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Explaining Buyouts

Adam Proteau of The Hockey News answers some emails and this buyout question is one I receive on a regular basis...

Was the two amnesty buyouts per team a one-time provision in the NHL’s collective bargaining agreement, or can teams continue to buy out players annually?

This must be a trick question, because the answer is neither. The NHL’s amnesty buyouts were implemented in the wake of the 2013 CBA, but allowed the two buyouts per team to be used either last summer or in the summer of 2014.

The grand majority of franchises still have both buyouts to use if they so desire; only four teams (Chicago, Montreal, Philadelphia and Toronto) have used both, and only seven teams (the Islanders, Rangers, Detroit, Minnesota, New Jersey, Tampa Bay, and Washington,) have used one. So it’s fair to expect that we’ll see more buyouts – and teams potentially making trades with organizations like the Flyers or Leafs to use their buyout on an acquired player in exchanged for a dumped contract or unwanted asset.

That isn’t to say teams can’t buy out players after this summer. The difference is, the normal buyout rules apply, – meaning the amount of contract term remaining at the time of the buyout is spread out over twice the number of years, and two-thirds of the money remaining is paid out and (and this is the most important part) counts against the cap.

read on for more Q & A...

Filed in: NHL Teams, NHL Talk, | KK Hockey | Permalink
 

Comments

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I am almost positive that the amnesty buyouts could only be use on players signed before the most recent CBA.  Seems like an important distinction that Proteau left out.

Posted by Valek from Chicago on 01/24/14 at 11:55 AM ET

J.J. from Kansas's avatar

Posted by Valek from Chicago on 01/24/14 at 11:55 AM ET

You are absolutely correct.

Amnesty (compliance) buyouts may not be used on players signed after September 15, 2012 (the day the Lockout officially started).

This is one of the more-common misconceptions that has been going around and Proteau should have made the distinction clear.

Posted by J.J. from Kansas on 01/24/14 at 12:42 PM ET

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He also fails to mention that in the “regular” buyout, the player has 24 hours from the time he receives notice to veto the club’s action against him.  Thus, there are going to be few, if any, “regular” buyouts unless the player is good enough to make up the lost salary with a contract from another team (i.e. not Stephen Weiss until he proves he can still play).

Posted by jkm2011 on 01/24/14 at 01:05 PM ET

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Plus Weiss as a no movement clause, so he’d have to waive that too, in order for the Wings to expose him to waivers (the first step in the buyout process).  He’s double-protected.

Posted by jkm2011 on 01/24/14 at 01:11 PM ET

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jkm, there is no “lost” salary, I don’t believe. My understanding is the move is done for cap reasons but it doesn’t actually cost the player (unless you factor time value of money). Basically, the player receives the same sum total of money but it is spread out over double the length of the contract.

Posted by VitoLambruski on 01/24/14 at 01:23 PM ET

J.J. from Kansas's avatar

Proteau has updated his story to include the rule about contract signed after 9/15/12.

Posted by J.J. from Kansas on 01/24/14 at 01:26 PM ET

J.J. from Kansas's avatar

He also fails to mention that in the “regular” buyout, the player has 24 hours from the time he receives notice to veto the club’s action against him.

That’s because this is false.

Players have no veto power on a buyout.  A player has to be placed on unconditional waivers before a buyout can commence, but the only power a player has in this situation is to use a no-movement clause to skip the waivers and go straight to getting bought out.

Whatever source you have about a player having veto power over being bought out is wrong.

Posted by J.J. from Kansas on 01/24/14 at 01:32 PM ET

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Which means that Detroit could buy out Sammy at any time but they choose not to, but they still won’t play him, which makes no sense.  He signed before September, right?

If they could still use a compliance on him, either play him till he gets hurt and then LTIR him, or buy him out and eat some salary (but clear a ton of space for the deadline).  Paying him and not playing him… I don’t get it.

Unless, they’re saving that other compliance buyout for an even bigger contract.  That’s got to be Franzen, right?  Weiss was signed after the lockout.  They’d have used it on Tootoo instead of burying him, they’re not using it on D or Z, all the other expirings are smaller than Sammy’s deal… it’s got to be Franzen, who has 6 years and 17.5 mil left on his deal.

They wouldn’t just not use it, would they?  Not with cap space being at such a premium.

