A John-Michael Liles buy-out?

-via Michael Miller

The Toronto Maple Leafs have already used both compliance buy-outs, on Mike Komisarek and then on Mikhail Grabovski. Should they need a third to dispatch themselves of John-Michael Liles’ contract, they can do so starting… Friday it appears.

Per Article 13 of the Standard Player’s Contract:

(c) The notice of termination shall be effective if given in the form attached as CBA Exhibit 20, with a copy to the NHLPA and Central Registry as follows:

  • (i) beginning the later of June 15 or forty-eight (48) hours after the conclusion of the Stanley Cup Finals and ending at 5:00 p.m. New York time on June 30; and
  • (ii) For Clubs who have Club or Player elected Salary Arbitration filings pursuant to Article 12, within the forty-eight (48) hour period beginning on the third day following the later of: (i) the Club’s receipt of its last salary arbitration award; or (ii) settlement of its last case (provided such award was received or such settlement occurred prior to 7:00 p.m. New York time; awards or settlements that occurred or were received at or after 7:00 p.m. New York time will be deemed to have occurred or received the following business day for purposes of this provision).

[Link to .pdf of the CBA]

The last Player elected Salary Arbitration filing is Mark Fraser’s, which begins at 9:00 a.m. Eastern Tuesday morning. If the Leafs and Fraser settle today, it would be Thursday. So the Leafs will have a small window to buy out John-Michael Liles, which is not a good course of action.

Mind you, there are some new rules when it comes to buy-outs. While the 2005 CBA meant that 2/3 of the remaining money on the contract were spread across twice the remaining years on the deal (with the player getting a lump sum payment each year. Hilariously, the Leafs spent $2-million on Colby Armstrong’s buy-out when simply paying him the pro-rated amount on his deal would have cost the team a little over $1.75-million. Buying out Armstrong therefore cost the Leafs about $250K more than it would have cost to simply play him. Whoops.)

But now it appears as if there’s a provision included in the new CBA to co-erce teams to buy out front-loaded contracts. It’s the same structure as cap recapture, offering teams a credit for the difference of two-thirds the player’s salary minus the original buy-out salary cap hit. This I guess gives a short-term benefit to those teams, ridding the league once and for all of those toxic contracts that league owners and general managers signed for years leading up to the lockout.

John-Michael Liles’ salary is $4,250,000.00 for the next two years and $2,750,000 in 2015-2016. That means the Leafs will get a “credit” towards the $1,250,000 salary cap hit they’d get if they bought him out during the previous CBA. Unfortunately, it comes back to haunt them in that 2016 season.

Using the Illustration provided in Article 50.5 (d) (iii) we can see that a buy-out would help the Leafs find the space they need to sign both Cody Franson and Nazem Kadri:

  Year 1* Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Original SPC Amt. $4.25M $4.25M $4.25M $2.75M      
Original SPC AAV $3.875M $3.875M $3.875M $3.875M      
Buy-Out Amt (2/3 of $11.25M)   $2.833M $2.833M $1.833M      
Buy-Out Amt over twice length
of original SPC
  $1.25M $1.25M $1.25M $1.25M $1.25M $1.25M
Buy-Out “Savings”
(Line 1 minus Line 4)
  $3M $3M $1.5M      
Amt included in Avg Club
Salary (Line 2 minus Line 5)
  $875K $875K $2.375M $1.25M $1.25M $1.25M

* – season already played

This is how you get to the buy-out number found on John-Michael Liles’ Capgeek page. I’ll admit I didn’t know about this provision when I wrote my post on Cody Franson this morning.

Still, the situation is less than ideal. I don’t think that the Leafs can take a further gamble on the team’s future salary cap situation even though the cap is going to go up. On the surface, it makes sense in a crunch year since the cap will never drop below this season’s amount, and will probably be all the way up to $77-million by Year 4. You’d be right in the thick of David Clarkson’s and Joffrey Lupul’s contract, and Nazem Kadri’s big money season if he gets a two-year bridge contract this year.

It’s not good, and you figure any team willing to take a flier on Liles knows that the Leafs would have to otherwise buy him out and they’d be able to get him as a unrestricted free agent for cheaper.

It wasn’t long ago that I was talking about the possibility of the Leafs taking on salary to use one of their own compliance buy outs while picking up an asset from a team like Philadelphia that needed some short-term relief. Now it seems the Leafs are in the opposition situation.

I generated a roster of what the Leafs look like with Liles bought out. Still very slim forward depth, but at least there’s some breathing cap space. Don’t worry too much about the amounts paid to Kadri and Franson—I’m assuming it will cost $7-million to sign both. For Fraser’s deal, I split the difference between the Leafs and his reported demands.

  • MaxPower417

    if it means not having to trade cody franson, even the $2.375 cap hit in 2016 is worth it, IMO.

    another option would be to trade him and retain up to 50% of his salary (the leafs can still do one more RST). it would only save $1.95m/year and things would still be tight this season, but the hit would only be for 3 seasons, rather than 6, and the total cap savings would be greater than a buyout.

    liles at $1.95 million/3 years is a lot easier to trade than liles at $3.85 million.

  • RP

    I agree that retaining JML’s salary will make him much more palatable to other teams. But, and please correct me if I’m wrong, I thought a team can only retain a player’s salary for 1 year? So even if the Leafs retain the maximum amount of JML’s salary, the other team will still have him on their books for two years at his regular AAV. (*Again, I may be wrong about this).

    Rather than gush about Clarkson and his love for Wendel Clark, the media should have been asking Nonis what he was going to do with JML and how he planned on signing his RFA’s. What a mess! Can Brian Burke please come back?

  • RP

    I believe your able to go over the cap by 10 percent until training camp and maybe work around the situation using the two way contracts or holding restricted free agent contract in limbo until the cap situation is resolved. I wouldn’t worry about the cap hit with Fraser. I think the lies situation will be resolved within the week.