It’s no secret that the Tampa Bay Lightning have salary cap issues. With a firm start to the season of January 13th now set, the clock is ticking for General Manager Julien BriseBois to find some answers. Earlier this fall, he tried to find a trade for Tyler Johnson. He even placed him on waivers, allowing any team to take him for free and no one took him.
One of the rumors that has been making the rounds of late on Twitter is that the Lightning are exploring a trade with the Detroit Red Wings, sending Tyler Johnson in return for Henrik Zetterberg’s contract. The trade could also include some draft picks going in either direction, but the big part of it would be Johnson and Zetterberg.
Henrik Zetterberg is effectively retired due to back issues, much like how Ryan Callahan was forced into retirement before his contract was completed. Zetterberg hasn’t played a single game the past two seasons. While the Red Wings haven’t needed to place him on Long Term Injured Reserve due to their low salary cap charges, Zetterberg does qualify for that status due to his career ending injury. This is the appeal for the Lightning.
Some of you that have been longer time fans may remember that the Lightning had a similar situation with Mattias Ohlund after the deteriorating condition of his knees forced him into early retirement. While having a player in such a situation that is eligible for LTIR does create some salary cap space, it also creates some difficulties. Let’s get into the nitty gritty of how this would work.
The Fine Print Details
There are two ways that a team can utilize Long Term Injured Reserve on such a player*. The team can get as close as possible to the salary cap, including the injured player, on opening night, and then place the player on Long Term Injured Reserve, or, the team can place the player on LTIR prior to the start of the season. The 1st option is usually the better option for the team, but is only available if the team can get below the salary cap with the injured player and a legal roster.
Option 1 - When the team submits it’s opening night roster, the team sets a roster of 14 forwards, 7 defensemen, and 2 goaltenders that is $500,000 below the $81.5 million salary cap, including the injured player. The team then places the injured player with a $5 million salary cap hit on LTIR. The team’s Cap Space, excluding the player on LTIR, becomes $81 million, but the salary cap charge becomes $76.5 million.
Option 2 - On the last day of training camp, the team has a salary cap charge of $86 million. The team places the injured player with a $5 million salary cap hit on LTIR. The player’s cap hit is subtracted from the team’s salary cap charge to determine the team’s new effective salary cap. The team’s Cap Space, excluding the player on LTIR, comes $81 million, but the team’s salary cap charge is also $81 million.
The reason that the first option is better, is that the intention of Long Term Injured Reserve is that the relief offered to the team for doing so will result in the team replacing that player’s salary cap hit with a like salary cap hit. In that first situation, after placing the player on LTIR, the team now has $4.5 million in salary cap space to add to the roster. In the second example, the team is assumed to have already replaced the player, and so does not get any extra cap space.
One important thing to point out as well, is that in both situations, for the team to accrue cap space, the team needs to reduce it’s salary cap space. You may have seen in trade deadlines of past where a team only has $1.5 million in cap space, but adds a player that has a $3 million cap hit. This is because under normal situations, a team is accruing salary cap charges daily based on the players that are and have been on the roster during the season and also have to account for the salary cap accrual that will still be required for the player if they remain on the roster for the rest of the season.
The maximum that the team can charge to the salary cap is the upper limit (for this season, the upper limit being $81.5 million). When adding a player with a $3 million cap hit, the actual cap charge remaining at the trade deadline is much lower and pro-rated to the rest of the year. If there’s only one third of the season to go when the player is acquired, then the team will only accrue $1 million in salary cap charges for the rest of the season from that player.
Under Long Term Injured Reserve, the team won’t be saving up any space through the season unless the team reduces it’s Salary Cap Charges after placing the player on LTIR. If Option 1 is used, and the team doesn’t add any players, then the team can add player or players with a combined salary cap hit of up to $4.5 million, but never a higher cap hit, like in the situation I referenced in the previous paragraph.
