Why the Delay on Doughty to LTIR, Kings Salary Cap Situation, and Trade Scenarios

Welcome to math class; now please take your seat so we can begin.

Through the first 10 games of their season, the LA Kings have made a plethora of roster moves — some have been obvious (Sean Walker’s injury) and others may have been a slight head scratcher.

In this latest addition of Math with the Mayor, we’ll attempt to make sense of it all.

PAPER TRANSACTIONS

One question that has come up quite a bit in 2021 is, ‘What are paper transactions, and why are they necessary?”

In short, often they are designed for NHL salary cap savings. You will also see the term used right after the NHL trade deadline. At that time, it has to do with AHL playoff availability. Basically, to be eligible for the AHL playoffs, a player must be on the AHL roster by noon that day. In theory, this prevents teams from hoarding players with the big club and then flooding their minor league affiliate with good players once their season is over. This scenario isn’t really as relevant in November, so we will put a pin in it for now and focus on the former.

Last season, coming out of the pandemic, many NHL teams were shuttling players up and down between the NHL and AHL. It’s a practice that has been used this season, as well — including by the Kings this week.

Often, these players don’t actually play AHL games while they are sent down; hence the term ‘paper transactions.’ Sure, they were in fact official NHL/AHL transactions, just more so on paper only.

So what was the purpose then?

It’s all about the salary cap.

On one hand, it allows teams to pay bubble players a bubble salary; meaning more than their AHL salary but less than their full NHL salary.

Let’s look at three examples, all from the 2019 NHL Draft. Alex Turcotte, Toby Bjornfot, and Arthur Kaliyev are all on their entry level contracts (standard contracts that most drafted players sign for three years). Their contracts carry an AAV of $894,167 at the NHL level. During the 3-year term of the contract, if any of them are in the AHL, they make 70k per year.

The 21-22 season is confirmed to be 200 days for cap and payroll purposes. See tweet thread below for impact of that.

1 additional impact:

Players called up from minors will get paid less per NHL day (1/200) than a usual season (1/186). https://t.co/CctiQ4hAVR

— PuckPedia (@PuckPedia) September 13, 2021

For easy math, players are actually paid a day rate. To determine their day rate, you take their AAV and divide it by the number of days in the hockey season. This season has been determined to have 200 days for cap and payroll purposes. Which means, for everyday one of those three players is in the NHL they will earn $4,471 and when they’re in the AHL it’s $350 per day.

Bjornfot is considered an NHL player, as he’s earned a full-time role with the LA Kings. As such, he is projected to be paid his full $925k this season.

Kaliyev would more likely be considered a bubble player. He’s more than an AHL player, but has not earned a full-time spot on the NHL club just yet. For example purposes, let’s assume he plays 50 games in the NHL this season. And to do that, he ends up being on the NHL roster for 91 days (i.e. on a five-game road trip he is on the NHL roster for the full five days, while a three-game homestand over a 7-Day period only requires him to be on the NHL roster for 3 days). He still needs to be paid for 200 days in total.

Kaliyev example
91 days x $4,741 = $406,861
109 days x $350 = $38,150
Total for 2021-22 season = $445,011

The point here is that everyday Kaliyev is on the AHL roster this season serves three main purposes:

(a) It serves as motivation for Kaliyev. Every day he is on the NHL roster, Kaliyev is earning more than 10 times what he would earn that day in the AHL. He — like every other prospect around the league — is working to get to the NHL for many different reasons. One of those primary reasons is quite simply the financial reward.

(b) Let’s deal with the elephant in the room right up front. It saves the LA Kings money (actual cash money). Coming out of a nearly 2-year pandemic when league revenue has declined, this is important. Any good business has a budget.

(c) Building on that point… Besides the actual real cash savings that come from these paper transactions, the Kings also receive salary cap savings. And this is also where understanding how long-term injured reserve (LTIR) factors into the conversation.

For example, let’s say the Kings want to use their cap savings at the NHL Trade Deadline, there are 40 out of 200 days left (20%) in the season, so any amount of projected annual cap space is worth five times that. Meaning, if a team has $1M of projected annual cap space at the Deadline saved up, they can add a $5M cap hit player (because the player’s $5M cap hit is only going to count toward that team’s calculation for 20% of the season (the math on that is $5M * 20% = $1M).

Let’s explore this even further.

LONG-TERM INJURED RESERVE

Every day that a team is under the salary cap, the money that didn’t get spent goes into a theoretical savings account and can be used later in the season. It’s not a dollar-for-dollar savings because the money is prorated based upon where we are in the season. For simple math, though, just think of it this way — if a team was $200K under the salary cap today, a portion of that money goes into their cap savings account and can be used at a later date.

At this point, some will ask, ‘Why do the Kings even need to mess around with this? Just put Drew Doughty on LTIR and use his money.’

Ah. Not so fast.

Again, to make things easy, think of LTIR as almost like fake money. It only provides temporary cap relief / flexibility. Sure, GM Rob Blake could have put Doughty on LTIR immediately and theoretically traded for Seth Jones the next day. Here’s the problem… As we detailed in an article here last week, the Kings began this season near the salary cap ceiling. So, in this scenario, paying Jones with the Doughty LTIR savings is not sustainable because they’d be paying him with the money created via a temporary relief. Sure, it’s great for the short term. What would they do when Doughty was ready to come back in a few months? At that moment, the LTIR cap flexibility goes away. The Kings would be back in their previous position, near the salary cap ceiling, and they would not be able to afford both Jones and Doughty.

