Before we begin, a little refresher in history. Last summer I foolishly said, “Hey how does that off-season expansion of the salary cap work, anyway?” Things then went way downhill when PPP staff answered me. Why do they listen to me?
The result was an article that looked at the off-season cap calculation, which is still interesting in how different that is from the regular season calculation. This process was helped along immensely by someone else having trod the ground already. All I had to do was correct a couple of small errors in his work, and we had our answer: Connor Brown couldn’t be signed.
A few days later, in even more synchronicity, Cap Friendly posted an article that came to the same conclusion. Our numbers lined up nicely. This is how it should be. You should be able to get feedback and confirmation on things, and we can all figure it out together.
Then of course, James Mirtle got Bill Daly to confirm that there is LTIR in the summer, and all our conclusions went out the window. This was particularly galling in that Daly himself had said the exact opposite not long before this.
Since then, Cap Friendly have discovered the rest of the story on LTIR, and have published a primer on how it actually works. And today, I’m going to delve into this again, and try to make sense of how LTIR and bonuses are affecting roster moves on the Leafs.
If you want my advice, you’ll just click off this story right now and go look at Matthews’ goal highlights on Youtube. Seriously, you knowing how this works doesn’t change anything. But if you want to properly second guess everything the GM does, and your team is a cap team, you have to have some kind of a handle on this. Once bitten, twice shy, though. This is my best understanding, and I am open to correction. Or the league could just publish a guide on the topic.
To begin we need to understand a couple of things. First, what is LTIR? That acronym is not in the CBA by the way, and the common usage that has it as long-term injury reserve is misleading. The ‘R’ needs to stand for ‘relief’ for it to mean anything. Relief, as in relief from the cap.
If you enter into this quest for understanding with the idea in your mind that LTIR is some nudge, nudge, wink, wink Louphole, har har, you will go badly wrong. The philosophical purpose of LTIR is to make it feasible to have a salary cap in a sport where rosters change frequently. Without relief from the cap hit of an injured player, teams could end up unable to ice enough players to play the game safely.
To extend that idea into the summer, teams that have injured players are not penalized by being unable to sign free agents to replace them because they can use LTIR to make space. It fits with the purpose of LTIR to have it be a year-round thing.
Normally when we talk about LTIR, we shorthand the concept into saying the injured player’s cap hit no longer counts. I did that right here on the opening day roster, because for those purposes that was good enough. But that thought leads you astray, so toss it aside. LTIR provides an amount a team is allowed to spend above the upper limit. The upper limit is the proper name for that thing we call “the cap”. This is more than a semantic difference, as we shall see in a moment.
For today’s exercise, the word bonuses refers just to performance bonuses. Ignore that signing bonuses exist.
Another thing we do when we talk generally about cap hits is pretend these bonuses aren’t there. They aren’t included in the cap hit, they don’t count against the cap until a player earns them, so we just forget about them.
Last year, we had to learn about the bonus cushion because suddenly the Leafs had a lot of cap hit and a lot of bonuses. Here’s how that works for a team that is below the cap, as the Leafs were last year:
You add up all the bonuses the players on your active roster can potentially still earn, and that number must be less than the available cap space plus the bonus cushion. The cushion is 7.5% of the upper limit in a given year.
We believed this was an issue with the Leafs last season, and we speculated that it was this which led the Leafs to make some of the roster decisions they made. This is likely true for the first few weeks of last season. But once a player (Nathan Horton) was put on LTIR in late October, the bonus issue changed.
Putting the two together
Seriously, you can back out now. It’s fine. You have no idea how many times I said arghhhhhhh figuring this out. And I’m not sure I have yet. I kept getting it wrong and asking dumb questions and having to go back and re-read things.
Now we’ll run through the basics of LTIR and bonuses that we need to know for just the Leafs’ situation.
A) While it’s true you can use LTIR in the off-season, you have to start fresh on the last day of training camp and reassign that person to LTIR.
When you’re sitting in training camp over the cap, as the Leafs were by any rational arrangement of players, you place your first player on LTIR, and you want to do that when the total cap hit of all remaining players (and all the other bits and bobs that count against the cap) is as close to the upper limit as you can get.
