The Perils of Over-Achievement
Stars players have $5.6 million in performance bonuses available. Hitting them all could mean cap issues for next year.
Last season, both Miro Heiskanen and Roope Hintz hit performance bonus thresholds. For Heiskanen, that meant an extra $850,000 payment, which for a Dallas Stars team already sitting at the upper limit of the salary cap, meant that the team ended up significantly over for the year.
Hintz’s bonus was for games played, and came in at $82,500. Combined, the performance bonuses pushed the Stars $932,500 over last years cap, which is money that is subtracted from the Stars’ upper limit for this season. In essence, if a team miscalculates the cost of performance bonuses in a given year, that team is penalized the following year for the overage.
Performance bonuses aren’t available for most standard NHL contracts. They are primarily used as incentives in entry level contracts and for players who sign a new contract at the age of 35 or older. There is an exception for players signing a standard contract prior to the age of 35 where there has been an injury, which is where performance bonuses for Andrej Sekera and Corey Perry fall.
The specifics are all covered in Exhibit 5 of the Collective Bargaining Agreement, but there are other places where you can find most of the details. There are two basic types of bonuses available, with each type having a general monetary cap. The first type, Schedule A bonuses, are within reach for high-end rookies and are capped at $850,000. The second type, Schedule B bonuses, are based on league wide targets and to hit one, a player would need to play at a truly elite level. Schedule B bonuses are capped at $2 million. Games played performance bonuses are also allowed.
Since some of the items used to determine bonus amounts won’t be known until the end of the season, a team is allowed 7.5% above the current Cap for potential performance bonuses in determining whether that team is compliant at any given point in time. With this year’s Cap set at $81.5 million, the allowed overage is just above $6.1 million.
The Stars currently have contracts for four players with potential performance bonuses. The total dollar amount at risk is $5.6 million, a number that is close to the maximum overage for a team that is near the salary cap ceiling. Looking at last year’s final numbers, that is a large amount to have at risk.
With Awards & All Rookie Team finally revealed last night, we were able to finalize all of our Bonus Overage numbers for 2019-20— CapFriendly (@CapFriendly) June 20, 2019
6 clubs finished the year above the ceiling as a result of P. Bonuses earned#Caps#Stars#Sharks#RedWings#Penguins#Blueshttps://t.co/nXfmDT1fO4 pic.twitter.com/nbRXoyMIh8
Sekera ($500,000) and Perry ($1,750,000) both have games played bonuses, with some additional monies available for team and player playoff goals. Details for both are listed at CapFriendly.
Denis Gurianov has $850,000 available, and although the details aren’t publicly known, payments are likely based on a combination of games played, scoring, and season award metrics. Given his play to date, Gurianov will likely achieve some, but maybe not all, of his performance goals.
Miro Heiskanen is the interesting case. Last year, he achieved enough of his targets to receive the maximum allowed Schedule A bonus of $850,000. He’s likely going to easily hit all of his Schedule A bonuses this year and next year as well. Given his start to the season, Heiskanen could very well hit some or all of his Schedule B bonuses. It is entirely possible that Heiskanen could earn all of his $2.5 million performance bonuses.
Where this gets fascinating, and somewhat concerning, is in looking at the Stars players and contracts for next season.
Dallas does have a $4.75 million contract coming to an end for Martin Hanzal. Other contracts that expire include the $2.5 million contract for Anton Khudobin, $2.3 million for Mattias Janmark, $1.75 million for Roman Polak, and $1.5 million each for Sekera and Perry. In total, $14.3 million worth of contracts are ending. These are all players, who either need to be re-signed or have their roles filled with new players.
On the other hand, Radek Faksa, Roope Hintz, and Denis Gurianov are all up for new contracts as restricted free agents. The Stars have some flexibility and could extend bridge deal offers, but each of these players has played a key role in the Stars’ success, with Hintz and Gurianov both in a position to receive substantial raises from their current entry level deals.
Dallas will need a backup netminder, two blueliners, and some combination of re-signings and pay increases for up to five forwards. Obviously, a significant increase to the salary cap could ease the pain, but with all of the player concern about escrow and hockey-related revenue, it is not likely (until the new television rights contract for the league is renewed and the CBA is renegotiated in the coming years).
Backup netminders don’t come cheap, unless the team thinks that Landon Bow or Jake Oettinger is going to be ready for prime time. Defenders are also likely to be expensive, as the Stars likely need to find a second pair guy, which is also not going to be cheap.
All of this comes back to this year’s team and the potential performance bonuses. If Miro Heiskanen continues at his current pace, Perry and Sekera continue to find spots in the lineup, and Gurianov hits even a few of his targets, the Stars could find themselves on the hook for $5 million, approximately a third of the amount that the team has coming off the books.
The Sekera and Perry bonuses are realistically the only ones that are under team control. Sekera’s games played bonuses are in $100,000 increments, starting at 40 games, with an additional kicker for playoffs and participation. Perry’s, on the other hand, are $250,000 and start at 10 games, so he has already earned his first incremental bonus with more coming every 10 games up to 50 games.
After an early season injury, Perry seems to have settled into a right wing slot on the fourth line, with a prominent place on the power play. He has played to expectation, showing a scoring touch, but without the speed to play the relentless end-to-end game that has been shown by the rest of the team. He also adds an agitator’s edge that is missing in the lineup, plus the team is 11-3-1 in the games in which he’s played (not necessarily causal, but interestingly coincidental nonetheless).
That said, it is debatable whether what Perry brings as a fourth line power play specialist is worth $3 million per year. That is in the range of what he will make between salary and bonuses if the current trends continue.
The continued exceptional play of Heiskanen is the catalyst; turns out that exceptional play comes with potential unforeseen downsides. The way that Sekera and Perry were brought in with one year, prove-it bonus-heavy contracts could exacerbate the potential salary cap issues moving into next season.
The NHL is driven by tradition, and that means that a head coach makes player decisions without regard to contracts. Perry is a potential future Hall of Fame-level player who has done everything as well as could be expected. Unfortunately, relying on him to play a fourth line role that could be filled by another, cheaper option could mean that the Stars have a million dollars less to put together a team next year.
Reducing playing time for Perry, or even working with him on a move to a different, acceptable team is a difficult managerial decision and discussion. Then again, so is re-molding a team within salary cap constraints. Nobody said the job would be easy, but with each game played, the clock is ticking on the Stars’ buying capacity for next season — and the years beyond.