Since the Walker and Doughty injuries, what the Kings have been doing instead is trying to maximize their actual cap savings. Remember, cap savings are more like real dollars, money that goes into a cap savings account that you can actually use. This is why they’ve been carrying less than 23 players on their daily roster whenever possible. The more cap savings they could create, well, the more real cap dollars they would be able to spend later.

MAKING ROOM FOR ATHANASIOU

This past Wednesday was set to be sort of a watershed moment.

Coming into the week, Andreas Athanasiou was ready to return from a hand injury suffered during training camp, so GM Rob Blake was about to be faced with a decision of how to best create a roster spot for Athanasiou.

However, when Viktor Arvidsson and Gabe Vilardi went into protocol a few days prior, that basically removed them from the roster and brought the Kings down to just 21 roster players:

Brown – Kopitar – Andersson
Iafallo – Danault – Kempe
Moore – Kupari – Grundstrom
Lemieux – Lizotte – Kaliyev

Maatta – Roy
Edler – Clague
Björnfot – Anderson
Strand

Quick and Petersen

NOTE: When a player enters protocol, their contract still counts toward the salary cap, yet it opens up a roster spot.

Now sitting at 21 players, two short of the league maximum, Blake had a roster spot to add Athanasiou to the roster.

Coming soon, though, Blake will need to deal with Vilardi and Arvidsson. With their player count up to 22 (including Athanasiou), that leaves only one open roster spot available. How will they make room for both Vilardi and Arvidsson when they are out of protocol soon? Blake’s most obvious four choices will be: send one of Kupari/Kaliyev to the AHL (they’re both waiver exempt) or put one of Grundstrom/Lizotte on waivers (for the purpose of sending them to Ontario).

ANDERSSON INJURY AND THE ROAD TRIP

As if the situation wasn’t complicated enough, then Lias Andersson was injured in Wednesday night’s game. Why is that such an issue? Well, with Vilardi and Arvidsson still in protocol and the Andersson now hurt, they were down to just 12 healthy forwards:

Brown – Kopitar – Kaliyev
Iafallo – Danault – Kempe
Moore – Kupari – Grundstrom
Lemieux – Lizotte – Athanasiou

With a four-game road trip through Canada set to begin Monday, the Kings will need to add at least one forward to the group — just in case somebody is needed while they’re gone next week.

A healthy Andersson would have given them that extra body. With his status in question for at least a week, they needed to add a forward to the roster.

At first, Alex Turcotte and Vladimir Tkachev were recalled. However, those were simply paper transactions. The idea was to get the Kings as close to the salary cap ceiling as possible, and then place Doughty on IR — in turn, freeing up a bunch of temporary cap dollars.

They told me there wouldn't be any math. I knew they lied to me. https://t.co/4hffLd0qzg

— The Mayor (@mayorNHL) November 5, 2021

Essentially, the reason they made those roster moves right before putting Doughty on LTIR is that the LTIR pool (how much you can exceed the cap by) is equal to the injured player’s cap hit minus the cap space when you put him on LTIR. So the less cap space a team has at that moment, the bigger their LTIR pool will be. That’s why the Kings made those moves — to get closer to the cap, just prior to putting Doughty on LTIR.

Once that was done, Turcotte was sent back down the next day and TJ Tynan was called up. Why Tynan? He’s earned it. Though the first eight games of the season, Tynan was leading the Ontario Reign with 13 points (3G, 8A) while serving as the team’s No. 1 center.

RECAPPING THE CAP

All these savings, even ever so slight, will add up.

And that gives Blake flexibility to make a trade later in the season where he can add a player with a larger contract. Right now, he’d largely be limited to adding a player with a contract under $1M AAV.

Should the Kings look like a possible playoff team in a few months from now, Blake would at least have the option of potentially spending some of that cap savings he’s been banking this season.

If he made a trade for a big name player right now, it would only create a cap headache for him later… because when Doughty is ready to come off LTIR, there wouldn’t be enough cap room to fit him in.

When you see all the paper transactions each week, just know, there is actually a method to the madness.

The Kings cap situation is also why they were never really in the Jack Eichel sweepstakes, regardless of what you might have heard elsewhere. Once they signed Danault, a potential Eichel acquisition was nearly impossible. Even if Blake was willing to send Byfield, Turcotte, Vilardi, and two first round picks to the Sabres (and he wasn’t, but just play along as an internet GM for a moment), the math wouldn’t have worked. The Sabres didn’t want to retain money in any Eichel deal, so the Kings would have needed $10M in cap room. Trading young players with inexpensive contracts wouldn’t be enough. The Kings most moveable contracts are Adrian Kempe ($2M, pending RFA), Sean Walker ($2.65M), and Olli Maatta ($3.3M, pending UFA). Even including all of them in the deal wouldn’t have cleared enough cap space for LA, plus Buffalo would have expected even MORE compensation to take on those contracts. Eichel just wasn’t a very viable option for the Kings. For a more detailed analysis on that situation, see the article linked below.

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Kings Of The Podcast: Ep. 113 – Todd McLellan

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