wings need a total teardown to win. Instead, he thinks that steady drafting can keep Detroit relevant without ripping out the foundation.
- When it came to talking about Buffalo, however, Bylsma was coy. When he arrived in Buffalo, the team was in the midst of a tear down and rebuilding with the likes of Jack Eichel, and other young, dynamic players. While there were some strides, last season was disastrous, costing both Bylsma and former general manager Tim Murray their jobs. Bylsma admits to Custance that he didn’t want to talk about what happened in Buffalo while explaining that Detroit hasn’t gutted things like Buffalo did. He also believes that a teardown-build up program takes several years, sometimes up to five. That’s understandable from his vantage point, given that he only had two years in Buffalo to try and win. It has to be said that Toronto’s resurgence couldn’t have helped matters, as the Leafs not only qualified for the playoffs, but gave Washington a scare in the first round.
- NBC Sports’ Adam Gretz writes that with Connor Sheary re-signed, the Pittsburgh Penguins will turn their attention to grabbing a third line center. He makes a couple suggestions, wondering if Jake Guentzel could move over to center line or if youngster Carter Rowney is ready for full time duty. The most realistic option, Gretz believes, is for Pittsburgh general manager Jim Rutherford to explore trades to fill the vacancy and give the Pens a solid chance to win their third consecutive Cup.
NHL Snapshots: Dallas Stars, Zadorov, Butcher
As announced yesterday, the Dallas Stars will host the 2018 NHL Entry Draft at American Airlines Arena on June 22-23. One key reason they received the honor, according to NHL.com’s Sean Shapiro, is that 2018 will mark the team’s 25th anniversary in Dallas and NHL Deputy Commissioner Bill Daly said the way the team has successfully built a hockey community is a main reason for get awarded with the draft.
“I think they’ve done a fabulous job over the 25 years they’ve been here,” Daly said. “The Stars organization has led the way in turning a non-traditional hockey market into a hockey market. Your involvement in promoting and supporting youth hockey in the greater Dallas area comes from rink initiatives and sponsoring youth hockey teams. It’s not only inspiring, but it’s a model that all NHL clubs in non-traditional markets aspire to.”
Stars CEO and president Jim Lites said it has been a two-year commitment to get the draft to come to Dallas. The team has worked hard this year to get back into the playoff picture after a down year for their 25th anniversary. They have hired coach Ken Hitchcock, traded for goaltender Ben Bishop and defenseman Marc Methot and signed several key free agents, including Alexander Radulov and Martin Hanzal.
- Adrian Dater of BSN Denver, writes that it is highly unlikely that Colorado Avalanche defenseman Nikita Zadorov will return to the KHL next year when his contract is up. Dater writes that the defensive defenseman and Colorado are less and $1MM apart in negotations and believes the Avalanche wouldn’t let the future restricted free agent leave over that little money. Zadorov, who was the key piece in the Ryan O’Reilly trade two years ago, played 56 games last year for the Avalanche and had 10 assists.
- Joe Haggerty of CSNNE writes the Bruins, who are well-known for going after top college talent, should not consider signing Hobey Baker Award winner Will Butcher. The defenseman, who will become a free agent if he doesn’t sign with Colorado before Aug. 15, is likely to receive multiple offers. However, Haggerty writes that the team doesn’t need another undersized, unproven player on their defense since they already have Brandon Carlo and Charlie McAvoy on the roster.
NHL Snapshots: Ennis, 2018 NHL Draft, Minor Signings
The Minnesota Wild didn’t make too many changes to a team that finished with 106 points in the Western Conference last season. However, one major move was to move defenseman Marco Scandella and veteran Jason Pominville to Buffalo for Marcus Foligno and Tyler Ennis. While the team has high hopes for the 25-year-old Foligno, still a restricted free agent, could have a breakout year and he has predicted a 20-goal season, the team is even more focused on Ennis returning to form.
Ennis, who has battled the injury bug for the last two years has only played in 74 games during that time. Last year, he missed time due to groin surgery and only played in 51 games. Before those injuries, the 27-year-old wing scored 41 goals in two seasons between 2013-15. However, since then, he has tallied just eight goals. NBC Sports Adam Gretz writes that Minnesota Wild coach Bruce Boudreau has high expectations for Ennis this year and believes that if Ennis can remain healthy, he expects to see a resurgence like the one that veteran Eric Staal did last year.
Staal scored 28 goals last year for the Wild a year after he was coming off a lackluster 13-goal season between the Carolina Hurricanes and the New York Rangers. Yet Boudreau believes Ennis could duplicate that kind of comeback performance in Minnesota.
“Tyler Ennis, I’ve seen and talked to and met,” Boudreau said. “I don’t want to put pressure on him, but three years ago, he was a great player in this league. He’s missed 90 games in the last two years due to injury. If we can keep him healthy, I think he’s going to have a rebound year like Eric Staal had. I’m very excited about having him. In our top-9 forwards, I think we’re as strong as anybody in the league.”
Of course Ennis’ personal high is 21 goals, and while he has hit 20 goals three times in his career, it’s unlikely to see Staal-like numbers.
