Julien BriseBois took a few minutes to have a conversation with Tampa Bay Lightning reporter Caley Chelios about the trade of Ryan Callahan and Mike Condon. While she only asked two questions in the interview, and the second one was about the goaltender situation, his answer to the first question was open and candid, if maybe a little bit obvious. For an organization that is generally tight lipped, BriseBois actually gave a lot of insight into his thought process in making this trade. And it struck me how much it mirrored a lot of the points that I have been talking about in regards to Long-Term Injured Reserve (LTIR) with Callahan.
Hear from #Bolts GM Julien BriseBois on Ryan Callahan, cap space, the addition of Mike Condon, and how our goalies will sort out for the upcoming 2019-20 season. pic.twitter.com/sRUlYZF2MQ
— Tampa Bay Lightning (@TBLightning) July 30, 2019
I have transcribed the interview for the first question for accessibility, but also so we can break it down and discuss it more in depth. Some filler words (such as ah, uhm, and so), as well as repeated or corrected words and phrases, have been omitted for clarity.
Caley Chelios: Julien obviously an important trade as you continue to deal with the cap but how does trading Ryan Callahan for Mike Condon help with the cap space and what was the process in making that agreement?
Julien BriseBois: Well, first of all, I’d like to thank Ryan Callahan for his cooperation and helping us address our cap issues, or some of them anyways internally, with his support and also thank Jeff Vinik for his support because obviously there’s a financial cost to this trade. But at the same time, we save cap space or create cap space.
With Callahan having a career ending injury, and the Lightning being smart enough to have bought an insurance policy against his contract, the Lightning (and now the Senators) were only on the hook for 20% of the salary remaining. That would have been $940,000. Condon on the other side of the ledger is still owed $3 million this year no matter if he is in the NHL or the AHL. That means Vinik, and the salary budget, will have to pay $2,060,000 more after this trade. Having an owner with financial resources lets you make trades like this from the Lightning’s perspective. Having an owner like Ottawa’s means your team is on the other side of these types of trades looking to spend less money.
Julien BriseBois: There were three ways to maybe handle the Ryan Callahan contract at this point once it was determined he would no longer be playing professional hockey. We could do nothing. Meaning, keep the contract. Put Ryan on long term injury exemption. The issues with that, first of all, it’s always better to have cap space instead of having long term injury exemption space because the long term injury exemption space doesn’t accrue. Whatever you start with at the start of the season, that’s what you have to play with for the entire year. That’s issue number one.
This one is important. If the Lightning couldn’t get the number down on Brayden Point’s contract low enough to be under the salary cap including Callahan’s contract, the team would have had zero flexibility going into the season to add players after playing Callahan on LTIR. Even if they did get Point’s cap hit low enough, there still would have been little ability for the team to add a player at the deadline. It would have required moving out some salary to be able to bring in a player with a decently sized cap hit.
Julien BriseBois: Issue number two with regard to performance bonuses or possible bonuses that might be earned by some of our players this year, I didn’t see how if we went the long term injury exemption route, I didn’t see how we’d be able to allocate those performance bonuses under this year’s cap. We would have had to push them forward into the 20-21 season and essentially start that season handicapped possibly by over a million dollars and I know that our cap situation is a little tight this summer but it’s really going to be tight a year from now. So, it allows us to get ahead of that. There’s some certainty in terms of being able to allocate all of those performance bonuses under this year’s cap. So the first route would have been to just put Ryan on LTI. It would have had those issues.
This is also a very handy point that I hadn’t given a lot of thought to before. LTIR is only designed for allowing you to replace the injured player with player or players with an equal cap hit. It’s only providing you with more cap space for those replacement players. It doesn’t give you any extra room for performance bonuses. Anthony Cirelli and Mathieu Joseph can earn up to $182,500, while Erik Cernak can earn up to $147,500 in performance bonuses, though it’s unlikely they would earn all of those bonuses.
The big one is Mikhail Sergachev who could earn up to $850,000 in performance bonuses. With the way he’s been progressing and the fact he may end up in a larger role this season as Victor Hedman’s partner, means that he is more likely to earn a large chunk of those performance bonuses. In addition, if Cal Foote ends up making his way up to the team, he has up to $500,000 in performance bonuses possible if he performs extremely well.
