2011 Offseason: The Potential Impact of RFAs on New Jersey Devils' Salary Cap

Zach Parise getting stacks on stacks on stacks + qualifying the 5 other NHL RFAs = more cap space than you think. (Photo by Paul Bereswill/Getty Images)

The New Jersey Devils are in a tight spot when it comes to their salary cap for the 2011-12 season.  

According to CapGeek's team chart, they have 17 players already signed for next season for a total of $52,177,500.   Under the current salary cap upper limit, this is $7,222,500 in space.  They nearly have a full roster - they only need to have a second goaltender to meet the minimum roster size.  But I highly doubt the Devils will let all of their free agents walk.  They probably will keep their restricted free agents, particularly that Zach Parise fellow.

However, doing even just that presents a problem.  The best way to keep their restricted free agents are to offer them qualifying offers on June 27.  And qualifying offers have a required pay raise for players who have earned certain salaries.  Even if the salary cap does raise up to a reported number of $62.2 million (source - Larry Brooks of the NY Post), the Devils would only have approximately $10,022,500 to spend on all of these free agents.  That may seem like enough, but as I'll show after the jump, it's going to be really tight to even just keep their RFAs with that much space.

CBA Reminder: League Minimum Salaries & Qualifying Offers

I want to highlight two items from the NHL-NHLPA Collective Bargaining Agreement that will be important to note for this coming season. First, the NHL minimum salary will increase for 2011-12 from $500,000 to $525,000 as per Article 11.12.  Second, impending restricted free agents can have their rights retained by their team (and get draft pick compensation if an offer sheet is tendered and signed) through a qualifying offer.   This is covered in Article 10.2.(a),(ii).  NHL teams can begin offering qualifying offers on June 27, which can be accepted on July 1 or automatically expire on July 15.  The NHL's CBA page has a good summary of what is required to be tendered for a qualifying offer.

QUALIFYING OFFERS

How will qualifying offers work?

Players earning $660,000 or less will be entitled to qualifying offers (QO) at 110% of their prior year's salary; players earning more than $660,000 and up to $1 million will be entitled to QOs at 105% of prior year's salary; players earning more than $1 million will be entitled to QO at 100% of their prior year's salary.

Please note that qualifying offers are based on the player's salary of the final year of their contract - not their cap hit.

The Cost of Qualifying the Devils' Restricted Free Agents

The Devils have six restricted free agents on their NHL roster at the end of last season.  Per Article 10.2.(a).(iv) the Devils either have tender them a qualifying offer, take them to arbitration, or let them become unrestricted free agents on July 1.  For the sake of argument, let's say the Devils will want to keep all six RFAs.   Using the salary information at CapGeek, I've calculated what their minimum qualifying offer may be.

NHL Devils RFA 2010-11 Salary Q.O. Minimum Difference
Zach Parise $5,000,000 $5,000,000 $0
Vladimir Zharkov $610,000 $671,000 $61,000
Matt Corrente $600,000 $660,000 $60,000
Anssi Salmela $625,000 $687,500 $62,500
Matt Taormina $510,000 $561,000 $51,000
Mark Fraser $500,000 $550,000 $50,000
Total $7,845,000 $8,129,500 $284,500

 

Everyone but Parise would stand to make 110% off their 2010-11 salary for the next season.   Individually that's not a lot of money and the total doesn't seem like much on it's own.  It's just more than half of a NHL minimum salary deal next season, after all.

Yet, please remember that the Devils only have so much cap space to put these guys back on the books.  Even if we assume the incredibly unlikely event that the players all accept and sign for the minimum qualifying offer happens, the Devils will need $8.13 million of total cap space to make that up.   Under the current cap ceiling of $59.4 million, the Devils wouldn't be able to do it.  They would be over by $907,000.  They could go above the cap by that much during the offseason; but they'll need to make moves to get under by the time the season starts.

If we consider the higher ceiling of $62.2 million, the Devils would then have $1,893,000  in cap space to use for  a second goaltender (either from within or sign UFA) and other players.  If we assume that second goaltender will only cost a league minimum salary, then that leaves $1,368,000 at most for other players or breathing room for an in-season trade and/or calling up players as needed.  The Devils may be able to live with that, assuming they're fine being close to the ceiling for another full season.  Of course, we should hope the upper limit gets higher if only for having more space. 

However, let's be real.  There's no way the Devils are going to sign all six RFAs at the minimum qualifying offer number for next season.  At the very least, Parise is going to demand and command a salary higher than $5 million for next season.  I can see it being closer to $7 million, which will present a major headache all on it's own. The more he wants, the less space available to keep these RFAs, much less keep Andy Greene or sign other impending UFA players like a goaltender.    Even at the potential $62.2 million upper limit, if Parise gets a cap hit higher than $6,893,000, then the Devils can't even keep all of their restricted free agents at the value of their minimum qualifying offer - much less fill out their roster.    Throw in the possibility of the other five wanting better salaries than they made last season, and what little space the Devils would have with a higher upper limit is vanished.

Oh, and it gets tougher if the Devils qualify their four RFAs not on the NHL roster and moves them up.  Yes, Jeff Frazee would be getting more than a league minimum salary:

Non-NHL Devils RFA 2010-11 Salary Q.O. Minimum Difference
Alexander Vasyunov $685,000 $719,250 $34,250
Jeff Frazee $550,000 $605,000 $55,000
Nathan Perkovich $515,000 $566,500 $51,500
Steven Zalewski $500,000 $550,000 $50,000

 

But given they're in Albany already, I'm not terribly concerned with them for the time being.

