Usually when we talk about salary around Leafs-land, we really mean cap hit. We don’t care about money much, and the only time we remember there’s a difference is when we want to laugh at the Senators for getting a player whose salary is less than his cap hit.
Another thing we mostly ignore is the one-way vs two-way contract. It’s seen as a status symbol that either makes people sneer at a player for only being on a two-way or getting mad if an AHL veteran gets a one-way.
The Taxi Squad, a short season, and escrow have made all this more relevant, so it’s worth some clarification.
Note: I got some things wrong on the first read of the new rules and gave some wrong information in comments. There’s more clarity on this now, so this is the scoop as of late January, before the AHL season is finalized.
First some definitions:
NHL contract means an SPC signed with the NHL team and AHL contract means a contract signed with the AHL team. Who ultimately owns both teams is not relevant to that difference. Travis Boyd is on an NHL contract Justin Brazeau is on an AHL deal. Players on AHL contracts cannot be called up to the NHL or the Taxi Squad and are governed by the AHL - PHPA agreements.
The Taxi Squad is a hazy concept that is usually the AHL for most CBA purposes, put not always. Waivers apply to the Taxi Squad like it’s the AHL, salaries do not.
One-way contract: there is one salary amount in the SPC that is the base salary paid no matter where the player is.
Two-way contract: there are two salary amounts in the SPC, and the players only receives the full amount while on the NHL active roster.
The active roster: is the 23 healthy players on the NHL team plus anyone on IR or LTIR. The Taxi Squad is not part of the active roster.
Proration: NHL SPCs contain language that allows for the proration of the salary stated in the first paragraph of the contract (that’s why it’s called Paragraph 1 Salary in the CBA). For the 2020-2021 season, the agreement signed by the NHLPA and the NHL expressly overrides that and does not allow for NHL salaries to be prorated.
Escrow: is the percentage deducted from all NHL salaries and held in an account until the final numbers on revenues are received and it is paid out to the owners and players to conform to the 50-50 split of revenue. This year’s is 20% and no one expects the players to ever see any of it back.
Salary deferral: is the 10% of all NHL salaries agreed to be deferred from paycheques now. It will be repaid in three installments in the future.
Player is in the NHL
If on a two-way, the player gets his NHL salary as the starting point. Players on a one-way deal have only one salary amount they begin with. From that salary 10% of the salary is deferred, and then 20% escrow comes off of the remainder. Effectively giving him 72% of his salary. That salary amount can vary year to year and is not necessarily the same as the AAV or “cap hit”.
Player is in the AHL
The AHL CBA was renewed in October, 2019, and an agreement was reached on June 2, 2020 regarding proration of salaries for this year. This applies to anyone on an AHL contract or an NHL two-way contract. The players on NHL two-way contracts are guaranteed at least 40% of their Paragraph 1 salary. That would be 40% of their minors salary amount.
AHL teams will not all play the same number of games, and with the season not yet begun, players on NHL two-way contracts have no idea how much money they can expect to receive. According to the NY Post, they won’t receive any money until the AHL season begins. Once it does, proration takes hold in an unknown formula. The Post claims no agreement is in force, but the NHL documentation quotes the 40% minimum from the June agreement, and the PHPA has a current CBA with the AHL that runs for several years, so this point is unclear.
“Our players are filled with anguish and anxiety. Our office has received numerous calls from players and their wives, crying about what is an unpalatable situation. Players may not be able to afford rent. They can’t get four-month leases on apartments. They’re eating fast food. Is this what anyone wants?” Larry Landon, the PHPA executive director.
Adam Brooks is on an NHL two-way, and his contract allows for $100,000 in the minors. If he were to be in the AHL all season, he could be looking at only $40,000 in pay. In his case he has a clause in his contract that guarantees him at least $175,000, so he will not suffer that fate even if he is sent down off the Taxi Squad.
Joey Anderson is on a two-way deal that will pay him $175,000 in minors salary this year, he has a minimum guarantee for next season, but not this one, so he could earn as little as $70,000.
