LTIR Explained: Here’s exactly how the Canucks will have to set their opening day roster to stay compliant (and why)
Photo credit:© Bob Frid-USA TODAY Sports
3 months ago
This is already going to be a long one, so let’s skip the preamble.
Mere hours after you read these words, the NHL’s opening day roster setting deadline will have come and gone. All 32 teams must have their rosters locked in by 2:00PM PST on Monday, October 10, 2022 — a date otherwise known as today!
You’ve heard plenty already about the salary cap woes of the Vancouver Canucks, and how they’ll have to juggle the likes of LTIR, regular IR, performance bonuses, and something called “papering” in order to even meet the league’s minimum standards for a legal roster.
But who really understands all that stuff, anyway?
Who — aside from the execs themselves — actually has the time to sift through the myriad NHL rules, regulations, and rumoured guidelines to figure out exactly which hoops the Canucks are about to attempt to jump through in the hours to come?
We do. Kinda. Mostly.
And we’re here to break it down for you in the simplest terms possible.
Every team has to submit a legal opening day roster by the deadline mentioned above. This roster must, of course, be compliant with the league’s salary cap. The active portion of each team’s roster must be at a minimum of 20 players and a maximum of 23. There can be an unlimited amount of players on the injured reserve (IR) or the long-term injured reserve (LTIR) — again, so long as everything remains cap-compliant.
That is, of course, the tricky part.
The Different Kinds of Injured Reserve
The kind of Injured Reserve that is just called Injured Reserve are for those players that a team will not have on their active roster, but are still expected to have count against their salary cap as per normal. They’re typically the players who won’t be out of action for an extended duration.
Long-Term Injured Reserve requires that a player be out of game action for a minimum of ten games and 24 days, and can be applied retroactively. You’ve probably heard that a player’s cap hit “doesn’t count” when they are on LTIR, but the truth is significantly more complicated than that.
Placing a player on LTIR affects a team’s salary cap by altering their Accruable Cap Space Limit (ACSL), which is the amount they are able to spend while still continuing to accrue cap space — with that accruable value being the difference between a team’s actual spending and their ACSL — and by creating a Salary Relief Pool (SRP).
There are two formulas for figuring out ACSL, depending on when a player is placed onto LTIR.
During the season and under most circumstances, the formula is as follows:
ACSL = Salary cap upper limit – team cap space.
So, if you put a player on LTIR whilst being $300K under the cap of $82.5 million, your ASL would be $82.2 million. This is why you’ll often see teams trying to get their roster as close to the salary cap as possible before placing someone on LTIR.
If a team can’t get under the cap before the end of Training Camp, however, a different formula comes into play:
ACSL = Team cap hit – LTIR player’s cap hit (ACSL must always be lower than the league’s upper salary limit).
Typically, this formula results in a lower ACSL, though that’s manageable through clever enough manoeuvring.
From there, the Salary Relief Pool is calculated by the player going on LTIR’s cap hit (their average salary and signing bonuses over the length of their contract) — or a cumulative cap hit, in the case of multiple players hitting LTIR at the same time. Performance bonuses don’t count at this juncture, but more on those later.
The SRP is added to the ACSL, and you’ve got a team’s new effective cap limit — or at least the amount they can now spend without incurring the league’s wrath.
The Problem with Performance Bonuses
The Salary Relief Pool isn’t the only pool that the Canucks and other teams will be playing in this season.
There’s also a Performance Bonus Pool (PBP), and it kicks in right when a team locks in their opening day roster.
In short, a Performance Bonus Pool is equal to the maximum amount of performance bonuses that might possibly be owed to players on your opening day roster, and can allow a team to theoretically exceed the cap ceiling by up to 7.5%.
Note: Performance bonuses can only be attained by players on entry-level contracts or those who sign contracts while older than the age of 35.
If those players actually attain the milestones and achievements laid out in their bonus structure, those bonus amounts will count against the cap, but that’s where the PBP comes in. If a team ends up exceeding the cap because of bonuses that were counted in that season-opening PBP, those bonuses can be rolled over to the next season’s cap. The Canucks did this with Jaroslav Halak’s bonuses in 2021/22, and are now paying for it in 2022/23 with $1.25 million worth of overages (in addition to their $2.4 million in buyout penalties.)
