On Friday morning, the Capitals were already over the salary cap thanks to an arbitrator’s award to Christian Djoos of $1.25 million for next season. The Caps, however, were not done signing. News broke Friday night that Chandler Stephenson had been re-signed to a one-year deal worth $1.05 million. This must say a lot about Stephenson that general manager Brian MacLellan was willing to push the team further beyond the cap ceiling to re-sign him, right?
Actually, it doesn’t.
When the Capitals signed both Garnet Hathaway and Brendan Leipsic in the offseason, the implication seemed clear: Stephenson was in trouble.
Stephenson saw his production go down last season from 18 points to 11 despite getting slightly more ice time. He is a fourth-line player so the fact that MacLellan went out and added two fourth-line free agents seems to indicate Stephenson may be on the outside looking in. Add in the fact that the team added multiple penalty killers, something that is considered Stephenson’s strength, and he suddenly looks very expendable.
And yet, even though the team was already over the cap, Stephenson was re-signed and given a $400,000 raise from his previous deal.
Perhaps reports of Stephenson’s demise had been greatly exaggerated.
It is easy to see Stephenson get re-signed with a raise and conclude that this new contract is a vote of confidence from the team, but if you dive into the numbers you realize that actually the exact opposite is true.
When a player on an NHL contract gets sent to the AHL, it does not automatically mean his entire salary is suddenly taken off the team’s salary cap. Instead, teams get only a limited amount of relief as dictated by the CBA. The formula to determine cap relief is the league minimum salary plus $375,000. For 2019-20 with a league minimum of $700,000, that means the maximum amount of cap relief a team can get for sending a contract to the AHL is $1.075 million.
If a player has a cap hit over $1.075 million, you subtract $1.075 and whatever remains still count against the cap. If a player has a cap hit less than $1.075 million however, then his entire cap hit does come off the books.
Stephenson’s new deal carries a cap hit of $1.05 million, just $25,000 under that threshold.
Yes, Stephenson got a new deal and a raise, but the fact that the Caps gave him just enough to make sure his full salary could be taken off the books if sent to the AHL is a clear indication of where the team thinks he will be next season. This is an NHL contract in name only.
So why would MacLellan give Stephenson a new contract at all then? To get in front of arbitration.
Both Djoos and Stephenson filed for arbitration this summer as restricted free agents. The way the team positioned itself prior to Djoos’ hearing, it seemed clear they thought they would be able to fit him under the cap. The arbitrator’s award, however, far exceeded what I expected him to get and I would not be surprised if it caught MacLellan off-guard as well.
Djoos had a down year, but he did play in 22 games in the Stanley Cup run in a third-pairing capacity. Stephenson played in all 24 games with two goals and five assists. If the Cup run was what led to the arbitrator giving Djoos such a big raise, it likely would have meant a bigger deal for Stephenson than the team wanted as well. The last thing the Caps could afford to happen is for Stephenson to be awarded a deal for more than $1.075 million which the team would not be able to fully bury in the AHL. That would have been a nightmare scenario.
They got a deal done with Stephenson now because they had to before the decision was taken out of their hands and he was given a contract the team really couldn’t afford. If you want to quibble with MacLellan’s decision making, then perhaps you could question why he gave Stephenson qualifying offer to retain his rights as an RFA? It is important to keep in mind, however, that this is done before the start of free agency so the Caps did not know they were going to be able to sign Hathaway and Leipsic at that point. It makes sense why they would keep Stephenson as a back-up just in case MacLellan was not able to get the players he wanted.
Why would Stephenson sign a deal that seemingly has him pegged for the AHL before even going to arbitration? Because it is still a raise and a one-way contract, plus the arbitrator could always give him less. Like Djoos, Stephenson played a role in the Stanley Cup run. Unlike Djoos, however, his bad season could not be explained away by a significant injury.
Really, coming to an agreement before arbitration was the best-case scenario for both sides. Stephenson got his raise, but it is even more clear the Caps intend to send him to the AHL barring any further offseason moves or a phenomenal performance in training camp.
While the Caps may now sit at over $1.3 million past the cap ceiling, they actually did not add any money to the cap at all because they can bury Stephenson’s entire cap hit by sending him to the AHL.