How This Work For The Lightning
In the proposed trade from the rumors, the Lightning would trade Tyler Johnson and his $5 million cap hit to the Detroit Red Wings for Henrik Zetterberg and his $6,083,333 cap hit. At the moment, with Anthony Cirelli and Erik Cernak unsigned, this would put the Lightning at 12 forwards, 5 defensemen, and 2 goaltenders with a $84,487,499 cap hit. It would be impossible for the Lightning to get under the salary cap of $81.5 million, so the team would have to use Option 2 from the Fine Print section above. The highest the Lightning could go before placing Zetterberg on LTIR would be $87,583,333. Keep in mind as well that after Zetterberg is placed on LTIR, the roster would be the roster. So you wouldn’t be able recall anyone without sending a like or higher salary cap hit out at the same time.
This would mean then that the Lightning would realistically have $3.095 million to sign Cirelli and Cernak. And probably to also include Cal Foote’s $925,000 salary cap hit. Add it all together, and that’s still not enough money to get things done. Remember, Mathieu Joseph and Alexander Volkov have yet to be re-signed as restricted free agents as well. If they were to sign, this situation would also require them to be placed on waivers and risk losing them for nothing, or trading them to get a return.
If, on the other hand, the Lightning also made a move to trade Alex Killorn to clear more cap space, then the numbers start to actually work. At that point, the team would have around $7.5 million to finish up it’s business. Including Joseph and Volkov on cheaper contracts, say $2 million total for both of them, and Cal Foote’s $925,000 cap hit, that means that the team will have $4.62 million to sign Cirelli and Cernak while giving the team 13 forwards, seven defensemen, and two goaltenders. That still means that those two players likely need to take 1-2 year contracts that are on the low side of what they deserve to make it work.
The only other realistic way that I could see the Lightning adding just a little bit more wiggle room is to trade Cedric Paquette and his $1.65 million salary cap hit. Possibly even to Detroit in the Johnson/Zetterberg deal. That would really only open up just $950,000 additional to give to Cirelli and Cernak because Paquette would need to be replaced by another player, like Ross Colton or Gemel Smith at $700,000. The first number would be reduced further if the player instead was Alex Barre-Boulet with his $759,258 cap hit.
To summarize, if the Lightning traded Tyler Johnson and Alex Killorn and acquire Henrik Zetterberg, the Lightning would have $7,545,834 to sign Anthony Cirelli, Mathieu Joseph, Alexander Volkov, Erik Cernak, and call up Cal Foote ($925,000). If Joseph and Volkov were signed for league minimum, the team would have $5.22 million for Cirelli and Cernak. If Joseph and Volkov were signed for an average of $1 million each, the team would have $4.62 million to sign Cirelli and Cernak.
If the Lightning also traded Cedric Paquette, the Lightning would have $9,195,834 to sign the four restricted free agents and call up Cal Foote and another forward ($700,000-$760,000). With Joseph and Volkov signed for league minimum, it would leave $6,170,834 to sign Cirelli and Cernak. Bump Joseph and Volkov up to an average of $1 million each, the team would only have $5,570,834 to sign Cirelli and Cernak.
You may be asking yourself why this even makes sense for the Lightning instead of just trading Tyler Johnson and getting out of his cap hit. Because of how Long Term Injured Reserve works, this would actually give the Lightning an addition $1,083,333 in cap space on top of Johnson’s $5 million cap hit to work with in getting their contracts finished. It’s doesn’t sound like a lot, but it could be just enough for the Lightning to get all of their salary cap work done. This deal wouldn’t be a money saver for the Lightning in terms of actual salary paid, but it also wouldn’t be a huge amount extra as Zetterberg is only owed $1 million in actual salary for this season.
Where I have a hard time seeing this happening, is that I keep asking what Detroit is getting out of this? Steve Yzerman had the opportunity to take on Johnson for free on waivers without giving up anything. The only answer here, is that Yzerman wants Johnson plus more to do this. It’s clear that the offers the Lightning have gotten for Johnson haven’t been what they’re looking for. Likely because it would cost the Lightning to move him. Adding that little bit of extra cap space could be the margin for BriseBois to decide that the cost is worth it though.
I think it’s still kind of a long shot that this happens, but where there’s smoke, there’s usually fire. So this was worth exploring, as I’m sure the Lightning’s front office has also explored. They’re poking every corner and turning over ever rock they can to figure out the solution to the team’s salary cap problems.
*[Note: There is also the ability to place a player on LTIR during the season, but that is more complicated than a situation where a player is out for the whole year.]