- The Dallas Stars tweeted they will host the 2018 NHL Draft at American Airlines Center next season on June 22-23. It was held this year in Las Vegas.
- The Tucson Roadrunners, the AHL team of the Arizona Coyotes, signed three more players along with the reported signing of Ryan Culkin earlier today. The minor league affiliate also inked goaltender Michael Houser and wingers Scott Allen and Trevor Cheek, according to SB Nation. Houser played most of last season with the ECHL Cincinnati Cyclones finishing with a 2.58 GAA in 41 games. Allen played 57 games for the Bakersfield Condors of the AHL and finished with eight goals and 11 assists, while Cheek split time between both the AHL and the ECHL.
Early Look At Some 2017-18 Impact Rookies
Last season we saw one of the greatest rookie crops come through the league in quite some time. Auston Matthews, Patrik Laine, Zach Werenski, Matt Murray, Mitch Marner, William Nylander, Travis Konecny, Ivan Provorov, Matthew Tkachuk, Sebastian Aho, Brayden Point the list could go on and on with the players who made an impact right away in their first full season. The league continues to skew younger and younger, and we got a taste last year of some of the names we’ll see fighting for the Calder trophy next season as well.
No longer is there an age restriction on the NHL, since teenagers have taken the league by storm with their blend of speed and skill. Even before they’ve grown into their bodies they’re putting up 40-goal seasons, or winning back-to-back Stanley Cups. So who will be the next wave of players to change their team’s fortunes and make an impact from the second they step on the ice? While there may not be another crop like last year, there are plenty of interesting names to keep an eye on.
Without dipping into the 2017 draft class, of which Nico Hischier, Nolan Patrick and others both may jump right into the top league, we’ll examine some early favorites who have both the talent and opportunity to find immediate success.
Clayton Keller – Arizona Coyotes 
Keller made his NHL debut last spring after exiting Boston University and immediately made his presence felt. In three games he registered a pair of assists, and showed off his incredible offensive skill. As a freshman at BU he scored 45 points in 31 games, won gold at the World Juniors and put up seven points in eight games with Team USA at the World Championships playing against other NHL stars. Like Marner last year there are questions about his size and durability, but Keller has excelled at every level so far and if given the chance could be a difference maker on the Coyotes.
Dylan Strome – Arizona Coyotes
In any discussion of young Coyotes you also have to mention Strome, the third-overall pick from 2015 who started the season with the team last year before heading back to junior for another year. Upon his return Strome dominated as part of one of the most talented lines in the OHL, but some still question his NHL ability in 2017-18. There is potential for a franchise centerman here, but there is also a substantial amount of risk that Strome’s skating will hold him back from being the elite offensive player he is at the lower levels.
Tyson Jost – Colorado Avalanche
Another NCAA-turned-NHL player this spring, Jost finished his year with six games for the Avalanche and even scored his first goal. It’s all about speed with Jost, who is rarely caught standing still and always seems to have the puck follow him around the ice. His year was spent in North Dakota where he scored 35 points in 33 games, and given the poor results of Colorado last year could be given an opportunity to impress right away. If put on a line with other young offensive talents in Colorado, Jost could end up with a healthy number of points even if some of his fundamentals at the center ice position still need work.
Brock Boeser – Vancouver Canucks
Boeser was Jost’s teammate (and often linemate) at North Dakota, and jumped straight to the NHL after losing out in the NCAA tournament only to immediately make an impact for the Canucks. Boeser scored what would end up being the game-winning goal in his first NHL game, in a fashion that will foreshadow how he’ll be effective at the next level. Speed, playmaking and a never-ending drive for the net will be the hallmarks of Boeser’s career, and he’ll be given a chance right away with some of Vancouver’s top forwards. In nine games at the end of the year he registered five points, including two powerplay tallies set up by Henrik Sedin.
Charlie McAvoy – Boston Bruins
On defense, the Bruins’ top prospect leads the list after debuting in the Stanley Cup playoffs this past season. McAvoy looked every bit as confident and smooth as expected, even when being chased by NHL forwards and paired with the legendary Zdeno Chara. While Boston won’t want to put too much on the 19-year old’s shoulders right away, he’s always floated to the top of any team he’s played on and didn’t log less than 24 minutes in a single one of his six playoff matches. The Bruins will have several rookies in the lineup next season, but it’s not just top pairing potential for McAvoy, it might already be performance.
Julius Honka – Dallas Stars 
A player that likely could have been included at the top of this article had he been given the chance, Honka comes into this season ready to take the next step and be a full-time player on the Dallas blueline. After three development years in the AHL where he’s shown off his high-end offensive talent on a nightly basis, he may just end up as one of the top up-and-coming defensemen in the league at year’s end. His two-way skill is reminiscent of teammate John Klingberg, and showed it off by being arguably Finland’s top defender at the recent World Championships. With 16 games under his belt and turning 22 this season, he’s ready to help the Stars get back to the playoffs right away.
*Note: There are many other rookies that have impact potential that will be profiled throughout the summer as we approach the season. These are in no particular order or ranking.
Photos courtesy of USA Today Sports Images