We have known for quite some time that the Leafs incurred a bonus overage last season that was massive. The final numbers had to wait on the outcome of the NHL awards to tally, and now we know what they are precisely. Huge is the technical term for it. That’s $5,370,000 if you like numbers.
First of all, what is a bonus overage?
Glad you asked. Players on ELCs, of which the Leafs had a metric tonne, can have two types of bonuses written into their contracts. This is not the same thing as a signing bonus! They have nothing to do with this issue.
When the player earns a bonus, and there are various categories including points stats, awards and other milestones that can get you a bonus, that bonus counts against the salary cap. It’s part of a player’s pay. And they get a cheque for it.
However, unlike all the other cap hits of players, you cannot use LTIR to cover bonuses. So, if you are at or over the cap without counting the reduction of the cap hits of players on LTIR, the bonuses are an overage. That overage gets rolled into the next year, and is essentially deducted off the cap space available next year.
So, instead of having a $75 million cap like most teams, the Leafs have $69.63 million in cap space.
OMG! That’s like a whole guy’s worth of cap space gone.
It is. That’s exactly what it is — one very good player’s worth of cap space as the price the Leafs pay for having a Calder Trophy winner and four other rookies earning bonuses for playing well enough to get the team into the playoffs, all while earning less than one million dollars each.
The total overage came very close to being higher, as Nikita Zaitsev just got beat out being named to the all-rookie team. That honour did go to Auston Matthews and Mitch Marner.
None of this is news.
Way back in April, Chris Johnston was able to estimate exactly the bonus amounts. The only thing missing from the calculation was how much cap space the Leafs had to absorb some of that. None is the answer.
That’s the price of dealing off the Phaneuf contract for multiple salaries and trading for Brian Boyle at the deadline.
When we did our last analysis of the cap situation in May, this was the number we used. The conclusion of that article was:
So, here’s the tl;dr of the Leafs’ 2017-18 salary cap: they probably have less room on paper than it seems at first blush. They are far from handcuffed, though. Utilizing the LTIR might not be ideal, but it means that the Leafs have the room to park a dump-truck full of money in someone’s driveway on July 1st.
And that’s the case now. The Leafs have two large dead contracts in Nathan Horton (three more years) and Joffrey Lupul (one more year). They have some buyout money this year that goes away after, and the only other dead money is the retained salary for Phil Kessel.
So for one more year, the Leafs have to watch carefully as the young guys earn bonuses — and surely they will this year, although likely not so high in total — and then the situation eases somewhat. There might be overages at the end of 2017-2018 that roll forward.
Or one of those dead contracts might vanish in some way, creating cap space that is more real than just the LTIR space the Leafs can use right now.
Either way, it’s not news; it’s not a big deal; and it is the price of righting past wrongs while playing a lot of hot young, underpaid players.