Kids, both those who qualify due to age and those who qualify in thinking young have always loved trading things and none more so than sports cards. For as long as we can remember kids have been into “got him”, “need him”, “got him”, “need him” with their friends, essentially playing real life GM’s.
It has always been easier for the kids because nothing is at stake other than fun and bragging rights for making the best trade or for being the first to complete a set. For real life GM’s it’s always been a challenge because no GM wants to lose a transaction. At the very least they want it to work out evenly for both sides, but even better if it worked out more for their team. The ideal trade of course is one that works out for both sides because not only does it help the two (or sometimes more) teams involved, it also stirs fan interest and keeps the GM off the hot seat even if only for a little while and also keeps all of his options open for future trades. A GM who fleeces everyone he trades with will quickly get a reputation as someone that others will treat with a wide berth any time a trade is proposed. Trades were always unique, sometimes role player for role player, sometimes a superstar for two or three younger players, sometimes “your problem for my problem”, sometimes a superstar for a superstar, sometimes the trade of a veteran in order to give him one last legitimate shot at a Stanley Cup.
But since the end of the 2004-05 lock out, another factor has come into play. The salary cap. The salary cap was the big win for the owners in the season long lockout of 2004-05. Smaller team owners felt they needed it in order to compete with the bigger market teams and the bigger market teams felt they needed it because if they were limited in how much they could spend on player salaries, they would be more profitable, since there were no intentions of reducing revenues. We’ve discussed before the impact that the salary cap has had on all teams, from top teams having to shed salaries after successful seasons simply to make the cap the following season (Chicago Blackhawks and Boston Bruins being the prime examples in recent years) to lower budget teams having to add unwanted players and salaries simply in order to meet the cap minimum (Florida Panthers, Arizona Coyotes). Good or bad, the cap is undoubtedly here to stay so everyone has to work around it.
The challenge that it has created for NHL GM’s is somewhat ironic, since the intent of the cap (other than controlling expenses) was to make more teams competitive as they all have to play under the same rules. It is good for the GM in small markets like Florida and Arizona to know that even the Rangers, Maple Leafs, Flyers and Blackhawks can only spend as much money as he can, but in other ways it prevents him from improving his team. The essence of trading is using existing assets as the purchase price of obtaining better assets. In other words, if money can’t be the equalizer, then the talent being traded has to be pretty much equal. The better teams have better talent so it becomes hard for a Florida, an Arizona or a Columbus to trade equal talent with a Montreal, New York Rangers or Chicago team. The cap always dictates that pretty much any trade now has to be close to an offset in terms of the salaries of the players involved.
The current NHL salary cap for 2015-16 is US$71.4 Million with a minimum of US$52.8 Million. Using the most recent data on the website www.spotrac.com 1based on data on the site Nov 15/15 only seven teams, Buffalo, Carolina, New Jersey, Nashville, Arizona, Colorado and Winnipeg have more than 10% of their cap space available for player additions. In other words, 23 teams (76.7%) of the 30 teams are operating at 90% of their cap or higher. That doesn’t leave much room for those 23 teams to trade unless there is a reasonably close dollar for dollar salary exchange in the trade. Assuming that most GM’s have negotiated salaries at fair market value for the player’s ability, that usually means that most in season trades would likely involve players of equal ability. Unless it is a clear need of team A having an extra defenseman and needing a centre and team B has an extra centre but needs a defenseman and the two teams can exchange players making almost the same amount of money it is easy to see how a GM’s hands can be tied in terms of trading, especially early in the season.
Many teams keep their cap space as an emergency fund in case they are very close to winning a division or securing a playoff spot at the March trade deadline in order that they can go out and pick up a player with a big salary in exchange for prospects. The current salaries of prospects would not match the current salary of the big name player acquired, so the cap space is eaten up paying the acquired player’s salary on a pro-rated basis for the balance of the regular season. Usually there are approximately 15 games left in the regular season at the trade deadline, so the additional expense equates to approximately 19% of the acquired player’s annual salary that has to be funded from the cap space.
In short, teams that want to trade for quality established players are generally already good quality teams operating at/close to the cap. That means the players they are looking to acquire are also likely well paid, established veteran players, thus putting more pressure on the payroll. Take the Pittsburgh Penguins as an example. According to www.spotrac.com they currently have $369,956 in available cap space. That isn’t going to let them acquire even a journeyman player, so GM Jim Rutherford has to be creative when considering a trade. Teams that are bordering on success want to acquire good players (read highly paid) and trade away younger players, but with his team being that tight against the cap how does Rutherford make a hockey trade that helps his team, even if the farm system is sufficiently stocked to make such a deal? The ideal situation would be for Rutherford to obtain a young, quality player with a lower salary but which GM would give him a player that fit those characteristics? Likely no one. Rutherford may talk to another team about a straight exchange of bad contract for bad contract, hoping that a change of scenery helps the player coming to Pittsburgh, but most likely he has to sit back and hope that the Penguins are still close at the trade deadline and then try and swing a deal for an expensive/impact player whose salary he is only responsible for paying for a few weeks.
Injuries are also a factor in trading these days. If an injury to a star player occurs later in the season and justifies putting the player on Long Term Injured Reserve (“LTIR”) the team does have some flexibility. Players on LTIR continue to get paid of course, but their salaries do not count against the cap while they are on LTIR. The classic example of this situation is the Patrick Kane injury in the latter part of the 2014-15 season. Chicago was up against the cap and they needed to try to replace Kane’s offense. They were able to acquire Antoine Vermette from the Arizona Coyotes without upsetting their cap budget because with Kane’s salary out of the way, the acquisition of Vermette did not have a negative effect on the Hawks payroll against the salary cap. In fact, it actually helped Chicago because when Kane was ready to return for the playoffs they had the benefit of being able to have both players in the lineup because the salary cap limit is not applicable for the playoffs 2Vermette was a pending free agent in July 2015 so the acquisition was always seen as short term. If that injury had occurred early in the season, the Blackhawks would likely not have been able to make that trade because Kane would have been eligible to return to the active roster before the end of the regular season, so it is unlikely that they could have kept both players and still stayed below the salary cap. It is in those situations where a GM really earns his money.
There has been talk of allowing teams to borrow against future years’ salary cap in order to make it easier to make a trade but I believe this creates an even bigger nightmare. As well as the possibility that the cap could go down in future years the possibility remains that a current GM, fearful for his job security might make a poor decision in trading for a player and “borrowing” from a future year’s salary cap. If the GM didn’t retain his job, someone else would be coining in to clean up the financial mess left behind. That would likely shy away some very good candidates for the job.
The salary cap, expensive salaries and the various factors influencing a GM’s ability to make trades are just some of the reasons driving NHL GM’s to the draft and develop strategy that we see many teams moving towards. As we move forward we will likely see teams continue to increase their budget on scouts, minor league coaches, and front office people with player development and/or analytics backgrounds. It is a trend we are already starting to see.
Sadly hockey trades, especially those before the March deadline have now become hockey business trades, rather than hockey talent trades.