How the Canucks’ OEL buyout affects (and kind of screws over) the Arizona Coyotes
Photo credit:© Bob Frid-USA TODAY Sports
3 months ago
So, we know that this isn’t CoyotesCavalry or anything like that. And we know that the comings and goings of the Arizona Coyotes isn’t typically something that those in the Vancouver market tend to care about. Heck, we’re not even sure there are that many people in Arizona itself that are interested in the intricacies of their home team’s cap and salary structure.
But for all the writing that has been done about the Oliver Ekman-Larsson buyout, there’s one angle that has been largely ignored, and that’s the portion of the buyout that impacts the Coyotes as holders of 12% of OEL’s contract via retention.
We A) think the details are fascinating, B) know that the Vancouver Canucks triggered these results, and C) thought they might be interesting to write about, despite only being tangentially Canucks-related.
We just hope you find it interesting to read, too.
Below, find a breakdown of exactly how the OEL buyout affects the Arizona-or-Not Coyotes from here on out, and why the Canucks have kind of screwed them over.
When the Coyotes traded Oliver Ekman-Larsson to the Canucks, along with Conor Garland in exchange for Loui Eriksson, Jay Beagle, Antoine Roussel, and Vancouver’s first, second, and seventh round pick in consecutive years, they also retained 12% of Ekman-Larsson’s contract.
Essentially, the moment that retention went into place, the Coyotes became culpable for their portion of any buyout brought into effect from there on out until OEL’s contract came to a natural conclusion, something that we now know didn’t happen.
But as the former holders of that contract, the Coyotes received no say in the decision to make the buyout this offseason. That was something that the Canucks had full autonomy to perform, but it’s still up to the Coyotes to face the consequences.
Financially-speaking, the Ekman-Larsson buyout can’t be seen as anything but a positive for the budgetarily-challenged Coyotes. Real dollars are a perpetual concern in the desert, and buyouts almost always reduce the actual number of dollars spent.
It’s not a major win, but it’s a win all the same.
Previously, the Coyotes were on the hook for 12% of Ekman-Larsson’s remaining $29 million in salary owed over the remaining four years on his contract prior to the buyout, a total of about $3.48 million.
As is usually the case with a buyout, that amount has now been reduced to two-thirds and spread out over double the length of time.
So, instead of paying Ekman-Larsson an average of about $870K a year over the next four years, they’ll be paying him $290K a year for the next eight.
Both the reduction and the general delay in the payment schedule are both financial positives for the Coyotes.
The Cap Implication
The way in which Ekman-Larsson’s buyout hits the Coyotes’ cap is less uniform, but also probably of less overall importance to the franchise.
Because his contract featured a descending base salary structure, Ekman-Larsson’s buyout cap hit varies from year-to-year, going from $147K in the first year to a high of $4.767 million in years three and four before settling back down to four straight years of $2.127 million to close the whole thing out.
On the Coyotes’ end, the math is a little less complicated. For them, this still acts almost exactly the same as a retained salary transaction, in that the Coyotes are simply picking up 12% of the total buyout cap hit in each of the eight years.
Those hits will look like this:
|OEL Arizona Buyout Hit||$20K||$320K||$650K||$650K||$290K||$290K||$290K||$290K|
Again, it’s hard to imagine that these details got as much attention in the Arizona front office as the hard cash did. For now, the Coyotes remain the kind of franchise that doesn’t spend to anywhere near the salary cap ceiling, so neither the hits remaining on the books nor the savings they represent matter all that much in the grand scheme of things.
Put differently, the Coyotes aren’t going to be within $670K of the ceiling anytime soon. If anything, these reduced hits just make it slightly harder to skate close to the cap floor.
Even if the expected happens and the Coyotes move to somewhere like Houston where they’re able to start spending more money, we don’t think these totals will matter all that much. By the time this team is theoretically ready to start spending, the OEL buyout is going to be taking up little more than a quarter-million in space, and the cap should have risen significantly a couple of times over.
Unfortunately for the Coyotes, however, the buyout impact doesn’t quite end with the salary and the cap hit.
The Big Twist
Remember when we said that, from the Coyotes’ perspective, the OEL buyout worked almost exactly the same as any salary retention transaction would?
The bad news is that the NHL sees it the same way.
As broken first by the folks at CapFriendly, contracts that have been retained on and then bought out still count as retentions, and they do so until the buyout comes to an end.
When they made the initial trade, the Coyotes thought that they were retaining on Ekman-Larsson for the final six years of his contract, one of the longer retentions in NHL history. That would mean that the Coyotes would give up one of their three retention slots for a period of six years.
But with the buyout, that period of time has been greatly extended. Now, in addition to the two years already spent, the Coyotes will lose one of their retention slots for the next eight years, or until the OEL buyout comes to a conclusion in 2031.
They had no say in the buyout, and there’s nothing they can do about it. That retention slot is gone.
And that’s potentially a huge issue for the Coyotes, easily number one on the leaguewide rankings of “teams most likely to use a retention slot.”
The Coyotes have become a dumping ground for bad contracts, and they have often use retention in the past to increase the value of said cap dumps before flipping them. Their ability to do so is now reduced by one-third.
The Coyotes have also served as intermediaries to deadline day trades, retaining a portion of a traded contract on route to another destination to further reduce that player’s cap hit. Again, their ability to do so is now reduced by one-third, and will continue to be so until the decade is over.
That’s what we’re talking about when we say that the OEL buyout has kind of, sort of, screwed over the Coyotes. It’s not a franchise-breaking occurrence, and it’s certainly not the biggest point of stress in Arizona at the current moment, but it’s notable all the same.
And, hey, the Canucks themselves are going to be paying very heavily for the buyout for the next eight years, too. At the very least, it’s nice to know that they’re not the only ones, and that the team that signed Ekman-Larsson to that massive contract in the first place is also taking a hit.
It seems fair, in a way.
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