Cap Hit for Benn, Seguin Isn’t the Whole Story

Blaming players for negotiated contracts and expecting them to avoid the downside of the aging curve is horseshit. But running an NHL team isn’t easy.

Both Benn and Seguin are highly compensated by the Dallas Stars, but until the day comes when you can spend Cap Hit on your next mansion, that isn’t the whole story. Dig into the numbers and you find that Seguin is due a healthy $13 million this year while Benn is making $6.5 million. This is Seguin’s last year before the salary starts down.

That’s the thing about NHL contracts. With the Hard Cap set up by the collective bargaining agreement forcing teams to manage to that Cap, that’s what the hockey community pays attention to.

But NHL hockey is also a business, and like most businesses, there are budgets. And when it comes to a budget, Cap Space isn’t going to be a line item. Most teams, the Stars included, have to manipulate contracts to not only keep their Cap in line with league minimums and maximums, but also to meet internal payroll budgets.

Which makes it all the more surprising that team owner Tom Gaglardi would go on the Cam & Strick Podcast to once again explain that the Stars two most highly paid players need to continue to earn their contracts.

If you listen to the whole episode, it doesn’t come out nearly as negative as the Twitter universe makes it out to be. On the other hand, the cash salary in both Seguin and Benn’s contracts clearly anticipates a decline in play. That’s why management includes some years of decline in long term contracts. If they didn’t, individual contracts could easily exceed 15% of a teams total Cap, making them top heavy (hello Toronto Maple Leafs).

In fact, you can learn a bit about what a team’s plans are with a player by taking a look at the differences between Cap Hit, salary, and signing bonuses. For example, Mason Marchment’s four year deal with the Stars — with a $4.5 million Cap Hit — includes $6 million of salary and signing bonuses for the first year.

By his third and fourth years, Marchment’s signing bonus is $1 million, with just $2.6 million in salary. This structure makes it easy to move a contract to a team that wants to conserve cash, but has excess Cap Space.

Radek Faksa’s five year deal is more standard, but in some ways makes it easier to explain why the contract is more difficult to move or trade. Faksa’s Cap hit is $3.25 million, but hitting year three of the five year deal, Faksa is due $4 million in salary for the next two years. There aren’t too many teams out there willing to take on that Cap Hit with an even larger salary without significant concessions, especially given the performance issues. Don’t expect Dallas to move Faksa until the last year of his contract — when his salary drops to $2.75 million — unless Jim Nill gets an offer he just can’t refuse.

Anton Khudobin’s contract is back loaded as well, so both players who the Stars might want to move to create some space have contracts that cost more in cash than they do in Cap Hit. I’m guessing that Khodobin’s salary numbers were driven by a Covid-19 budget. Like most of the cash based decisions that the team makes, they are hidden within an internal team budget.

Jobs in an NHL team front office aren’t particularly easy. Every Twitter expert has a different opinion about players and how much they “cost” the team. But when Jim Nill, Jim Lites and the rest of the Stars staff get together to negotiate player contracts, there are quite a few metrics that they’re dealing with that aren’t in the public domain.

Each team has a road map, and when Covid-19 hit and the flat Cap hit, it threw most teams’ plans into disarray. The road map that the Stars had in place for Jamie Benn, Tyler Seguin, Miro Heiskanen and John Klingberg had to be reworked on the fly and while missing critical information.

So if you’re worried about Jake Oettinger and Jason Robertson not being signed, keep in mind that Benn and Seguin are a higher percentage of the team’s Cap than anticipated. Their salary numbers also need to be blended into a multi-year budget, a budget that includes both Cap calculations and a team payroll. The team also needs to anticipate what happens with Roope Hintz and even Denis Gurianov as they head into their final restricted free agency contracts, while hoping that estimated increases in the Cap are realistic.

All with an owner whose travel and leisure businesses are coming out of a pandemic, yet facing the possibility of a recession. Guess I’ll stick to hot takes on Twitter.