The New York Rangers were recently forced to address their salary cap woes by demoting an expensive veteran player.
Sitting approximately $4 million above the NHL’s $59.4 million salary cap for the upcoming season, the Rangers announced Saturday they had placed defenseman Wade Redden on waivers with the intent of sending him to their minor league affiliate in Hartford.
The announcement came as no surprise. Management’s need to bolster its roster for this season — as well as re-sign a key player like Marc Staal — pushed the Rangers above the cap leaving no option but to dump a salary to become cap compliant.
Redden, 33, was entering the third year of his six-year contract and owed a cap hit of $6.5 million. Unfortunately, his performance was not up to management’s expectations when they signed him to that expensive deal two years ago.
Coming off nine 30-plus points seasons with the Ottawa Senators, including a career-high 50 points in 2005-06, Redden managed only 26 points in his first year with the Rangers and only 14 points in 75 games last season.
He was the prime candidate for demotion as clearing his salary not only puts the Rangers under the cap this season but gives them sufficient “wiggle room” should the need arise to add another player or two later in the season.
It’s not the first time a team has demoted a player to the minors as a cost-cutting move. The Washington Capitals did so last year with unhappy center Michael Nylander and his $4.875 million per season contract. Another way to slash payroll is loaning players to European clubs, which the Capitals ultimately did with Nylander, who played last season in Finland.
The Chicago Blackhawks recently made a similar move with expensive ($5.625 million) goaltender Cristobal Huet, who, after clearing waivers this week, is expected to play in Switzerland this season.
Redden, Huet and Nylander are notable examples of the risks of signing veteran free agent players to expensive, long-term contracts under a salary cap if they fail to play up to expectations.
Their contracts weren’t particularly lengthy; Redden’s was a six-year deal, Huet’s and Nylander’s four years each. The problem was the dollars.
Redden was never a $6.5 million player with the Rangers. Huet eventually lost his starting goalie role in Chicago and spent most of the Blackhawks Cup run last spring as an expensive backup, while Nylander lost the confidence of the Capitals coaching staff.
Under the previous collective bargaining agreement (CBA), there were no limitations on payroll so deep-pocketed teams like the Rangers could carry expensive busts on their roster without penalty.
The lack of a cap on salaries also made it easier for general manager to attempt to trade expensive mistakes to other clubs, often by agreeing to pick up part of the player’s remaining contract in order to make them more attractive to other teams.
But under the current CBA, that is no longer possible. It’s now very difficult to move expensive busts since every team operates under the same league-wide cap. Some teams even operate under self-imposed caps considerably lower than the league ceiling and would have no interest in picking up another club’s costly mistake.
That leaves demotion to the minors or loans to European clubs, provided of course the player isn’t carrying a “no-movement” clause or is willing to waive it.
The other option is to buy out the remaining years of their contracts during the two-week buyout period in June, which usually means the team continues to pay out two-thirds of the remainder of the contract over twice the remaining tenure.
Most general managers are loath to do that, especially for contracts with any significant time left as they’ll be paying off a portion of those contracts for a very long time.
During the early years of this current CBA, teams didn’t often face these scenarios as the cap steadily rose with league revenues by an average of $6 million per season. Over the past two years, however, the cap increases have slowed significantly, resulting in most teams having limited cap space to improve their respective rosters.
Some general managers are able to resolve their cap problems with offseason trades, as the Chicago Blackhawks did this past summer by making several salary-dumping deals. But once September rolls around, there aren’t many teams with available cap space willing to make trades, leaving demotions or European loans the only options.
This season might not be the last time the Rangers and Blackhawks face this possibility again, as both teams will have to consider either buying out the respective contracts of Redden and Huet next June or bury them for another season in the minors or overseas .
Those who overspent heavily will undoubtedly face similar scenarios as the Rangers and Blackhawks.
The New Jersey Devils could face that prospect between now and their season-opener on Oct. 8.
Their much-ballyhooed signing this summer of Ilya Kovalchuk pushed them over the salary cap by nearly $3 million. GM Lou Lamoriello is believed to be shopping one or two players like Dainius Zubrus ($3.4 million) or Bryce Salvadore ($2.9 million), but he could end up demoting one or both to the minors. Those players will pay the price for the Devils pursuit of Kovalchuk.
If the salary cap fails to significantly increase over the final two seasons of this CBA, don’t be surprised if more teams look to move more overpaid players who fail to play up to their expensive salaries.