That first assignment to LTIR creates a thing called the ACSL. And it is calculated as follows:
ACSL = total cap hit - cap hit of player on LTIR
The ACSL can never exceed the upper limit, which is $75 million this year, but it can be less.
By assigning Nathan Horton to LTIR with the roster the Leafs had on opening day, they set their ACSL at $74,604,167.
This is very important, because the ACSL becomes the upper limit for the team. In the Leafs’ case, Horton is never coming off LTIR, so that number is now the Leafs upper limit for the whole season. The higher your upper limit is, the higher you can go when you use the LTIR space to exceed it. Remember, LTIR is relief from the upper limit, not a reduction in total cap hits.
B) Once you have a player on LTIR, the next player added, if that happens, does nothing to the ACSL. So adding Joffrey Lupul to LTIR increased the available LTIR space only.
C) On roster setting day, your total potential bonuses have to fit inside that 7.5% cushion. The Leafs had no cap space, so forget about that part of the regular bonus calculation. With the roster the Leaf had, their bonuses fit. It was $5,400,000 and there was a bit of room to spare.
D) Once you have your player(s) on LTIR and you then add a new player to the team to replace him, his bonuses get considered in terms of the LTIR space he uses. The cushion calculation no longer figures in. Let’s delve into this a little deeper.
With Horton on LTIR, the amount the Leafs were allowed to go over their new upper limit was $5,300,000. When they added Lupul it became $10,550,000. When a player on LTIR has performance bonuses, this becomes more complex, but neither of the Leafs’ players do, so we’ll cross that bridge (screaming) when someone who does have them ends up on LTIR.
When the Leafs added Calle Rosen, his cap hit and his potential bonuses were deducted from that pool of available overage. Here, I’ll let Cap Friendly tell you:
Despite savings of $1.025M for Marincin, Rosen's $925K cap hit will cost more in LTIR relief bcz of his PB's, which also count under LTIR. pic.twitter.com/LeRYRvLVTu— CapFriendly (@CapFriendly) October 6, 2017
So what they are showing is that out of the vast amount of LTIR room, first you take the total amount of cap hit the team is over that new upper limit (including Rosen’s), and then you take Rosen’s bonuses.
At this point the Leafs technically exceed the bonus cushion, which we had thought you could not do ever, but they do it at the cost of their LTIR space. If the Leafs choose to call up Aaltonen, his effect on that available LTIR room will be the same sort of calculation. His $925,000 cap hit and his $850,000 bonus potential will both figure in in reducing the space available.
How did this affect decisions?
It explains Babcock saying one thing about the roster and Lou Lamoriello doing another. It explains why Martin Marincin was on the roster at first and waived after October 3.
By keeping the more expensive (in terms of cap hit, but not bonuses) Marincin over Rosen at first, the Leafs managed to meet the bonus cushion limit on opening day, and they also got their total cap hit up as high as they could when they put Horton on LTIR. That is also at least partly why Dominic Moore and Eric Fehr were chosen over Aaltonen.
This FanPost delves into this, and it was chewing over that post that got me to buckle down and figure this out with infinite amounts of help from the PPP staff, who are an entire bag of smart cookies. (Not cheap store brand either.)
By bringing Rosen up after Lupul was added to the LTIR pool, there was room in that pool to hold him and his bonuses in exchange for Marincin’s lower total “cost”. The cushion no longer is the deciding factor, the LTIR room is.
How might it affect future decisions?
That depends on how close the Leafs want to come to using all that remaining LTIR space. Most of their potential callups have bonuses to add to their cap hits, so their effective costs are:
Cap Hits plus Bonuses for Selected Marlies
You kids today, you should be getting art history degrees, so you can explain that painting instead of LTIR.
But seriously, Cap Friendly’s team page is now tracking this and they will post transaction specific information every time it changes.
What you need to know in the future as you speculate on how the Leafs should use their $4,550,000 relief pool is that bonuses which can be earned count. So to make this tricky for you: If a player has a games played bonus in their contract and they can no longer meet it, they suddenly use less of the LTIR pool if they get called up.
And now you know (why Lou Lamoriello hates bonuses).