Posted by HockeyinHD on 01/24/14 at 02:38 PM ET

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Posted by HockeyinHD on 01/24/14 at 02:38 PM ET

The only reason they couldn’t buy him out is because he was injured at the time.  Or, at least, they couldn’t prove that he wasn’t injured.

Other than that, there are specific buyout periods, so they can’t buy anyone out now.

I’m sure they’ll use it, and they’ll use it on Tootoo when the time comes.

Posted by Garth on 01/24/14 at 02:44 PM ET

TreKronor's avatar

That’s got to be Franzen, right?

I couldn’t imagine it would be.  I think Garth is right with Tootoo.  Franzen’s contract will look considerably better when the cap rises next year.  Besides, I’m sure they could get some picks for him or a prospect or player in return, other than buying him out.

Posted by TreKronor on 01/24/14 at 02:58 PM ET

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Posted by TreKronor on 01/24/14 at 02:58 PM ET

Definitely.  In a couple years the cap will be $80M and even in Franzen never has an 80-game season and never cracks 30 goals, having a guy with the natural ability at less than $4M a season will be good, and once his salary drops below his cap hit, he’d be decent trade prospect.

Posted by Garth on 01/24/14 at 03:05 PM ET

J.J. from Kansas's avatar

Other than that, there are specific buyout periods, so they can’t buy anyone out now.

First buyout period is in late June and ends before free agency begins.

Second buyout period depends on salary arbitration cases and no matter what happens before training camp begins.

You may not buy out a player during the season unless the NHL and NHLPA make a special agreement to allow it (They did this last January to allow both the Redden and Gomez buyouts because the Rangers and Habs said they would shut down each player to ensure they were healthy enough to be bought out during the summer and they made a stink about that). 

I don’t anticipate another special buyout window would open, even if the Wings threatened to simply send Samuelsson home for the rest of the season.

Tootoo is the most-likely target.  The Wings could also use it as a bargaining chip to trade for a player that another team can’t buy out and then use it on that guy.

Franzen is an interesting consideration, but I just don’t think Kenny pulls the trigger on it unless something goofy happens like the Hawks use one on Hossa to avoid the cap recapture problem (similar to the problem with Franzen).

Posted by J.J. from Kansas on 01/24/14 at 03:09 PM ET

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You are mostly right.  Weiss cannot stop a buyout (sweet) ...

(c) A no-move clause may prevent the involuntary relocation of a Player, whether by
Trade, Loan or Waiver claim. A no-move clause, however, may not restrict the Club’s Buy-Out
and termination rights as set forth in this Agreement. Prior to exercising its Ordinary Course
Buy-Out rights pursuant to Paragraph 13 of the SPC hereof, the Club shall, in writing in
accordance with the notice provisions in Exhibit 3 hereof, provide the Player with the option of
electing to be placed on Waivers. The Player will have twenty-four (24) hours from the time he
receives such notice to accept or reject that option at his sole discretion, and shall so inform the
Club in writing, in accordance with the notice provisions in Exhibit 3 hereof, within such twentyfour
(24) hour period. If the Player does not timely accept or reject that option, it will be deemed
rejected.

Posted by jkm2011 on 01/24/14 at 04:00 PM ET

J.J. from Kansas's avatar

Posted by jkm2011 on 01/24/14 at 04:00 PM ET

Read it again. I am entirely right.

A no-move clause, however, may not restrict the Club’s Buy-Out

He may reject being placed on waivers prior to the buyout, which is a way of saying he may skip the waivers and go straight to being bought out.  He can stay on waivers for 24 hours or he can tell the team he doesn’t want to go on waivers and make it effective immediately.  The only other option is to elect to be placed on waivers 23 hours after being notified of the intended buyout and then spend another day waiting to clear/be claimed before he could be bought out.

A case which would still not make me wrong. He’d either go on waivers or he would elect to skip waivers and go straight to being bought out… like I said.

Weiss would have no power to stop a buyout, but the Red Wings would have very little reason to use one on him because it couldn’t be a compliance buyout. They would be throwing away $2.1M worth of cap space next year on a guy who they know is better than the person who’s been hurt pretty much this entire season.

Posted by J.J. from Kansas on 01/24/14 at 04:19 PM ET

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Paul Kukla founded Kukla’s Korner in 2005 and the site has since become the must-read site on the ‘net for all the latest happenings around the NHL.

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