When it comes to free agency and projecting which pending free agents a team may try to re-sign, there is a fair amount of guesswork involved. For most of the year, we don't actually know perhaps the most crucial piece of information: the salary cap. The salary cap is not set until after a season is over so while we have projections of what the cap may be, we don't actually know. The one assumption that pretty much everyone makes when projecting the cap is that it will go up. Business is good for professional sports, the value of teams continues to rise as does hockey-related revenue...and then the coronavirus pandemic happened.
The revenue the league stands to lose due to the pause to the season, the cancellation of the remainder of the regular season and a postseason without any fan attendance brought the NHL and NHL Players' Association together to negotiate how to navigate the difficult financial times ahead. As a result, an agreement was reached Monday on a memorandum of understanding for the collective bargaining agreement. As part of the negotiations, both sides reportedly agreed to a flat salary cap for the next two seasons meaning the current ceiling of $81.5 million will remain the ceiling.
That's bad news for the Capitals.
But why? If the Caps can afford to fit their team under the $81.5 million salary cap now, why is it such an issue that the cap will remain at $81.5 million next season?
As I mentioned above, everyone operates under the assumption that the salary cap will continue to rise, including general managers. That's not optimism or poor planning. Really it takes something catastrophic to halt that rise, like a lockout/strike or...you know, like a global pandemic. The point is, every team when projecting out its rosters for next year and beyond, did so with the assumption that the salary cap would rise. Now that it's not, that affects the projections for every team.
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For the Caps, yes, they were able to fit their roster under the $81.5 million cap for this season, but just barely. For much of the season, the team carried only six defensemen, the bare minimum, on the roster. That means if a player got sick or injured the day of the game, the team would have essentially had to play a full game with only five defensemen. It took a lot of cap gymnastics for general manager Brian MacLellan to fit his roster under the cap and it was something that was constantly tweaked all year. Will he be able to do it again next year? Not with the current roster.
The biggest issue for Washington is a number of long-term deals that will now come back to bite them. The Caps have for several years now been a "cap team," meaning they have spent right up to the salary cap ceiling. This is typical for teams looking to compete for the Stanley Cup. If you feel you are a legitimate contender, you try to make every dollar count towards building a championship roster. Without much room under the cap to work with, however, MacLellan had to offer free agents something else in order to entice players to sign. As a result, the team has given out several deals to players of four years or more. The benefit to this is, not only can you continue bidding on free agents without much money to spend, but even if a player does not live up to his cap hit, that cap hit gets lower every year in terms of percentage with a rising salary cap.
In 2017, T.J. Oshie was a free agent. The Caps did not have the money under the cap to re-sign him so instead offered him an eight-year deal. There is no question Oshie left money on the table in terms of a yearly salary, but he got more years. Will he be worth a $5.75 million cap hit when he's 38 and on the last year of his contract? Probably not by today's standards when his cap hit alone takes a little over 7-percent of the team's cap space. With a rising cap, however, that percentage would have gone down each year. Now it won't, at least not as much as MacLellan had anticipated.
For a team that has pushed right up against the cap ceiling the last few years, one of the few sources of relief it could find was the yearly increase to the cap. Now it won't have that for the next two years.
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Washington has 11 players with at least three years on their current contracts after the 2019-20 season. Those are players whose cap hits by percentage will remain exactly the same next season. With a salary cap of $81.5 million, the Caps have 11 forwards, four defensemen and one goalie under contract with a little less than $10.4 million of cap space remaining. That's $10.4 million to use on at least two forwards, three defensemen and a goalie. That's not a lot.
There are also restricted free agents like Jonas Siegenthaler and Travis Boyd with cap hits of $714,166 and $800,000, respectively. Both players will be due raises. It's hard to imagine the team walking away from Siegenthaler, but even if they wanted to with Boyd, they would still have to replace him with another player who costs money. Plus, Ilya Kovalchuk, Radko Gudas, Brenden Dillon and, most importantly, Braden Holtby will be unrestricted free agents.
Free agency was going to be difficult for Washington to manage yet again in 2020 regardless of how much the cap was going to rise. Now with a flat cap, the team's practice of handing out long-term contracts is really going to come back to bite them and force some difficult decisions. The team has very little money to pay players more than what they're making now. Does this ensure the end of Holtby's time in Washington? Does the team wait on a long-term extension for Ovechkin to get a better idea of where the salary cap may be in a few years? Can the team afford to keep any of its UFAs? Does the team leave Oshie exposed to Seattle in the expansion draft?
At this point, these are all questions MacLellan now has to consider.
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