The Canucks have five players with potential performance bonuses in the mix for this season: Vasily Podkolzin ($850K), Andrey Kuzmenko ($850K), Nils Höglander ($300K), Linus Karlsson ($82.5K), and Nils Åman ($82.5K). Jack Rathbone, notably, has no performance bonuses in his contract.
Any of those players who start the season on the opening day roster gets their bonuses added to the PBP.
But this next part comes with a WARNING!
Any player who is not on the opening day roster, and is subsequently called up while the team is operating under an LTIR-affected ceiling, is counted against that adjusted cap by the full value of their contract, performance bonuses and all.
If Podkolzin were sent down and then recalled while the team was under LTIR, for example, they’d need to have enough room to accommodate a hit of $1.775 million, instead of the $925K he counts for as is.
This throws a wrinkle into the concept of papering…
The Concept of Papering
To tinker with their cap limits, teams often “paper” players down to the AHL before setting their opening day rosters; officially demoting the player for a day and then instantly recalling them before any game action occurs.
If a team needed to shave a few million off their cap hit to get under the ceiling before opening day, and had a couple of waiver-exempt players on their 23-player roster, they could theoretically just paper those players down, field an opening day roster of 21, and then recall those same players before their first game.
If not for the issue of performance bonuses, this could work for the Canucks. They could send all five or six of their waiver-exempt players down tomorrow, and then bring them all back up after putting the appropriate players on IR the next day — but only if they had enough cap space to accommodate the bonuses. Unfortunately, they do not and can not, as we’ll explain in more detail below.
One Additional Issue: Season-Opening IR and Phil Di Giuseppe
There’s one extra special sort of Injured Reserve, and that’s Season-Opening Injured Reserve (SOIR).
Basically, it’s an injured reserve set aside for those players who get injured in NHL Training Camp, and thus still deserve to draw their NHL paycheques while recovering, but who were never really in that team’s plans to begin with and have no business counting against the cap.
For these players, the rule is fairly straightforward: a player on a two-way contract who played fewer than 50 NHL games the season prior and who was injured prior to the opening roster will have their cap hit pro-rated by the number of days they spent on the roster the season prior.
For Karel Plasek, injured since prior to Training Camp and having spent zero days on the Canucks’ roster last year, the math is easy: $0 cap hit.
For Phil Di Giuseppe, it’s a little more difficult. The team could always throw him on regular LTIR to start the season, but that’s complicated, as we outlined above. To put him on Season-Opening Injured Reserve should be simpler and more cap-effective, but it will incur a cap cost all the same.
Di Giuseppe played no games for the Canucks last year, but he was on the roster from December 14-30 and then again from February 25 to March 6. That’s a total of about 25 days, which our calculations have at roughly 13% of the regular season.
Ergo, Di Giuseppe on SOIR incurs a cap hit a little less than $100K. It ain’t much, but it’s something to keep in mind.
It’s worth a quick revisit of who exactly the Canucks are going to have to fit on their roster before we proceed any further.
Elias Pettersson, JT Miller, Bo Horvat, Tanner Pearson, Curtis Lazar, Dakota Joshua, Vasily Podkolzin, Andrey Kuzmenko, and Nils Höglander are all healthy and expected to play on opening night. That’s nine forwards.
Brock Boeser and Conor Garland are both currently injured, but both are hopeful for opening night, as well, and are not expected to hit LTIR. That’s 11.
The Canucks would like Nils Åman and Linus Karlsson to be forwards 13 and 14 on the roster, and feel those two have earned their spot.
Ilya Mikheyev is also injured, although it is unknown whether his absence will reach the lengths required for LTIR. As of now, it seems unlikely, and so he’ll likely remain on the roster.
Di Giuseppe and Plasek were covered above.
Micheal Ferland is not expected to play again, and he’s the only player guaranteed to hit LTIR.
On defense, Quinn Hughes, Oliver Ekman-Larsson, Luke Schenn, Kyle Burroughs, Tucker Poolman, and the newly-acquired Riley Stillman are all healthy and expected to either play or be scratched on opening night. That’s seven.