As BriseBois stated, if you go over the cap with performance bonuses, those bonuses are pushed over into the next season. The Lightning have had a couple instances of needing to do that over the past five seasons as they’ve kept close to the salary cap while still playing some higher end players on entry level contracts with performance bonuses.
Julien BriseBois: The second option was maybe waiting, seeing how the season plays out, and maybe mid-way through the year, see if I can’t trade Ryan Callahan’s contract at that point and try to create enough cap space to allocate the performance bonuses under the 19-20 cap. The issue with that is mid-way through the year, very few teams were going to be in a position to trade for such a contract. There might be no teams in a position to do that that have the cap space and the willingness to acquire this type of contract. Maybe there’s one, maybe there’s two. In any event, I don’t think that there would have been more than one or two and by then my leverage is very small. They could ask, and I’m sure they would, for exorbitant returns in order for us to trade the contract. Now I was able to kind of get ahead of that.
This is a very good point. Ottawa likely would not have been a good match later in the season as they were now. By the time you get to the trade deadline, much of the salary has already been paid to players. The actual money they would have saved would have been in the low hundreds of thousands instead of nearly $2 million. Thus, their asking price would be much higher.
I had already been pretty afraid of what the asking price might be to get out of his contract. This especially after we saw the Toronto Maple Leafs give up a first round pick to get away from Patrick Marleau’s last year of his contract. The Lightning at least had a little more leverage because they could use Long Term Injured Reserve, while the Maple Leafs couldn’t do that with Marleau. But I was still sure that the team would have to give up assets to move him.
Instead, the only asset that the Lightning gave up was a little bit of cap space and some cash.
Julien BriseBois: Which brings us to the third possibility. Third possibility was work out a trade now. It allows us to keep our assets. I don’t have to give up a draft pick or… there’s a switch of picks, but it’s minimal. But I don’t have to give up a draft pick or a prospect or a roster player in order to create this cap space. We’re creating cap space instead of LTI space. So whatever performance bonuses our players earn this year we’ll be able to calculate those against this year’s cap. Have the full strength of whatever the cap is in 20-21 to invest that on on-ice talent for the 20-21 season. And the cap space that we create now, it accrues over the course of a season. So a million dollars of cap space at the start of the season is over four and a half million dollars of cap space come the trade deadline. So there’s a lot more value in that type of space instead of having long term injury exemption space, having cap space is a lot more advantageous.
In this last part of the answer, BriseBois basically re-iterates most of what we’ve already said here. By doing this move now, he had more leverage and got a pretty nice deal to make that cap space. He’s preserved the team’s flexibility under the cap. The team will be much more capable of adding at the trade deadline if a need arises up front, on the blue line, or just because a deal that’s too good to turn down comes along.
To his comment about cap space growing, let me give a little more context on that. Charges against the salary cap accrue daily. In simple terms, take the number of days in the season, divide the players cap hit by that many days, and every day the player is on the NHL roster, that’s how much he costs against the cap. For a player with a $1 million salary cap hit, if he spends exactly half the year on the roster, his salary cap charge is $500,000.
To add a player on to the roster, you must have enough cap space remaining to pay the player for the rest of the season, even if you intend to send the player down a week later after someone else returns from injury. Let’s say the Lightning have $1 million in cap space at the beginning of the season and make no roster moves. One quarter of the way into the season, the Lightning could add a player with a $1.333 million cap hit. You only need to have enough space for the remaining 75% of the salary’s cap hit, which would be $1 million.
Half way through the season, you’d only need 50% of the player’s cap hit in cap space, so the Lightning could add a $2 million player. By the time you get to the trade deadline, there’s only about 80% of the season left, which is where BriseBois’ $4.5 million cap hit for $1 million in cap space example comes in.
BriseBois and his staff are very smart. They obviously took a lot of time going over all of the figures and scenarios to seek out an answer. In the end, they found a very good answer that cost the team next to nothing in terms of assets.
The funniest thing about the trade is the swap of draft picks. If the Lightning win the Stanley Cup and the Ottawa Senators finish last in the season, then the draft pick swap will result in a change of one position. BriseBois said the switch of picks was minimal, and it could end up being infinitesimally minimal if that happens.