Mac Hollowell is on his ELC still, and those two-way deals have the minors salary capped at $70,000. He could see as little as $28,000.
The AHL sets a minimum salary in their CBA for players on AHL contracts. For this season it is $51,000. It’s not clear if that amount is overridden by the proration agreement, but if not, then NHL players in the AHL could be paid considerably less than the AHL thinks is a reasonable minimum for a minor-leaguer.
Players in the AHL on one-way NHL contracts will be paid the same way they are in the NHL with the 10% deferral and the 20% Escrow.
This information is from item 9 in the 2020-2021 NHL Transition Rules
Player is on the Taxi Squad
If a player on a one-way NHL contract is on the Taxi Squad, he is paid his regular NHL salary subject to the same deferral and escrow as if he was on the NHL roster.
If a player is on a two-way NHL contract, he is paid his minor league salary, without any proration.
Alex Barabanov is on an ELC that pays $925,000 in the NHL and $70,000 in the minors.
Salary owed is calculated daily, and the NHL year has 116 this year. So one day on the NHL roster for him is: 925,000 x 1 / 116 = 7,974.14. With the deferral and escrow taken off, that becomes: $5,751.38
On the Taxi Squad he is paid 70,000 x 1 / 116 = $603.45
In the AHL he would be paid something between that number and $242 each day.
This information is from Attachment D of the 2020-2021 NHL Transition Rules
Banking Cap Space
Until Aaron Dell was waived and claimed, the Leafs couldn’t bank cap space beyond what the existing ~$600,000 was on a daily basis. Now that they have 19 skaters on the roster (one of whom is Nick Robertson, who is not on LTIR at this time) They can send a player to the squad to increase the space that gets banked. It works on the 116 day formula too, so the amount banked by sending Mikko Lehtonen back to the squad is $7,974.14, and the amount saved by sending Jason Spezza to the squad is $6,034.48.
Not much of a difference to the Leafs, but Spezza’s salary stays the same while Lehtonen’s falls to his minors amount. On Tuesday, the Leafs sent Spezza to the Taxi Squad, presumably for one day.
Meanwhile, to make a little room on the squad to allow for banking manoeuvres, one of the six players on the squad had to be moved (Pierre Engvall has been added), and the Leafs sent Travis Boyd to the AHL. By sending a player on a one-way NHL deal to the AHL off the squad, he sees no change in his pay. But as shown above, Someone like Rasmus Sandin would suddenly see his $70,000 minors salary become (eventually) prorated.
If and when Nick Robertson is placed on LTIR, someone on the Taxi Squad will be added to the roster, and the ability to bank space vanishes for as long as LTIR is in use. The juggling of players will be solely for playing roster decisions if LTIR is in play.
Once the AHL season starts, we might see players on the Taxi Squad rotated out to play some games in the AHL to avoid getting stale, but that will cost a lot of them salary, and it will be interesting to see how they respond to an increased workload along with a pay cut.
Even with the Leafs, Lou Lamoriello used to nickel and dime players by sending them to the AHL over Christmas. Now the Leafs go out of their way to pay players more.
Aaron Dell had to be waived, not because he was causing roster problems, particularly, but because Mikko Lehtonen and Alex Barabanov are experienced professional hockey players 27 and 26 years old, and they did not sign with the Leafs to get paid $600 a day to sit in a pressbox.
The roster had to be opened up to get those two, in particular, on the playing roster a little more often than once in a while.
Meanwhile, Pierre Engvall’s doghouse came with his normal NHL salary, and if anyone had to sit out some days while this got sorted, at least it wasn’t someone who’d get paid next to or actually nothing while it happened.
But all of this is much more difficult for AHL-contracted players. Their pay will be more like an ECHLers, which is not really enough to live on, and as the PHPA spokesperson says, players will be forced into shared accommodation and the risks of outbreaks of COVID-19 will increase. Is this what anyone wanted? I don’t think it is.