Signing bonuses. The Leafs have them. Free agents want them. It’s a beautiful situation to be in for the Leafs, minus the fact that the Leafs have about $8M to spend on 5 positions at the moment. That is decidedly less ideal, but of course there is the 10% offseason salary cap inflator for Toronto to take advantage of at the moment.
The fact that signing bonuses are an advantage for the Leafs is nothing new. In a regular season this is a huge advantage for Toronto in free agency, but this year it could allow Toronto to pay a fraction of the price that other teams are paying, at least on short term deals to bring players in for guaranteed money.
WILL THE PLAYERS BE PAID FOR 82 GAMES REGARDLESS?
This is going to be a big one. Honestly, I missed how big an issue this could be.
The NHL and NHLPA put their abrasive history behind them to reach a long-term CBA extension before the return to play. In it, the players accepted a 10 per cent deferral and a 20 per cent escrow deduction, which means they are entitled to 72 per cent of their gross salaries in 2020–21. There is also an agreement that the NHL not use specific powers that allow it to reduce salaries if COVID-19 eliminates games for 2020–21.
Basically, the players are saying, “We’ve given back enough.” Owners are saying, “We can’t be expected to pay for games that won’t be played.”
Here’s the thing about signing bonuses. They get paid out in full. There isn’t going to be a rollback based on games, that money is paid as if it’s an 82 game season, and for this season and possibly next, that might give teams an incentive to come to Toronto and the land of signing bonuses for slightly less than market value because of the lack of certainty about how many games will be played. The fact that the dominant belief is that the 2021 season will not be an 82 game season gives the Leafs a huge advantage. If it’s a 48 game season, like what we saw during the last lockout, players on a primarily signing bonus based contract would be making almost 70% more than their salary based peers at the same cap hit. Even if it’s a 70 game season, like what we essentially saw last year, players on the signing bonus driven contract would make 17% than an entirely salary driven contract of the same value.
Well, first and foremost the Leafs could probably benefit by clearing a bit more room so they can use signing bonuses on top free agents rather than some of the bottom tier players. It’s no secret that Alex Pietrangelo is looking for a signing bonus driven contract, and if that’s all the Leafs get to do with this tactic, that’s not a bad outcome.
If the plan is to look short term on a number of middle tier free agents, offering 1 year deals almost entirely signing bonus driven will give the Leafs an opportunity to stack the deck for a season, giving them affordable roster upgrades with the players that work out and potential sellable rentals at the trade deadline for those who don’t pan out.
So let’s look at it this way. The Leafs are in a situation where they have money and they can’t spend it. Other teams have cap space, and they can’t use it. There are a number of players that are looking for their true market value. With that I offer up the idea of the Sign and Pay and Trade contract.
Essentially teams would negotiate contracts with the players they want, including a year one signing bonus they can’t afford to pay. Once the contract is agreed upon, the team calls Kyle Dubas and asks the Leafs to sign that player to that contract. The Leafs would then pay that player their signing bonus. Following that payment, the Leafs would flip the player to the team that negotiated the deal, picking up compensation in players, prospects or draft picks from that team in line with the amount of signing bonus the Leafs had to pay for allowing the other team to bring in a player on a large cap hit, but league minimum salary.
I know. You hate this. You hate this because it’s shady. You hate it because it’s never been done. You hate it because it’s hard to pull off. The fact of the matter is it allows the Leafs improve using a resource the league is in desperate need of at the moment, and it’s not far off of what we’ve seen the Leafs do in the Pridham era of cap management.
We’ve seen strange cap related movements from the Leafs before. The signing of Daniel Winnik to bonus laden deal that was then flipped in short order to the Capitals. We’ve seen where the Leafs traded Jonathan Bernier to Anaheim for future considerations to close out the Freddie Andersen deal shortly after his signing bonus was paid.
I can’t really see this being something the Leafs will repeatedly use throughout free agency. It in fact seems like it would have a short shelf life before the league shuts it down, but I’d be curious to see if it’s something where Lou Lamoriello and Pridham come together on a chance to make the most of limited resources in Long Island. Or if it’s something that a team like Arizona, Ottawa, or Florida decides to tap into because their monetary resources are much more limited than even the other teams tightening their grips on their wallets.
Of course you also need a lot of buy-in from the player and their agent to make this possible. And in these different times maybe this is how business can get done. In reality, I acknowledge this stands little chance of ever happening.
Rather than embrace my craziest of ideas, the Leafs will probably take the more traditional and practical approach of paying their free agents by signing bonuses as much as possible, and simply using that to their advantage in the here and now.