Travis Dermott and Tyler Myers are both injured and expected to miss opening night, but neither is expected to hit LTIR as of yet.
The Canucks will have to fit all of the above players under their cap before opening day, while still leaving enough room to call up those necessary players before opening night.
So, can the Canucks get under the cap with all their injured players before opening day?
No, they can not. At least, not anywhere near comfortably.
It’s close, but no cigar.
The Canucks could achieve this goal by papering down Karlsson, Åman, Rathbone, and Höglander: those waiver-exempt players with the smallest potential performance bonuses.
This would leave them with a cap hit of $82,372,500 and cap space of $127,500 with a roster size of 22.
Then, Ferland goes on the LTIR, and the Canucks gain nearly his full $3.5 million AAV in salary relief. Mikheyev, Myers, and Dermott go on IR, Plasek and Di Giuseppe go SOIR.
Not so fast. $3.5 million is not enough to accommodate recalling those four players again the next day — not with their performance bonuses now included in their cap hits.
The team could afford to recall three of those players, but that would leave them with just 12 healthy forwards and seven healthy defenders on the roster — which is sketchy at the best of times, and doubly so with both Boeser and Garland of uncertain health.
Interesting, the team might have been able to just squeeze it if they had yielded an extra $375K in cap space by burying Tucker Poolman’s contract in the minors and replacing him on the roster with Christian Wolanin.
Unfortunately, to do so, the Canucks would have had to put Poolman on waivers yesterday. They did not.
So, what do they do?
The Canucks are going to have to engage the Training Camp Formula of LTIR, meaning they’ll have to place Ferland on LTIR as part of their opening day festivities.
Again, that formula is:
ACSL = Team cap hit – LTIR player’s cap hit.
To this end, the Canucks are going to want to manipulate their roster so as to exceed the salary cap by as close to Ferland’s $3.5 million cap hit as possible.
At the very least, this method requires fewer transactions.
Plasek still goes on SOIR. Di Giuseppe either goes on SOIR or (more likely) goes on LTIR at the same time and via the same methodology as Ferland (before ultimately being demoted upon becoming healthy.)
Next up, send down Rathbone and one of either Åman or Karlsson (it doesn’t matter which, but let’s say Karlsson so we don’t have to type that little ‘Å’ anymore.)
This leaves the Canucks with a 24-player roster of $84,147,917. Subtract Ferland’s LTIR from that, reducing the roster to 23, and you’ve got the Canucks’ ACSL. Add Ferland’s SRP back to it, and you’ve got their new effective cap ceiling for the start of the 2022/23: $84 million and change.
That leaves the Canucks with about $1,852,083 in functional cap space to bring Rathbone and Karlsson (and Karlsson’s bonus) back up, which is juuuust enough room, with about $30K or so to spare.
What if one of Mikheyev, Myers, or Dermott winds up injured for long enough to end up on LTIR?
In the short term, it leaves a lot more manoeuvring room for call-ups. In the long-term, it changes nothing, as space needs to be left on the cap for those player’s inevitable return.
What if Boeser and/or Garland aren’t available for opening night?
The Canucks should have an extra forward on hand to cover one of those players if they can’t go for opening night. If both can’t go, then the Canucks won’t have room for another call-up, and they’ll need to explore other possibilities. That could include putting one of the aforementioned players on LTIR (and locking them out for a minimum of ten games), making a trade, or playing down a player.
What if the Canucks pick someone up on waivers?
That’s a whole ‘nother article.
What does this have to do with the Jason Dickinson trade?
We covered yesterday how the Canucks didn’t really gain all that much cap space in the trade that sent Jason Dickinson and a second round pick to Chicago in exchange for Stillman.
But, as you’ve clearly seen by now, that little bit of cap space is going to go a long way.
In fact, it’s fair to say that the Canucks had to make that trade, or a similar one, to even have a chance of putting together a cap-compliant opening day roster, given the number of mid-term injuries they’re currently suffering from.
It does help to put the trade into a bit more of an understandable context.
As for what to think of the management team being painted into such a tight and costly corner after having an entire offseason to work with?
We’ll leave that with you.
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