Maneuverability with RFAs

Fortunately, the Devils do have some maneuverability.  Not much, but some wiggle room can be had. 

As I noted with the CBA, if the Devils don't tender a qualifying offer to a RFA, then they become an unrestricted free agent.  In theory, the Devils can simply let some of these RFAs go free and then sign them to lower salaries on July 1.  The incentive in return could be a one-way contract instead of a two-way deal, which would be of interest for Taormina, Corrente, and Zharkov - who were all on two-way deals.  This method wouldn't provide any savings for Matt Taormina but it would for Matthew Corrente ($75,000) and Vladimir Zharkov ($85,000), which could give the Devils a little more breathing room.  This wouldn't make sense for Salmela or Fraser since they're coming off one-way deals where they made more than the league minimum.  I don't see them taking a pay cut at this juncture unless they're guaranteed a NHL spot or something substantial like that.

More simply, the Devils can cut more significant space by not tendering one or two of these six players and letting them go as UFAs.  This is a likely scenario for the defensemen involved.  Do the Devils really need Mark Fraser and Matthew Corrente on the roster when either one would suffice? Or if there is a defenseman in the system that is expected to rise up the depth chart soon, then would the Devils make space for that player now?  It's like releasing a player with respect to the salary cap.  Clearing $500,000 to $600,000 would be more significant than just signing a RFA to lesser money; that's worth a NHL player in of itself.

Lastly, I want to point out this clause in the CBA for RFAs - Section 10.2.(iii):

A Club's Qualifying Offer must be a One-Way Qualifying Offer if the applicable Player has: (A) actually played (excluding games missed for injury, illness or disability) 180 or more NHL Games in the previous three (3) NHL Seasons, (B) played at least sixty (60) NHL Games in the previous NHL Season, and (C) not cleared Waivers in the period between the 12th day prior to the commencement of the previous Regular Season and the end of a Club's previous Playing Season. For purposes hereof only, a goaltender is deemed to have played an NHL Game when he was dressed and on the bench as a backup. In all other cases, a Qualifying Offer may be a Two-Way Qualifying Offer.

The only RFA I believe this applies to is Zach Parise, who's going to get a very large one way deal of some length this summer anyway.  This means everyone else can be tendered a two-way qualifying offer.  So, in theory, the Devils can sign all of these guys and move whoever to Albany just to make some additional space.  Not everyone - the Devils would have only five defensemen on their NHL roster if all of the non-Parise RFAs go down. At least one RFA defenseman would have to stay up, provided Greene and Jay Leach aren't kept and Bryce Salvador can actually play hockey.  This is why I'm not really concerned with Frazee, Perkovich, Zalewski, and Vasyunov.  They were in Albany last season on two-way deals; and they're only going to be factors if they are ever called up.

I'm not sure how happy the five NHL RFAs would be about being put on a two-way qualifying offer.  Namely, Salmela and Fraser. Both are coming off one-way deals in this offseason. If I were them, I wouldn't be keen on agreeing to a two-way deal after being on a one-way deal.  Then there's the matter with Zharkov.  He had non-insignificant call ups to the NHL team in the last two seasons, I could see how he would prefer a one-way deal and the security and confidence that comes with such a contract.  Another two-way deal may send the message to him that his future with New Jersey isn't very bright.

That all said, neither of these methods will provide a lot of additional cap space unless taken to some extreme.  I can see the Devils doing a mix of this.  For example, they can not tender a RFA and let him loose as an UFA; do the same but retain them at a lower salary; and sign the rest and make a decision later whether to move them up or down. 

Combined, I don't think they will allow the Devils to have their cake and eat it too.   Keeping Parise and the RFAs alone is going to be quite expensive with respect to the cap.  The current upper limit is not enough to do just that even if Parise feels incredibly generous and signs for the minimum qualifying offer.  Throw in the reality that the Devils need a backup goaltender, which will cost at least $525,000 to the cap, and that's $8,654,000 already accounted for without even thinking about Andy Greene other UFAs.   That's why I spent so much time wondering whether the Devils can replace Greene from within.  Keeping him even at a "bargain" salary simply may not possible to fit under the cap without more drastic measures.

While the Devils do have some maneuverability with how they handle their RFAs, there are only a few possibilities - outside of just letting the RFAs walk - to clear up significant cap space.  The first is that we have to hope the cap ceiling will increase - just to keep Parise and other RFAs.  That may be necessary anyway.  The second is that the Devils can buyout a contract or two when the buyout period begins on June 15.  The third is to trade away a "bad" contract, which can be done this offseason as well.    Lou may not be worried about the cap, but I'm honestly a little concerned about all of this.  Yes, things will get better cap-wise after next season as Brian Rolston, Colin White, Salvador, and Martin Brodeur all come off the books.   But 2011-12 comes first and I don't want to see the Devils any more hamstrung than they are in their current situation.

We can discuss the merits of the latter two options on a future date.  In the meantime, what do you make of the Devils cap situation knowing that qualifying the restricted free agents plus the big money Parise may/will get will eat up so much space for next season already?  Please leave your thoughts and what would you do knowing all of this in the comments.  Thanks for reading.

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